Featured Three US banks collapse in one week? Where's my money?

[Multicolored Lemur]

That's better than most. I only have one from high school. I'm also a self-taught investor if that counts for anything.

I think self-taught is perfectly fine!

I’ve also heard the approach of having 90% of your money in safe, boring stocks. Like established blue chip companies. Or, broadly-diversified mutual funds, or even index funds.

And then with 10%, you can take some chances and learn some things. In all honesty, if I had more than 5% in crypto, I’d start easing out. And basically, just book a win and leave it at that.

But, to each his own!

 

[AgnosticBoy]

Here's a finding from a report by the Federal Reserve regarding why one of the banks (i.e. SVB) failed:

In a hotly anticipated banking report released Friday morning, the Federal Reserve said it failed to take sufficient action to prevent the collapse of Silicon Valley Bank, while detailing serious management oversights by the lender’s executives.

The report offers four key takeaways:

• Silicon Valley Bank’s leadership failed to manage risks.
• The Fed’s own supervisors didn’t fully appreciate SVB’s vulnerabilities.
• Supervisors were too slow to act on problems.
• A 2019 shift in Fed policy “impeded effective supervision.”

Source: CNN

That first bullet point should not be a surprised.

 

[bbyrd009]

Here's a finding from a report by the Federal Reserve regarding why one of the banks (i.e. SVB) failed:

Source: CNN

That first bullet point should not be a surprised.

i think prolly with the raising the interest rates so fast there was bound to be some breakage somewhere?
theyll just paper it over, printin 24/7 now prolly. debt service is north of…125%? and climbing? wont be long now i guess

 

[Multicolored Lemur]

i think prolly with the raising the interest rates so fast there was bound to be some breakage somewhere?
theyll just paper it over, printin 24/7 now prolly. debt service is north of…125%? and climbing? wont be long now i guess

I personally think the economy’s been resilient, first with the 2008 sup-prime and “investment” banking thing, and now with Covid.

What worries me is the slow erosion of middle-income jobs.

And the slow-motion aspect has a big effect of how people view it. As an analogy, there’s a big difference between how people respond to a fast-moving disaster like a hurricane [where typically people are close to their best] and a slow-moving disaster like a drought [where people are selfish and cheatful and closer to their worst]

 

[bbyrd009]

I personally think the economy’s been resilient, first with the 2008 sup-prime and “investment” banking thing, and now with Covid.

What worries me is the slow erosion of middle-income jobs.

And the slow-motion aspect has a big effect of how people view it. As an analogy, there’s a big difference between how people respond to a fast-moving disaster like a hurricane [where typically people are close to their best] and a slow-moving disaster like a drought [where people are selfish and cheatful and closer to their worst]

good point

 

[AgnosticBoy]

Another bank fails, i.e. First Republic. So that's 4 bank failures this year.

First Republic Bank has become the second large regional bank with assets over $200 billion to fail in just a few weeks. Like Silicon Valley Bank, which was seized by the government on March 10, First Republic catered to a wealthy clientele, which helped it grow deposits rapidly but may have also contributed to its undoing.

WHY DID FIRST REPUBLIC FAIL?

First Republic grew rapidly through deposits from wealthy individuals and companies. It used those deposits to make large loans, including jumbo mortgages, when interest rates were at historically low levels in hopes of then convincing customers to expand into more profitable products like wealth management.

What’s more, the large loans on First Republic’s books dropped in value as the Federal Reserve rapidly raised interest rates last year. So, if the bank tried to sell the loans to raise capital, it would do so at a loss. Similar circumstances had doomed Silicon Valley Bank.

Many of the bank’s accounts had deposits well north of the federally-insured $250,000. Once Silicon Valley Bank went under, clients pulled their money, fearful their deposits were in danger. First Republic said last week that depositors had withdrawn more than $100 billion, most of it during a few days in mid-March.

Source: AP

 

[bbyrd009]

Another bank fails, i.e. First Republic. So that's 4 bank failures this year.

Source: AP

i think dikking with interest rates, especially so quickly, is producing pretty much exactly the scenario a (very) few people like to see, tbh