Signature Bank's Demise: Who's Next? | Joseph Wang

Signature and Silicon Valley Bank have collapsed. In this breaking news episode, hosts Jason Yanowitz and Jack Farley interview Joseph Wang to discuss the banking system failures and what to expect next. Joseph dives deep into the risk both banks took by not hedging interest rate risk, how this could have been avoided and whether other banks are in a similar position?

We then discuss if the Fed's Bank Term Funding Program was the right move? To hear all this and more, you'll have to tune! Filmed on March 13, 2023, at 10:30am ET.
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Disclaimer: Nothing said on Empire is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Santiago, Jason, and our guests may hold positions in the companies, funds, or projects discussed.

[Dante-olms]

99% of people who deposit their money in a bank don't think of themselves as "investors" in the bank

[judymckee]

Bottom line all of us have to pay for it through inflation.

[ayalneh]

Mr Wang speaks in a language that ordinary people can understand easily. He knows his subject very well and explains it without much jargon and academic pomposity. Great respect to him.

[ryanpatrick]

The catalyst of this crisis was the idiots in crypto who infected a few idiot banks (silvergate, Signature, and SVB) Once Silverbank inevitably failed, that caused the panic. Which caused the two runs afterwards. The long-term bond issue is just a secondary excuse to cause further panic and enable shortsellers to profit. It is not as though these bonds were taken out just yesterday, or that interest rates just started rising. Having these longterm securities are fine if there is no bank run panic. Never would have been a panic if crypto was never invented. People are already trying to pretend that Silvergate and its original sin, never existed.

[andujarpain]

You guys are ridiculous!! It depends on why a bank fails. If the bank fails because they took the FED'[s advice and purchased government bills and bonds and interest rates go up, then this is a weakening that impacts all banks, as china and japan are no longer buying american government bills/bonds! This impacts our economy as a whole. Our housing, our mortgage rates, our employment opportunities, etc...

[jasonbroderick]

Have to disagree with Joseph about the lack of global impact as they are like ‘local banks’. SVB UK is being bought out through a government backed deal for £1 to protect the UK tech sector businesses who would have been severely impacted.

[supersam]

Joseph is a incredible resource we need to take advantage of .

[karlson]

Love this Fed guy. Did the cfo at this bank not know about hedging risk? I don’t get it

[qwertyify]

One other key is that the bonds/loans that have large duration/rate risk are those that are based on the 10y/20y rates.
The risk for these is actually long term inflation expectations, which are somewhat independent of Fed control (they're not BoJ doing yield control).

In normal conditions raising short term rates does increase long term rates, but since we've inverted that is much less true and long term rates have been falling. In that way, the Fed by raising rates and pushing down long term inflation and rates (getting rid of high expectations) is helping these banks out of their bad (unhedged) decisions. That however, also embeds somewhat poor economic performance over the long term as well.

[ginNjus]

Too late 12 other regional shut down from trading.

[ahhjonge]

Dudes. Bros . Dont dump millions in one account. Need to say more?

[kyfeam]

Seems like peeps are running to Bitcoin.. being it's not in the banking system..

[massonh]

Almost ANY bank can fall at this moment.

All it takes is ‘’a widespread humor’’ the bank is insolvent. Joseph Wang is over rationalizing the issue.

[PumaMama]

I live in northern California and have been contacted by several vendors asking us to stop sending money to their bank, Silicon Valley Bank. Our small business, we're in the construction sector, barely survived 2008. The more the government tries to reassure me about bank failures, the more I worry. Thank you for shedding light on this for us, I've learned a lot from your video.

[chrisp]

Mr. Wang, thank you for sharing your expertise. This interview is remarkably good. I have much respect for you, sir.

[brandon-hhjf]

I wonder that the FTX, Bitcoin and general crypto investors aren't saying 'what about us, where is our bailout'.

[rohitkothari]

New facility = BTFP = Buy The F***king Pivot 🤣🤣

[Tential]

Yes... A special surcharge charged on the banks... I wonder where the banks will get the money to pay that fee from.... God, you have to be stupid to think that's a good idea. Pure marketing.

[CoreyChambersLA]

If SVB were just another poorly run bank, why is the federal government bailing them out by giving free money to the richest customers?

[tlebryk]

Glad to hear that SVB is closed and the C-suite idiots that caused this are out of their overpriced jobs!!!