Matt Levine is the best.
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Another failure
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Inconsistent story – there can never be a run on the bank if the bank holds all customer deposits and does nothing with them.
Suppose you purchased CDs in your brokerage account from one of these regional banks and the bank eventually goes belly up. If you have less than $250K in your account, would you be made whole?
Yes. It might take a bit longer to get your cash, but all CDs issued by FDIC/NCUA institutions are insured up to their respective limits. Doesn’t matter if you buy through a broker or purchase direct.
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Good article on the soundness of most banks in terms of capital ratios, interest rate sensitivity, etc
And on the Fed
The Fed reads what you read, they see the press, they see the charts, they don’t want to be the idiots who break things either. They don’t want to be the idiots that caused GFC 2, but they also don’t want to be the idiots who let inflation get out of control and go down in the history books for that either. So dammed if you do. Dammed if you don’t. What do you do? They stall here for a while. And this is the road to sustained high inflation.
We have 6% inflation but the Fed won’t raise rates higher because of 3 banks failures, two of which the SEC wanted to shut down anyways to get rid of cryptocurrencies. We won’t see an official policy change, but the Fed will now have to let inflation run at 5-6% or whatever and not do anything about it. Down the road there they will write an economic study about how it is fine for the new inflation target to be in a range of 3-5%.
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This means that all nominal treasury securities, bank CDs and savings accounts have negative real rates. And that is not even taking into account that the bureau of labor statistics is cooking the books on their inflation figure.
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Senator Warren is publicly putting pressure on Chairman Powell to keep rates at current levels or even lower them. A smoke screen, IMO, as politicians like her want to blame somebody else instead of admitting inflation has a lot to do with their free-money-for-the-masses policies.
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Assuming that the current Fed policy isn’t already affecting inflation does not make sense to me. It’s quite possible that the Fed doesn’t have to do anything at all from this point forward for inflation to come down to the target range. Just because the Fed doesn’t take some drastic action now doesn’t mean that their previous actions are not continuously having the desired effect.
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Quite possibly, but a terrible graphic. 
I didn’t read that anyone is assuming that. Are you assuming facts not yet in evidence?
It’s also quite possible that Jesus will descend from Heaven and make monetary policy the last think on anyone’s mind. I mean you can’t really rule anything out, but why bring up such improbabilities?
You are absolutely right. Following your logic, they should have quit in April of 2022. Their previous action(s) would continuously have the desired effect. 
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They’re afraid that if they don’t act reasonably decisively to lower inflationary expectations, those will become “entrenched” and then “everyone knows inflation is really 5%+ so I need that much raise every year” etc.
Sure at 5% rates inflation will come down, but maybe like 2-3 years from now. The equilibrium could be reset to 3-4% instead of 2-3% by then.
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SIVB there’s the takeover and man that’s gonna leave a mark
$20B hole in the FDIC fund and counting. The buying bank only took half their assets and did so at a 35% haircut to their valuation. The rest of the assets they wouldn’t take at any price, which sure doesn’t bode well for what the FDIC eventually gets when they liquidate.
The Feds are taking at least 80% of any downside on the bank’s acquired assets.
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I could swing a few deals with that kind of backstop.
Your responses do not make sense. My reply was about the quote xerty posted, in which the author alleges the following: “the Fed won’t raise rates higher because of 3 bank failures … the Fed will now have to let inflation run at 5-6%”.
So let me say the same thing I already said slightly differently – just because they won’t raise rates right now, does not imply that they will let inflation run at 5-6%, because inflation is already under the pressure of the current Fed rate.
I agree. Which is why I predict the Fed will overshoot with their increases - wherever rates peak, they wont stay long before they’ll need to start reversing course.
Powell and the fed say otherwise
https://finance.yahoo.com/news/wall-street-expects-fed-cut-201757416.html
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- First Citizens BancShares is acquiring $72 billion in Silicon Valley Bank assets at a discount of $16.5 billion, or 23%, according to a Sunday release from the Federal Deposit Insurance Corp.
- But even after the deal closes, the FDIC remains on the hook to dispose of the majority of SVB’s assets, about $90 billion, which are being kept in receivership.
- “The deal was getting stale,” said former Federal Reserve examiner Mark Williams. “I think the FDIC realized that the longer this took, the more they’d have to discount it to entice someone.”
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All told, the SVB failure will cost the FDIC’s Deposit Insurance Fund about $20 billion, the agency said. That cost will be borne by higher fees on American banks that enjoy FDIC protection.
How much would the cost be to the FDIC be if they had not agreed to cover all deposits including those above the 250k limit?
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Roughly $20B in losses estimated by the FDIC, which included anticipated markdowns on these assets that were supposedly marked at $210B as of EOY, so a 10% loss on assets and 100% loss on equity. Could be worse if I misunderstood how bad the write downs were,
They had $150B in uninsured deposits, so clearly the Feds wouldn’t have paid very much via FDIC except they wanted to bail out everyone. Maybe a quarter of that $20B instead since I think the depositors all get the same recovery rate, say 90% or whatever, but then the FDIC pays the rest up to 100% for the first $250k worth of deposits.
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