Bank failures, bank runs and other musings | Page 5 | General financial discussion | Discussion forum

The goal is not to make it impossible for the bank to make money. The goal is a useful level of regulation that is likely to avoid disasters.

Details are important:
https://www.factcheck.org/2023/03/what-to-know-about-trump-era-bank-deregulation-and-bank-failures/

Loonie said
The goal is not to make it impossible for the bank to make money. The goal is a useful level of regulation that is likely to avoid disasters.

Details are important:
https://www.factcheck.org/2023/03/what-to-know-about-trump-era-bank-deregulation-and-bank-failures/  

Well written read.

Are percentages of "hot money" vs "slow money" of Canadian banks / unions public data? And how about the same for US banks?

P.S. Finally what happened with SVB non-insured deposits of over $250k? Was it only the stock holders that lost or also depositors over $250k too?

Speaking of bank runs… how do people feel about home trust liquidity and stability here in Canada at present? I have some money above the cdic limit there. Not a crazy amount above. Am I now being paranoid to withdraw the excess to leave it at 100k?

I never exceed the limit at Home, just peace of mind. And if you have a partner you can have 6 accounts there (Oaken) so that can help.

Unfortunately, its a business savings account so some limitations but its insured under hometrust which is the best option. In general Ive never been keen to go over CDIC limits but its not practical to open up numerous accounts for 100K due to more accounting and cost come tax time. Oaken generally has the best business savings account rates. I am in the process of opening a tangerine business account to play the promo games for the busines side now. Been waiting a week already to have it opened. Hoping for greener pastures. Ill just lighten the balance at Oaken to be safer.

Thanks for your responses everyone.

What was the rating on parent Home Capital in the months before it almost went bankrupt about six years ago?

And what was the rating on Silicon Valley Bank a month ago?

I don't know the answers, but the answers should give a good idea of the usefulness of ratings in detecting what is less obvious.

At the risk of repeating myself, it's not the things you see coming that will kill you (those you can avoid); it's the ones you don't see coming that are the problem.

butterflycharm said

Is DBRS the more accurate of all other rating agencies and why?

And do they just read the public records to make rating decisions or banks have to supply to them more info than they show publicly?

DBRS is one of ratings agencies recognized by regulators and investors. Others are Fitch, S&P, and Moody's.

It depends on the issuer. In the case of Home Trust, DBRS had access to non-public information for the latest rating action:

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

The rating agencies have been criticized (sometimes apparently with some merit) various times over the decades after bad things have happened, e.g. 2008 crisis, just to give one example.

And as informed estimates are not good enough for me with regard to my savings accounts and GICs portfolio (if I'm ok with risk I'm in the markets, otherwise why risk losing savings money for an extra few bucks of interest?) I just never exceed CDIC limits unless it's the big 5 or Tangerine, pretty much. Plus saves me having to spend any time analyzing debt ratings, reading financials, etc., things only a very few people are interested in doing.

I think rating agencies are paid by the banks they rate. Yes? No?

RetirEd said
COIN: News reports say Silicon Valley Bank has been allowing withdrawals since Monday, and no problems.
…

Silicon Valley Bank has been shutdown and gutted. According to the March 13 FDIC press release, deposit liabilities and most of the assets have been transferred out to a new bridge bank called Silicon Valley Bridge Bank NA:

Depositors will have full access to their money beginning this morning, when Silicon Valley Bridge Bank, N.A., the bridge bank, opens and resumes normal banking hours and activities, including online banking. Depositors and borrowers will automatically become customers of Silicon Valley Bridge Bank, N.A. and will have customer service and access to their funds by ATM, debit cards, and writing checks in the same manner as before. Silicon Valley Bank’s official checks will continue to clear. Loan customers should continue making loan payments as usual.

That USDC stablecoin fund can pick up its $3 billion, deposited with the former Silicon Valley Bank, at the new bridge bank.