NY Fed rescues overnight lending market with $53B

Re:NY Fed rescues overnight lending market with $53B by mgraczyk on Tuesday September 17, 2019 @05:32PM (#21000300)

Aside from the fact that you can easily borrow money for lunch in a variety of ways, the main difference is that banks almost never default, compared to individuals.

Only one bank has failed in the US in the last two years.

https://www.fdic.gov/bank/individual/failed/banklist.html

The real risks are systematic (many banks failing), not that an individual bank will fail.

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Re:NY Fed rescues overnight lending market with $53B by taneq on Tuesday September 17, 2019 @05:45PM (#21000409)

This feels like a circular argument: Banks get bailed out, because banks always repay their loans, because banks can’t go broke, because banks get bailed out.

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Re:NY Fed rescues overnight lending market with $53B by mgraczyk on Tuesday September 17, 2019 @05:50PM (#21000445)

Whether or not bank bailouts were prudent is a matter of debate, but unlike individuals, default is rare and overall bailouts were repaid quickly.

https://www.politifact.com/new-hampshire/statements/2012/oct...

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Re:NY Fed rescues overnight lending market with $53B by mywittyname on Tuesday September 17, 2019 @06:00PM (#21000525)

Not really. It's more like, when a bank fails, there's a system in place to ensure a quick, transparent sale of assets to another financially sound institution.

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Re:NY Fed rescues overnight lending market with $53B by kortilla on Tuesday September 17, 2019 @06:07PM (#21000582)

No, banks don’t get bailed out. That’s the point. These aren’t being bailed out each night.

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Re:NY Fed rescues overnight lending market with $53B by ldayley on Tuesday September 17, 2019 @05:51PM (#21000456)

This is true- but for perspective in 2010 around 100 U.S. banks went under (actually seized, closed, and merged out by the FDIC).

But yes, it’s far easier to get funded as a bank than an individual, mostly because there are laws, institutions, and processes to try and remedy problem banks if trouble happens and individuals are really on their own to find advice and resources.

EDIT: I was wrong, according to FDIC it was 157[0].

[0]: https://www.fdic.gov/bank/historical/bank/

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Re:NY Fed rescues overnight lending market with $53B by cptskippy on Tuesday September 17, 2019 @05:56PM (#21000505)

> Only one bank has failed in the US in the last two years.

That's not really that comforting, especially when there were 8 failures in 2017. 2018 was the first time since 2006 that there wasn't a bank failure and multiple bank failures. 2006 was also the last time we had consecutive years without a bank failure.

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Re:NY Fed rescues overnight lending market with $53B by jfk13 on Tuesday September 17, 2019 @06:14PM (#21000629)

I wonder: as a percentage of the total number of banks, how does this compare to individual bankruptcies as a percentage of the total population?

From a quick search: apparently in 2017, there were 767,721 non-business bankruptcies in the US. That's about 0.236% of the population.

And that year, there were 4,909 banks. 8 failures would represent 0.163% of them.

So it looks like individuals were a bit more likely to go bust than banks in 2017, but those figures aren't really all that different.

(I haven't checked exactly what these figures mean, or how authoritative they are. Just wanted a ballpark idea...)

OK, we probably should exclude children from the calculation of the individual bankruptcy rate, which would make it look rather worse. Still, the difference between individuals and banks isn't as dramatic as I'd have expected.

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