There have been 562 bank failures since 2000

I’m surprised the author didn’t include a chart like this: <a href="https:&#x2F;&#x2F;twitter.com&#x2F;alistairmbarr&#x2F;status&#x2F;1634275645235793920" rel="nofollow">https:&#x2F;&#x2F;twitter.com&#x2F;alistairmbarr&#x2F;status&#x2F;1634275645235793920</a>. It shows how bad the SVB situation really is. It’s been very quiet since 2008 and its aftermath. Until now.

It&#x27;s not just SVB, but the title is a bit misleading. There&#x27;s been 22 failures since 2016 and 10 since 2018 and they&#x27;ve been really small compared to SVB. The article has this information so it isn&#x27;t a misleading article, but damn the title is misleading. The 562 number makes it seem like bank failures are really common.<p>These failures aren&#x27;t common, especially of SVB&#x27;s size. Washington Mutual is the only larger failure at the height of the 2008 financial crisis (47% larger). The next largest was IndyMac, but SVB&#x27;s failure is 6.5x larger than IndyMac (which also failed during the financial crisis).<p>As the article shows, there were many years of fallout from the 2008 crisis, but then bank failures became quite rare again.<p>The author believes that SVB will be acquired given that&#x27;s what happened to Washington Mutual. The author doesn&#x27;t talk about Wachovia and they technically were bought before failure, but they were bought as well. However, I&#x27;m less sure of this for SVB. WaMu and Wachovia had vast branch and ATM networks allowing Chase and Wells Fargo to hugely increase their footprint. SVB doesn&#x27;t come with that. Given that SVB has seen a run on its deposits and its reputation shredded, is it coming with enough stuff to be worthwhile? I guess it&#x27;ll depend on how bad its situation is. When Wells Fargo bought Wachovia, they essentially doubled in size and had the largest branch network in the US. WaMu essentially doubled the size of Chase. In both cases, it opened up huge new parts of the country to the acquiring banks. What does SVB offer? Existing relationships with tech companies which have now soured?<p>I think calling this &quot;not just SVB&quot; is misleading. SVB really stands alone as an extremely large failure and the only large failure since the end of the 2008 financial crisis. Maybe that will change in the coming weeks or months, but lumping them in with 562 other failures (most of which were a result of the 2008 financial crisis) is really misleading - especially for an article that is actually good.

All the numbers in the chart have a decimal point in the wrong place. Washington Mutual had $307bn in assets[1] (not $30.7bn), SVB had $209bn[2] (not $20.9bn), etc.<p>[1] - <a href="https:&#x2F;&#x2F;www.fdic.gov&#x2F;resources&#x2F;resolutions&#x2F;bank-failures&#x2F;failed-bank-list&#x2F;wamu-settlement.html" rel="nofollow">https:&#x2F;&#x2F;www.fdic.gov&#x2F;resources&#x2F;resolutions&#x2F;bank-failures&#x2F;fai...</a><p>[2] - <a href="https:&#x2F;&#x2F;www.fdic.gov&#x2F;news&#x2F;press-releases&#x2F;2023&#x2F;pr23016.html" rel="nofollow">https:&#x2F;&#x2F;www.fdic.gov&#x2F;news&#x2F;press-releases&#x2F;2023&#x2F;pr23016.html</a>

&quot;Bank failures&quot; are routine. Most banks are small. Small businesses make mistakes and fail all the time. Banks are just a special kind of business with a federally-mandated insurance regime and so fail in specific and spectacular ways. A smaller company that can&#x27;t make payroll files chapter 11 and gets acquired piecewise over several years. A bank that fails gets instantly seized by the FDIC.<p>SVB happens to be notable <i>here</i> because lots of HN posters are customers or employes of customers.<p>And it&#x27;s notable elsewhere because this is sort of a capstone on the current era of cheap VC money. The proximate cause may have been some questionable investment decisions, but the root cause of SVB&#x27;s failure is the fact that startup funding dried up.<p>And... is that maybe a good thing? Over the last few years, the tech community, and HN in particular, has been been almost entirely fixated on <i>funding</i> and not technology. We talk about &quot;founders&quot; and not products these days. Series B rounds and not launches. Companies get acquired before an MVC is ready. No one even <i>remembers</i> &quot;ramen profitable&quot; any more.

So I looked it up. As of September 30, 2022, there are 4,746 commercial banks in the US. That&#x27;s 11.8% failure in 23 years. That includes 2008.<p>Those banks total $23.6 trillion in assets. Looking at the tweet cited by ezekg, I&#x27;d eyeball that as about $1 trillion in assets in the banks that have failed in the last 23 years. So, 11.8% by number of banks, but only 4.2% by assets.<p>That&#x27;s still more than I thought. But the real question is, of those $1 trillion in assets, how much did people actually lose, and how much did either the FDIC or a taking-over bank cover? Anybody have that number?

