The Fed’s move to raise interest rates is a puzzling move. I watched Powell’s explanation about this decision and it makes no sense.
It makes sense if you are part of the cabal that is purposely trying to create a major crash!
About that bank thing:
Until very recently, a director of Signature Bank, which the New York State Department of Financial Services closed today, was Barney Frank, the former congressman from Massachusetts who is the “Frank” of the Dodd-Frank banking reform law. Frank, who is 82 years old, earned $303,267 in compensation in 2022 from the bank for his work as a director, according to the 2023 proxy statement. He earned $398,940 in 2021, and $158,020 in 2020, and $365,850 in 2019, and $413,750 in 2018, and $409,200 in 2017, and $393,750 in 2016, and $26,000 in 2015. For some of the time, he was on the risk committee. That is a total of $2,468,777. Perhaps he had some of it in Signature Bank stock that is now worth much less than it was before. Or perhaps he got out just in time. Either way, it is something for the former chairman of the House Financial Services Committee and the sponsor of the Dodd-Frank Act to have been paid nearly two and a half million dollars to serve as an “independent” director of a bank that has now been closed by the government.
It will be interesting to see what Barney Frank has to say for himself about this. In a February 2023 press release from Signature Bank, Frank was quoted as saying this:
Former U.S. Congressman Barney Frank, a Signature Bank board member since 2015, added: “Serving on the Board of Signature Bank during Joe DePaolo’s tenure as CEO has been a very positive experience. Joe combined financial expertise with excellent management skills and an unshakable commitment to fairness in the Bank’s dealings with its clients, colleagues and the broader community with whom I directly and regularly engage to advance my work in Congress. Having myself decided years ago to reduce my level of professional activity after decades of all-consuming work, I fully understand Joe’s decision to take on a less intense role in the Bank’s affairs. I am assured Signature Bank will continue to thrive, both by Joe’s welcome agreement to maintain a significant role in the Board’s work, and also based on my high regard for his designated successor, Eric Howell.”
Silicon Valley Bank took excessive risk by carrying a huge duration gap, and didn’t hedge that risk, leading to its insolvency when interest rates rose. The current system relies on uninsured depositors shopping around for a safe bank to incentivize bank prudence (regulators being often unaware of how close a bank is to insolvency were assets marked to market) by making risky banks pay a premium for uninsured deposits. If the government lets uninsured depositors off the hook this time, moral hazard intensifies yet again. Not closing insolvent banks promptly is what made it so costly to eventually resolve the S&L crisis in the 1980s.
The ultimate irony. You have to laugh before crying as its the same release!
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No mention of the CEO’s getting handsome bonuses a month before this happening?
2008 all over again! This smells really rotten to the core.
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Happens when DC get involved in any business including banking. Few remember before the banking crash where DC was demanding banks make loans in areas they would have avoided due to risk.
Woke banking
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Before its collapse Friday, wokesterism surrounded Silicon Valley Bank like a miasma.
The wokesterly attentiveness didn’t per se destroy that mid-sized bank, given that most banks play these games and the big ones are very loud about it.
As I noted earlier, Johns Hopkins University professor of economics, Steve Hanke, put his finger on the problem more precisely in an email:
[T]he real SVB issue was terrible banking and risk management that resulted in a massive duration mismatch between SVB’s liabilities (read: deposits) and its assets (read: long-dated bonds). The mismatch was stupidly not hedged. SVB was a poorly run bank, a disaster waiting to happen. Any regulator worth his salt should have seen this coming long ago.
Apparently, they didn’t know how to run a bank. They failed to understand their unique risk profile, they failed to plan for it through hedging their risk, which could have been done, and they failed to even hire a risk manager for most of 2022. They just did woke stuff, virtue-signaling for the political crowd, and donated to Democrats.
Now it comes to light from the Daily Mail that they really didn’t know much about banking at all:
Just one member of Silicon Valley Bank’s board of directors had a career in investment banking, while the others were major Democratic donors, it has been revealed.
Tom King, 63, was appointed to the board in September after previously serving as the CEO of investment banking at Barclay’s. He has had 35 years of experience in investment banking.
But he is the only one on the board with a career in the financial industry, while others are a former Obama administration employee, a prolific contributor to former House Speaker Nancy Pelosi and even a Hillary Clinton mega-donor who prayed at a Shinto shrine when Donald Trump won the 2016 presidential election.
The board is now being investigated by federal authorities after it failed to prevent the bank from going under while it was investing clients’ money in risky low-interest government bonds and securities.
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All planned?
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Is the disease spreading?
You bet.
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Essentially Janet Yellen and this administration along with the FED are a bunch of morons who don’t know WTF they are doing. Janet Yellen especially whiffed very badly many months ago when it came to addressing the inflation issue and the warning signs were pretty obvious. Remember when she said it was transitory? Yeah that idiot! So now what is happening is all because the ones in charge didn’t take the warning signs seriously enough to enact safeguards to prevent this from happening. Corruption has a price that the ones who caused the crisis are not the ones who will end up paying for it in the end.
The system is collapsing. All the signs are playing out similar to the great Depression and Black Tuesday of 1929 is right around the corner.
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Timelines?
Control matrix?
Free will?
Mark of the Beast?
(I’m not sure what they are)
“banks with less than $250bn in assets account for 50% of US commercial and industrial lending, 60% of residential real estate lending, 80% of commercial real estate lending, and 45% of consumer lending.” - GS
If you really want to shut down the economy, kill the small banks
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