stevenkelly49.bsky.social - Profile | ThreadSky | a Reddit-style client for Bluesky

A new FDIC disclosure shows the text of its 2023 "systemic risk exception" board resolution to rescue the SVB/Signature uninsured depositors. As noted below, the resolution included First Republic, which wasn't ultimately closed for another 6 weeks:

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In fairness, it's so expensive because it's the first airplane in history to be made entirely of listening devices

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Bloomberg "suffered widespread disruption on Wednesday morning that prevented traders from accessing live pricing and pushed back UK and EU sovereign debt auctions."

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"What Has Changed Since Silicon Valley Bank Collapsed? Not Much."

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Brazil's central bank (BCB) has announced swap agreement w/ the PBoC. But, not to lose any friends, the press release specifically mentions also having access to the Fed's FIMA facility, "which allows the BCB to access US dollars through a repo operation." Translated:

submitted 10 days ago • 1 comment

Credit Suisse was a bank from which a thousand case studies will bloom. Now out in the Journal of Financial Crises—with Jack French and Owen Heaphy—we take a look at the Swiss government's emergency liquidity assistance, which Credit Suisse drew on for over $180 billion:

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There are three certainties in life: death, taxes, and Credit Suisse somehow avoiding both

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“The secondary market will hit record levels this year with deal volume in the range of $162 billion to $182 billion as private markets continue to expand and LPs look for liquidity, according to Evercore Inc. That’s expected to lure increased capital…”

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“Biggest bounce-back ever”

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Trump's tariff and Powell attack retreats have calmed markets, but if things go off the rails again, here's what a range of experts believe will be the central bank toolkit to tame disorderly markets.

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The IMF Global Financial Stability Report on the importance of the dollar swap lines, specifically for Europe:

submitted 29 days ago • 1 comment

Great to hop on the UBS podcast to discuss "the state of financial stability." Lots on the usual suspects: Treasury market, private credit, etc. Also, why I don't think the weakening of the dollar represents a changing of the "flight to safety" order (yet, at least):

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New paper: "Ad Hoc Emergency Liquidity Programs in the 21st Century" w/ Vincient Arnold, Greg Feldberg, & Andrew Metrick How do policymakers design emergency rescue loans? And how should they? We survey 22 high-profile, modern emergency loan cases: elischolar.library.yale.edu/journal-of-f...

submitted 37 days ago • 1 comment

Checking on the 10yr yield like

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Less-known of the SVB & Signature rescue weekend, policymakers had prepared a bridge bank and invoked the "systemic risk exception" for First Republic too. But First Republic stayed open & soon got $30bn from other banks. New case study on that rescue w/ Salil Gupta & Jack French:

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The government (in)famously did not provide a rescue loan to Lehman. The Fed did, however, lend substantially to the firm dealer subsidiary. @ayogeorge.bsky.social & I have a new case study on this intervention, which also squares that apparent inconsistency. In the Journal of Financial Crises:

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Still a ways away from an inter-meeting Fed cut:

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“Tether’s CEO says his $144 billion stablecoin is good for the U.S. dollar. Is he right?”

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The Fed released 2023-Q1 discount window data today. All the largest borrowers (pictured) were the crypto/VC banks highlighted in the paper below: SVB, Signature, First Republic, PacWest, & Western Alliance. One additional bank sneaks in at the bottom: Customers Bank—another crypto bank.

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Selling shovels in a gold rush. US Banks Finance Their Own Competition to Tune of $1 Trillion

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Thanks to the 1050 Bascom students/staff for having me back on our @uwpolisci.bsky.social podcast. We started with tariffs & the Trump economy, but also ranged across topics including 🇺🇸 power, transatlantic relations, Musk/DOGE & our ongoing collapse into competitive authoritarianism, &...pirates.

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Systemic ‘Bank Run’ Risk Hangs Over Stablecoin Bills in Congress

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European officials beginning to wargame what it would look like if the Fed pulled their swaps under political pressure. The Fed got the State Dept's OK for each of its swap lines in 2008, particularly important for EM ones. Unclear tho if it'd pull one of the standing ones from Europe, Japan, etc.

submitted 59 days ago • 3 comments

Thought-provoking! "Rushing to Judgment and the Banking Crisis of 2023" by Steven Kelly and Jonathan Rose. "This article critically reviews the 2023 banking crisis with the benefit of two years of hindsight." www.chicagofed.org/publications...

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You can see why "regional banks," the midsize banks scattered across the country, took umbrage at those who took to calling 2023 the "Regional Bank Crisis":

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NEED the @mcopelov.bsky.social take on this...

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Our details here on the failures of Signature Bank and Silvergate Bank can also hopefully put the “debanking” debate into some more context. Have a look:

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#econsky

submitted 80 days ago • 1 comment