Is that &quot;second largest bank failure of all time&quot; adjusting for inflation?

Seems like we have a systemic crisis every 5-7 years

IndyMac&#x27;s sale to OneWest was interesting, as OneWest was newly formed for the purpose of acquiring the leftovers of IndyMac.<p>&gt; On March 19, 2009, a seven-member investor group, IMB Holdco, led by Steven Mnuchin—which included billionaire Christopher Flowers, John Paulson, Michael Dell, and George Soros—purchased Independent National Mortgage Corporation (IndyMac Bank) of Pasadena, California for $13.65 billion from the FDIC and created OneWest from the remains of IndyMac, which then had 33 branches and $32 billion in assets<p>&gt; as of December 2014, the FDIC had already paid over $1 billion to OneWest Bank under the shared loss agreements it secured from the FDIC when it purchased IndyMac and La Jolla Banks, and that the FDIC expected it would pay another $1.4 billion.<p><a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;OneWest_Bank" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;OneWest_Bank</a>

One thing that&#x27;s kind of weird here is the peverse incentives. There are quite a lot of people going around insisting that the government has to step in and bail out the large depositors of SVB becuase if you don&#x27;t, well... then no small bank is safe! There should be a run on every bank! Which is kind of... you know. Scummmy. If your money is locked up in SVB its certainly convenient if the Fed feels it has to step in and bail you out even though SVB isn&#x27;t systemically important. So what you do is you make the argument that the system <i>will</i> collapse because there will be a run on every bank! But... the only thing that&#x27;s likely to cause a run on every bank is... you. You, running around shouting that no bank is safe. Real people are FDIC insured.<p>The problems with SVB are specific, not systemic, and there are other banks and they may also have this specific issue, but if they do then people will pretty quickly catch on (hint: these issues weren&#x27;t hidden). You can make a broader point, which is that SVB failing will impact a lot of silicon valley businesses, and you can do your best to argue those businesses are creating a fantastic new world and there worth saving (and definitely aren&#x27;t causing teen depression, minting billionaires who use their wealth to destroy free speech, and generally just enriching loathsome fraudsters), but then you are basically arguing for the Fed to step in and socialise the losses of douchebag libertarians. Fine, save SVB, funded by a 1-off 100% wealth tax on anyone worth over $10m in silicon valley. Welcome comrade.

I&#x27;m surprised no one is talking about what it takes to get a bank charter to begin with.<p>Starting in 2009 (iirc), the requirements changed to be so stringent that basically the only people who would be on the board of directors were people that lie about their kickbacks for being on the board. You&#x27;ll notice a sharp falloff of the banks being created after that time, and banking has become so consolidated now that if one of the majors goes under, the others are unlikely to be able to absorb the costs or losses.<p>I mean, who in their right mind would sit on a bank board, accept personal liability for decisions made, and be prohibited from receiving any kind of compensation for those risks (including just a basic salary).

My mom was a contracts law&#x2F;construction loan specialist at several diff banks (key bank, wells fargo, Wachovia, etc)<p>The horror stories from her experiences were nuts.<p>They are all bad.<p>I met a Giannini in San Mateo (I went to school with his (great?) grandkids in Tahoe (they use to be dropped off in a bently each morning to north lake tahoe HS...<p>The bank consolidation has been bad.<p>I met Giannini in San Mateo, and he was telling me how &quot;important family is&quot;....<p>It was tough to hear how the most important thing is &quot;family&quot; from a billionaire who has never struggled with money and owns Bank of America.<p>Fuck banks.

Trump and republicans increased the capital treshhold of banks from 50B to 250B where banks must comply with an FDIC stress test as defined by Dodd-frank regulations. A small bank like SVB would have probably been required to hold more capital and wouldn’t have gone bankrupt.

“This is normal” just like in 2008.

Meanwhile, the obligatory 40-year-old Silicon Valley Bank episode of The Simpsons TV series.<p><a href="https:&#x2F;&#x2F;m.youtube.com&#x2F;watch?v=OKEDivgNMaM">https:&#x2F;&#x2F;m.youtube.com&#x2F;watch?v=OKEDivgNMaM</a>

If only there were some sort of effective regulation to prevent this...

Pick 2009 as a starting date instead of 2000.

But with the other banks there never were six top stories at the same time on Hacker News&#x27; front page.

There were lots of earthquakes before 2004, and 2012, etc.

Yes just SVB. It was huge and we already know about WaMu.

these banks are connected to each other, secure yourself in physical assets until shitstorm is over, oh wait :)

This is total &#x27;whataboutism&#x27;. This bank failure is the second largest of all time in the US, and has a potential massive contagion with lots of ripple effects through the tech industry.<p>This <i>&quot;Not just SVB&quot;</i> and <i>&quot;There have been 562 other bank failures before&quot;</i> deflection doesn&#x27;t help those affected.

LMAO