No banks are safe (bail ins, FDIC limits, systemic risks)

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Contains a link to an 11-page pdf. Nothing too technical, easy read.

Michelle W Bowman: Tailoring, fidelity to the rule of law, and unintended consequences​

Thank you for the invitation to join you this evening at Harvard Law School. It is an honor and a pleasure to speak to this distinguished group. To kick off our conversation, I would like to frame the discussion by offering my views on a key element underpinning the U.S. bank regulatory framework: the role of tailoring. While the principle itself is simple - setting regulatory priorities and allocating supervisory resources in a risk-based way - the consequences of tailoring (or not) can reverberate throughout the banking system, the broader U.S. financial system, and the economy. I see a clear nexus between tailoring and fidelity to the law, including a targeted focus within our statutorily mandated prudential responsibilities.

Read the rest:

www.bis.org

Michelle W Bowman: Tailoring, fidelity to the rule of law, and unintended consequences

Speech by Ms Michelle W Bowman, Member of the Board of Governors of the Federal Reserve System, at the Harvard Law School Faculty Club, Cambridge, Massachusetts, 5 March 2024.
www.bis.org www.bis.org
 
"Failures coming soon to a small to medium size bank near you! The big ones will be fine though, the problem manageable."
- Jerome Powell

In the Fed's eye, they've managed every problem they ever helped to create. Lol

Eight short minutes.

 
New details have emerged about New York Community Bancorp's $1 billion rescue, including a lucrative incentive award for the company's incoming CEO and more changes to its board.

Late Monday, the troubled regional lender issued a press release packed with information about the deal to pump approximately $1.05 billion of capital into the company.

The transaction, which closed Monday, is led by Liberty Strategic Capital, the investment firm run by former Treasury Secretary Steven Mnuchin. Funds managed by Hudson Bay Capital Management and Reverence Capital Partners are among the other investors that are participating. Combined, the new investors are positioned to own about 39.6% of the company "on a fully diluted basis," the release said.
...
"It's not common to see deals like this, especially deals that represent so much ownership of the company and especially with these terms," said Wedbush Securities analyst David Chiaverini.
...
The deal announced last week is significantly dilutive to existing shareholders. For example, an existing shareholder with 72 million shares previously owned 10% of the company, according to Jefferies analyst Casey Haire. Today, that's down to 6%, he said.

"No one likes to be diluted 40%, but the alternative could have been zero and a 100% loss, so it's the lesser of two evils," Haire said.

Analysts are now waiting for New York Community's annual report, which is expected to be filed this week. Its release was delayed so that the company could finish working on a remediation plan to address the deficiencies related to the previously identified "material weaknesses."
...
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www.americanbanker.com

New York Community's new investors poised to own nearly 40% of the bank

The Long Island-based lender has released a number of new details about its reconfiguration following a $1 billion capital injection led by two former Trump administration officials.
www.americanbanker.com www.americanbanker.com
 
From the link:

From revoking the American people’s right to a jury trial in matters involving Wall Street; to brazenly thumbing their nose at anti-trust law; to trading the stock of their own bank in the darkness of their own dark pools; to forming their own stock exchange; to committing serial felonies without being criminally prosecuted or having their bank charters revoked – Wall Street mega banks have drawn a law-free zone around themselves and are more dangerous today than they have ever been in U.S. history.

The most dangerous eras for the American people versus Wall Street mega banks have been the late 1920s and 1930s; 2007 to 2010; and today. We know that today is the most dangerous era because we read 12,000 pages produced by the Senate Banking Committee of the early 1930s on the Wall Street corruption in the late 20s and 30s; we read every government report produced on the causes of the crash of 2008 and its aftermath, as well as every important book on the subject; and we have personally chronicled at Wall Street On Parade the unprecedented corruption of the Wall Street mega banks since 2008.

One key factor stands out in our mind as to why today’s Wall Street mega bank era is so much more corrupt and dangerous than earlier times: the failure of mainstream media to do its job.

Wall Street Mega Banks Have Drawn a Law-Free Zone Around Themselves – The Media Is Complicit

By Pam Martens: March 13, 2024 ~ From revoking the American people’s right to a jury trial in matters involving Wall Street; to brazenly thumbing their
wallstreetonparade.com

 
Bill's Commentary:

"This should be no surprise, the game is rigged from top to bottom ...period!"

