Why Banks Fail

Someone on Twitter said it best:

“If taxpayer money bails out a bank, the bank should become publicly owned.

You can’t privatize the profits, but socialize the losses.”

Didn't Iceland let banks fail, and actually sought to prosecute the bankers? Would've been nice to hear about that approach

The negative impact of SVB and SI debacles has been reflected in the regional bank ETF (KRE) which has witnessed a decline of over 20%. This event has triggered contagion effects, dragging the entire market lower. However, historically speaking, a localized and narrow contagion of this nature presents an opportune time to invest in strong, financially stable companies with substantial cash reserves on their balance sheets.

feel bad for the lowest paid workers that may be affected, but not CEO's. A lot of them have created this abusive corporate pay structure where they are paid 300 to 400 percent the salary of entry level workers. Most add very little value. They posture and perform with speeches, meetings, and excessive travel to provide the appearance of working hard. It's a con.

You basically walked through the reason why we need to have public banks without every realizing that we need to have public banks. Our banking system is pretty far from: "leads us to all work together for the prosperity and growth of society".

I think you hit the nail on the head - saving the bank is only good in the short run. In the long run it erodes all senses of accountability and a greater loss overall.

That "The Big Short" outro though in the end 👌- great stuff, Johnny.

The fact that this is still legal somehow is astounding. Great video as always Johnny!

I blame the FEDs for this, because in the end they benefit by either buying off the failed banks cheaper or something. <The fed can print credit as long as someone will borrow it into existence, but they cannot print product (or production).>

With changes in the economy leading to instability in the stock market, some individuals may face a decrease in their investments in an effort to benefit from the current market conditions, I am considering liquidating my $725k portfolio consisting of bonds and stocks. Someone else in the same situation? Please tell me in the comments!..

"The reality is that we don't have to worry." Spoken like a true economist. Someone who is looking at the system as a whole, but forgetting about the extreme inequality and poverty that this system is, relentlessly, creating.

After a horrendous 2022, shell-stunned financial backers have misfortunes to recover and a lot to consider, as an expansion report and a pile of different information did close to nothing to change assumptions that the Central bank would probably keep climbing interest rates regardless of whether the economy dials back, And that implies more red ink for portfolios for the principal quarter of year 2023. How might I benefit from the ongoing unstable market, I'm currently at a junction choosing if to exchange my $250k security/stock portfolio.

Hey Johnny, one key detail you left out: The FDIC sold all the assets of SVB to pay the account holders, not the shareholders (who were left out to dry). So this is a MASSIVE victory for everyone except the greedy SVB owners. This is how the system should work, and we should celebrate that we found a way to punish greed while ensuring people's money is safe.

Props to you for making an amazing video in record time! People need to hear this stuff!

It’s really hard to decide on this channel but this is one of the best useful content of the channel.
Thank you and your wonderful team.

Johnny I love how balanced your content is and how you strive to keep growing. Keep it up. Definitely one of the best creators on YouTube

One other aspect that should be considered is public and institutional confidence that the FDIC will be able to meet the demands of the next bank failure. Like with the 10% deposit requirement, the FDIC collects insurance payments from member banks that is only a small fraction of the total assets covered by the insurance. It also depends on only an extremely small number of bank failures at any one time.

Johnny another banger. Keep up all the good work. You are far and away my favorite journalist. Until I can afford to pay for your subscription I will be liking and sharing everything. Thank you so much for everything you and your team do

I like how these people who tell us "don't make bad decisions with your money, or you will suffer the consequences ." are the same people WE have to bail out when THEY make the bad decisions. Glad we all get to play the same game. SMH

A reasonable option is that when the government bails out a bank, they should also get certain amount of stock options - essentially owning part of the bank, so that can get a return when the bank recovers. And then let the bank slowly buy those stocks back over a long period of time.