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The Rational Walk's avatar

I wish I had seen this tweet from Bill Ackman before posting this article… the idea that (sophisticated) depositors with over $250K in a bank didn’t realize what they were doing seems crazy to me. Bailouts cannot be the perennial answer.

https://mobile.twitter.com/BillAckman/status/1634564398919368704

“By allowing @SVB_Financial to fail without protecting all depositors, the world has woken up to what an uninsured deposit is — an unsecured illiquid claim on a failed bank.”

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Max Rudolph's avatar

As an ALM actuary it always amazes me when bank regulators tell life insurers that banks do ALM better. All could improve. In today's environment too many are relying on rules of thumb that are no longer appropriate. Risk teams should all be running scenarios based on cash flows and market value in addition to those based on GAAP. Finance 101 gets forgotten as you get more sophisticated.

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