Wall Street Mega Banks Have Drawn a Law-Free Zone Around Themselves – The Media Is Complicit

From revoking the American people’s right to a jury trial in matters involving Wall Street; to brazenly thumbing their nose at anti-trust law; to trading the stock of their own bank in the darkness of their own dark pools; to forming their own stock exchange; to committing serial felonies without being criminally prosecuted or having their bank charters revoked – Wall Street mega banks have drawn a law-free zone around themselves and are more dangerous today than they have ever been in U.S. history.

Read more here...
 
mmerlinn said:
Since they do the same thing as banks, but on a more limited scale, I don't see them being much more secure. They can still have bank runs, still freeze your accounts, etc. And they still loan out the money you "loaned" to them for safekeeping. Just a smaller, usually more local bank in my view.
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Just my to cents here on this. And I'll answer with my own question. Democrat or Republican? The correct answer here is Republican. And not because Republicans are so wonderful, they aren't. But the reason they are the correct choice is because the Democrats are so F#@*^% UP. So yes Credit Unions are the better choice, if only that you'll have a better chance at recovering some of your $$ if the SHTF. Can you imagine trying to deal with the likes of Wells Fargo, B of A, Citibank, or Chase. I'll definitely take my chances with a Credit Union.
 
Almost a year ago, Credit Suisse, a globally systemic bank with $540 billion in assets and the second-largest Swiss lender, founded in 1856, failed and was sold to UBS. In the United States, Silicon Valley Bank, Signature Bank and First Republic Bank failed at around the same time amid Federal Reserve interest rate hikes to contain inflation. With a combined $440 billion of assets, these were the second, third, and fourth biggest bank resolutions since the Federal Deposit Insurance Corporation was created during the Great Depression.

This banking turmoil represented the most significant test since the global financial crisis of ending too-big-to-fail—whereby a systemic bank can be resolved while preserving financial stability and protecting taxpayers.

So, what’s the verdict? In short, while significant progress has been made, further work is required.

www.imf.org

More Work is Needed to Make Big Banks Resolvable

Last year's turmoil showed that further progress is required in a number of areas to ensure banks aren’t too big to fail.
www.imf.org
 

Banks are in limbo without a crucial lifeline. Here’s where cracks may appear next​

  • The forces that consumed three regional lenders last March have left hundreds of smaller banks wounded, as merger activity — a key potential lifeline — has slowed to a trickle.
  • Klaros Group analyzed about 4,000 institutions and found 282 with both high levels of commercial real estate exposure and large unrealized losses from the rate surge — which may force these lenders to raise fresh capital or merge.
  • Behind the scenes, regulators have been prodding banks with confidential orders to improve capital levels and staffing, according to Klaros co-founder Brian Graham.
The forces that consumed three regional lenders in March 2023 have left hundreds of smaller banks wounded, as merger activity — a key potential lifeline — has slowed to a trickle.

As the memory of last year’s regional banking crisis begins to fade, it’s easy to believe the industry is in the clear. But the high interest rates that caused the collapse of Silicon Valley Bank and its peers in 2023 are still at play.

More:

 
CRELoansandAssets.jpg


Visualizing Major US Banks By Commercial Real Estate Exposure | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com www.zerohedge.com
 
Vichris said:
Just my to cents here on this. And I'll answer with my own question. Democrat or Republican? The correct answer here is Republican. And not because Republicans are so wonderful, they aren't. But the reason they are the correct choice is because the Democrats are so F#@*^% UP. So yes Credit Unions are the better choice, if only that you'll have a better chance at recovering some of your $$ if the SHTF. Can you imagine trying to deal with the likes of Wells Fargo, B of A, Citibank, or Chase. I'll definitely take my chances with a Credit Union.
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I am going with the "be your own bank" option and leaving only enough in the account to pay bills.
 
CopperSilverGold said:
I am going with the "be your own bank" option and leaving only enough in the account to pay bills.
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I'm there too, but there's some exceptions. I've been my own bank for about 6 years now. BUT,.... I've got a fair sized amount of my money tied up in short term CD's that are paying decent returns. Both of them only have a couple of months left before them become liquid again. We'll see how things shake out over the next 2-3 months.
 
