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Someone explain the bank failures to me like I'm 5.
Posted on 3/13/23 at 8:06 pm
Posted on 3/13/23 at 8:06 pm
Tied up too much of their money in the market, folks get spooked and make a run to pull cash at once leading to downfall?
Also, the decision by the government to "make depositors whole" means they are printing more money?
Did the other money go poof or is it still tied up in the market somehow?
Also, the decision by the government to "make depositors whole" means they are printing more money?
Did the other money go poof or is it still tied up in the market somehow?
6
Posted on 3/13/23 at 8:13 pm to HailToTheChiz
Daddy put poo poo in toilet.
Mommy take daddy poo poo out of toilet.
Daddy return and want poo poo but it gone.
Now when daddy wants to leave poo poo in toilet he is scared mommy will take it again.
Mommy take daddy poo poo out of toilet.
Daddy return and want poo poo but it gone.
Now when daddy wants to leave poo poo in toilet he is scared mommy will take it again.
Posted on 3/13/23 at 8:20 pm to I Love Bama
brilliant
Posted on 3/13/23 at 8:25 pm to HailToTheChiz
Jack took something from Jill that wasn't his. Jill is sad.
Posted on 3/13/23 at 8:40 pm to HailToTheChiz
Bank leadership bought high and sold low
Venture capitalists said GTFO
Bank run, liquidity ran out
Government liquidating and distributing the remaining money. Rest of money will come from other banks
Venture capitalists said GTFO
Bank run, liquidity ran out
Government liquidating and distributing the remaining money. Rest of money will come from other banks
Posted on 3/13/23 at 8:46 pm to HailToTheChiz
quote:
Tied up too much of their money in the market, folks get spooked and make a run to pull cash at once leading to downfall?
Close on this, they tied up the usual amount of funds in the market but made some weak investments and one of their billionaire clients got spooked first and set off the rest
quote:
Also, the decision by the government to "make depositors whole" means they are printing more money?
I heard today the money is coming from a fund all banks pay into and not being assigned to taxpayers. This was from a Congressman from North Carolina.
quote:
Did the other money go poof or is it still tied up in the market somehow?
Money didn't go poof, they just have loans out for far more actual cash than they have, so as people demand cash they simply don't have any to give out (this is common for all banks; most don't experience runs).
Posted on 3/13/23 at 8:56 pm to HailToTheChiz
Two of the three banks relied too heavily on crypto. That’s no bueno.
The other bank, SVP, relied primarily on tech, which isn’t bad but you don’t want to concentrate on any one industry. You want to diversify. Plus 90%+ of their deposit accounts were not FDIC insured. Lastly, they went from $50B in assets to $200B in assets in a couple of years. They used their cash buying up bonds and investments and when the rates went up, their investments lost their value. They were too leveraged.
The other bank, SVP, relied primarily on tech, which isn’t bad but you don’t want to concentrate on any one industry. You want to diversify. Plus 90%+ of their deposit accounts were not FDIC insured. Lastly, they went from $50B in assets to $200B in assets in a couple of years. They used their cash buying up bonds and investments and when the rates went up, their investments lost their value. They were too leveraged.
Posted on 3/13/23 at 9:05 pm to HailToTheChiz
Once upon a time, banks would take customer deposits and then loan that money to borrowers, but they always had the same amount of money as outstanding loans.
Then the bank decided that loaning MORE money than it has in deposits would be ok.
Now the bank has loaned too much money and they no longer have those customer deposits.
Then the bank decided that loaning MORE money than it has in deposits would be ok.
Now the bank has loaned too much money and they no longer have those customer deposits.
Posted on 3/13/23 at 9:47 pm to I Love Bama
quote:
Daddy put poo poo in toilet.
Mommy take daddy poo poo out of toilet.
Daddy return and want poo poo but it gone.
Now when daddy wants to leave poo poo in toilet he is scared mommy will take it again.
You explained it like he was 2
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