(A) When the Fed's QE-induced interest-rate corridor is still in force, the US's future SME-bank-run potential problem can be mitigated by the following suggestion from John Cochrane : "If banks had to funnel all deposits and short-term debts into interest-paying reserves at the Fed and short-term Treasury investments, runs would end forever as there would always be money to satisfy any depositor. More regulations (and stress-tests) or not in the future for the US's SME-banks, some of them will always be forced to sell some of their long-term security investments at big losses to replenish their quickly diminishing deposit bases, whenever the Fed's coming new rate-hiking cycle (say to fight inflation) once again non-trivially and quickly pulls up, non-symmetrically, the short-term market interest rate from its normal near-zero-lower-bound level to a rather high positive level, unless those new stress tests (i) can very quickly find out that some of the SME-banks have invested too large a proportion of their customer deposits into long-term investment securities (and have also forgot to hedge the accompanying interest-rate risk), and (ii) can quickly enforce the immediate readjustment of those banks' investment portfolios, say by requiring them to quickly turn some of their long-term securities back into cash deposits. But it’s not small in the lives of the millions who depend on it. By the standards of Citibank, SVB is small. Powell was part of former President Donald Trump’s regulatory team that worked to weaken the Dodd-Frank bank regulations enacted after the 2008 financial meltdown, in order to free “smaller” banks from the standards applied to the largest, systemically important, banks. Given the large and rapid increases in interest rates Powell engineered – probably the most significant since former Fed Chair Paul Volcker’s interest-rate hikes of 40 years ago – it was predicted that dramatic movements in the prices of financial assets would cause trauma somewhere in the financial system.īut, again, Powell assured us not to worry – despite abundant historical experience indicating that we should be worried. The news about the second-biggest bank failure in US history came just days after Federal Reserve Chair Jerome Powell assured Congress that the financial condition of America’s banks was sound. Once again, economic policy and financial regulation has proven inadequate. They discuss favorite horror films, the live show, and more.NEW YORK – The run on Silicon Valley Bank (SVB) – on which nearly half of all venture-backed tech start-ups in the United States depend – is in part a rerun of a familiar story, but it’s more than that. Includes brief interview and clips from the show.įorgotten Flix (10/26/14) – interview with Edward Douglas and Gavin Goszka. Covering the genesis and development of Midnight Syndicate Live! and more. News Herald (9/23/14) – feature and interview with Edward Douglas and Gavin Goszka. WKYC Channel 3 – television feature including footage from the show, brief interview, and images
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |