Ten observations:
1. FDIC wrote the regulation to say they will cover personal accounts up to $250,000. Once they go past that (in the SVB case) and say into millions.....they might invent a rule to protect 'other' accounts, but then the FDIC fund is finished (emptied out) before it gets to the rest.
If there are other banks (I would suggest no fewer than forty banks) who will default in the same fashion (probably before mid-summer)....then the 9-billion-dollar fund that FDIC has will be long-gone. The House/Senate would then have to invent money out of thin air to cover the others, up to the $250,000 level.
Will lawsuits then occur against the Treasury folks for saving big accounts for SVB and not the rest? Yes, and this will go on for several years. For the House/Senate to resolve this mess? You'd be talking about several trillion dollars.
It's a bigger mess than people think.
2. Yellen of the Treasury Department?
She's 76, and based on the Senate hearing yesterday, I'd say she's way beyond her capability. About one out of every three questions....were 'headlight' type answers....she couldn't answer them.
Like Biden, old age is hindering her ability.
3. Can any of this crisis be resolved in 2023?
I would dispute this mindset and suggest that we are handing the 2024 Presidential campaign a major economic issue.
4. Do any of these 3-minutes speeches by President Biden really bring confidence into the banking situation? No, and the more often you do this....the more it becomes a comedy act.
5. The single most important figure of any bank....is the risk management officer. If this person was hired for non-risk management skills/talents....you need to pack your money up and move elsewhere.
6. If the Treasury Department is going to 'make good' all the folks who lost tons of money beyond the $250,000 limit.....you'd basically hand the lost money back to them....giving them yet another chance to take high risks, and yet lose the second batch of money as well.
Are you set for a 2nd saving job....possibly even a 3rd saving job?
7. Somewhere in all this SVB chatter.....someone noted that the SVB bank offered a 'personal' deal....where if you placed their business account with the bank....the 'VIP' could get some kind of 'below-market mortgage' account.
Illegal? No.
How much is this 'below-market' deal? No one is really saying....it might only amount to a quarter-point lower rate. But the problem is....it's gotten out in public and will beg questions.
8. If you count both SVB and Signature Bank (both failed), they had around $263-billion in deposits. That's the total amount from all the failed banks of 2008.
From this point on.....it's a bigger mess than 2008 (which we all thought was a five-star mess).
9. KPMG is a audit and review company that gives a stamp of approval over banks. It's an odd thing....KPMG, 2 weeks prior to the SVB collapse, gave them a clean bill of health.
Then it's a 2nd odd thing....KPMG, 11 days prior to Signature Bank's failure....gave them a clean bill of health.
Makes you wonder....did the two banks just fail over night, or did the two hide their problems well enough that KPMG couldn't find the issues?
10. Just odd....the risk-control officer for a major bank (SVB)....says that they want a executive job....not related to risk management (April 2022). They don't want retirement or to quit....just some executive position.
SVB invents such a position.
Then the risk-control position remains empty for 8 months.
Hard to believe? Most companies would have advertised and interviewed within 6 weeks after the person left. Did they do that (the HR crew) and the people who applied....considered the job, found the issues....spoke to having to sell the bonds, and the CEO said 'no'? You have to wonder.
Why did the original risk-control officer want another job? Never explained.