Vichris said:
I'm there too, but there's some exceptions. I've been my own bank for about 6 years now. BUT,.... I've got a fair sized amount of my money tied up in short term CD's that are paying decent returns. Both of them only have a couple of months left before them become liquid again. We'll see how things shake out over the next 2-3 months.
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Worse case scenario is you can still cash out those CDs and just forfeit the interest earned, right? Been awhile since I had some ladder CDs set up.
 
CopperSilverGold said:
Worse case scenario is you can still cash out those CDs and just forfeit the interest earned, right? Been awhile since I had some ladder CDs set up.
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I believe that recent court rulings assert that bank depositors, of any nature, are merely unsecured creditors.

Back of the line, behind secured creditors.
 
Casey Jones said:
I believe that recent court rulings assert that bank depositors, of any nature, are merely unsecured creditors.

Back of the line, behind secured creditors.
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I have heard that as well. So many will get caught with their pants down and go from middle class to poor in an instant.
 
As with SVB, Silvergate, etc., the FDIC is the absolute last resort. They will try to force a sale to another bank in a deal that at least makes customers whole to the limit of the FDIC insurance. With the big 3 blow ups last year, the Fed/FDIC basically said they would insure all deposits at any amount (in an effort to avoid customer deposit flight to JPM). It's not the letter of the law though.
 
I remember when stock holders of Riverside Bank in Florida would strut around like nouveo redneck rich AHs around here because new construction was booming in 2005.

Then it crashed in 2006 and the bank went under. All those stock holders lost everything which is the natural order. Sometimes you need to let bad operators fail and wash out to have a better system.
 

Failed Bank Review - Citizens Bank​

The Federal Deposit Insurance Corporation Office of Inspector General has issued its memorandum on the Failed Bank Review |Citizens Bank | Sac City, Iowa.

On November 3, 2023, the Iowa Division of Banking (IDOB) closed Citizens Bank and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. According to the FDIC’s Division of Finance, the estimated loss to the Deposit Insurance Fund (DIF) was $14.8 million or 23 percent of the bank’s $65 million in total assets. Following a period of supervisory actions by regulators, the IDOB took possession and closed Citizens Bank during an ongoing examination because FDIC and IDOB examiners found significant loan losses in the loan portfolio. These loan losses eroded the institution’s capital and earnings position and the bank had become insolvent.

More:

Failed Bank Review - Citizens Bank

www.fdicoig.gov www.fdicoig.gov
 
FDIC reminding folks about bail in plans I guess:
Federal Deposit Insurance Corporation (FDIC) Chairman Martin J. Gruenberg returns to the Peterson Institute for International Economics (PIIE) on Wednesday, April 10, 2024, to present a comprehensive update of how the FDIC has prepared for the orderly resolution of a GSIB under Title II of the Dodd-Frank Act. Chairman Gruenberg will detail the agency’s latest work to resolve the failure of a GSIB in a manner that protects insured depositors, preserves value, promotes financial stability, and prevents taxpayer bailouts.
...
The event will also feature a roundtable discussion of the new FDIC paper to be released entitled, “Overview of Resolution Under Title II of the Dodd-Frank Act.” Art Murton (FDIC), Ryan Tetrick (FDIC), Susan Baker (FDIC), and Nicolas Véron (PIIE) will participate in the roundtable moderated by PIIE Senior Fellow Anna Gelpern.
...
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FDIC Chairman to Address ‘Too Big to Fail’ and the Orderly Resolution of a Global Banking Organization at the Peterson Institute of International Economics

content.govdelivery.com content.govdelivery.com
 

FDIC Releases Comprehensive Report on Orderly Resolution of Global Systemically Important Banks​

WASHINGTON — The Federal Deposit Insurance Corporation (FDIC) today released a comprehensive report on how the FDIC would manage the orderly resolution of a large, complex financial company under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

In remarks to the Peterson Institute for International Economics in Washington, DC, FDIC Chairman Martin J. Gruenberg presented the Overview of Resolution Under Title II of the Dodd-Frank Act, the most detailed description to date of the FDIC’s preparedness to use its Title II resolution authority in a manner that promotes financial stability and prevents taxpayer bailouts.

More:

Press Release: FDIC Releases Comprehensive Report on Orderly Resolution of Global Systemically Important Banks

content.govdelivery.com content.govdelivery.com
 
A little bit of insider info sent to Bravo. A banker sent him some data that said chargeoffs last Month were what usually happens in a Year. things are gonna go boom.

 
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