The worst year for banks since 2008 | FT Film

The banking sector survived two big shocks in 2023: the collapse of Silicon Valley Bank and the disaster-driven sale of Credit Suisse. Swift action prevented a global economic crisis but threats remain

#banks #financial #financialmarkets #bankingsector #siliconvalleybank #creditsuisse #finance #bank #banking #citibank #citigroup


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[TimothyWilliams]

At this moment, things appear to be odd. Inflation is reducing the value of the US dollar, but it is strengthening in comparison to other currencies and commodities like real estate and gold. People are switching to the dollar because they believe it is safer. I worry that the rising cost of living may cause the value of my retirement savings to decline. We could put our cash anywhere else.

[SeanTalkoff]

The disastrous decision to repeal the Glass-Steagall Act in the late 1990s led to the spectacular failure of huge banks during the financial crisis of 2007–2008. To prevent a future catastrophe, Dodd-Frank and this Act both need to be revived right away. What happened with SVB is just the start of what will happen if nothing is done to address the current problem.

[MarkLeonard-xnzs]

The system is failing as a result of both government and federal policy. In the next days, the banking crisis would have to be epic and gigantic for the FED to decide not to raise interest rates. This won't happen; an increase and a crash are coming. There will be more negative portfolios this 2nd half of 2024 with markets tumbling, soaring inflation, and banks going out of business. My concern is how can the rapid interest-rate hike be of favor to a value investor, or is it better avoiding stocks for a while?

[NicholasBall]

About the current bank situation, I'm really concerned. I am worried about a lot more if a bank the size of SVB may fail. I have a friend who manages a fast-growing startup and was severely impacted by the bank run. I have taken more than $840k out of my bank. Since the FDIC only provides coverage up to $250K, an implosion could have negative consequences. presently want to invest in the stock market. Does anyone have any ideas on how I might proceed?

[timkey_]

Something really beautiful to see is that this time we didn't bail out the banks.
We bailed out the bank's creditors which I think is the right thing to do.

[markeinsteinog]

'you have to stay paranoid to survive in this line of work'

[randomcon]

Is it really a bad year for banks? Pretty sure JPM and HSBC were quite happy about the deals they made this year to buy up SVB and first republic… unlike credit Susie, those weren’t bad assets. They had liquidity issues which turned into solvency issue because of a mismatch of short and long term of assets and liabilities. To compare this with 2007-08 is completely absurd

[ducann]

Great content! I hope FT will have more video about shadow bank, it's a great topic to explore.
Thank for all your effort

[Sjalabais]

Excellent interviewees, all of them! The takeaway here is that "4 or 5" unsupervised, well-suited individuals could have the hyperleveraged firepower to blow up our entire financial system. Post QE, we're still in an overliquidized market system where losing tens of billions of USD is merely a hiccup, but much more serious reform of not just the banking sector - rather, the concept of wealth - should be discussed in earnesty now.

[TrangLe-ybsy]

What's super amusing to me is that the very people who enthusiastically helped amplify the Twitter shitstorm that triggered the bank run on Credit Suisse were surprised by what happened next - The write-off of the bank's $17bn AT1 bonds.

[matthewthornton]

‘Miraculous that this wasn’t disastrous’, you can thank the FDIC for bailing depositors out and containing the domino effect. Consequently, ye olde national debt faces even more upward pressure. Had SVB, Signature and FR been located in any other country that cant issue its own bills, then there would have been an immediate contagion effect. In the US, this pain will be felt later on.

[nezgi]

I think because it was a Swiss giant bank which was collapsed not an American one that prevented a global financial crisis. Swiss has highly, enoumorsly regulated banking system and a very keen eye on credit suisse already for many years. If it was an American bank of a size of CS was failed then that wouldn't have been pretty. CS took so many wrong turns in recent years but did so well over the past 160 years and was as loyal as possible to Swiss standards. That's why when its share prices plummeted, it didn't go under bust. It had correct asset/liability ratio, had necessary insurances and AT1 bonds and had solvency so and so fort.

[JoshuaMccaffrey-q]

It’s amazing really. We have a financial crisis, caused by greedy, reckless financial institutions. Congress passes legislation requiring those institutions to be less greedy and reckless. The institutions then lobby to have those restrictions removed, usually in the name of “remaining competitive”. This leads to another financial crisis. It’s completely predictable, and we have been doing this dance since the Great Depression almost 100 years ago.

[ga]

Was a great buying oppertunity for financial stocks. I bought two financial related stocks and they're both up 50% providing never before seen dividend yields and added to some other existing positions like BlackStone due to the broader panic. At the end of the day, I was sure the plunge protection team from the Feds would save the day. Thank you Feds.

[tatianastarcic]

Bank failures are likely to continue increasing due to rising interest rates, as it causes their commercial paper and treasuries to become devalued. To prevent a severe economic downturn, it is necessary to implement a freeze on interest rates. Simultaneously, the White House should support the industry in boosting gas and oil production to lower fuel prices. The anti-oil stance only contributes to higher energy costs, leading to inflation throughout the economy. By reducing interest rates, tightening the money supply, cutting government expenditures, and increasing the availability of affordable fuel, inflation will decrease, and the economy will thrive. Unfortunately, various conflicting agendas make it unlikely for all these measures to be implemented, resulting in a recession and persistent inflation.

[davisoaresalves]

Everytime interest rates are raised too much, a bubble bursts. And from them on a confidence crisis takes hold, freezing the money market and threatening a full domino effect, which only stops with Central Bank guarantees.

[danielzz]

First time listener; great bit. Love the transition between presenters.

[mp]

The world is in a serious economic crisis for months, but for some reason no one has the courage to call things by its own name.

[Skilli]

I gotta watch this today, tomorrow, on the 4th day and seventh day. How much data is that? "Grind to a halt" the music sounds like hip hop, and you guys are laying your lines. 🎉

[Subaru_]

Amazingly, I have a non-financial background and learned a great deal of practical financial, economics knowledge, use cases, and more from the FT.