Forward Guidance

The Return Of Bank Runs | Sheila Bair, Former FDIC Chair

May 19, 2023

57:15

Episode guests

Jack Farley

Sheila Bair

Highlights

AI Chapters

Episode notes

The Effect of Temporary Guarantees on the FDIC

02:24

The OCC's Role in the Bidding Universe

02:10

Introduction

3min

The FDIC's Role in Regulating Bank Capital

3min

The Impact of Basel III on Credit Risk

3min

The Problem With Instable Deposit Bases

3min

The Media's Role in the Bank Run

4min

The History of the FDIC

5min

The Instability of Money Market Funds

4min

The Perception of Too Big to Fail Banks

3min

The Effect of Temporary Guarantees on the FDIC

2min

10.

The Cost of Collateralized Borrowing to the FDIC

2min

11.

How to Make the Decision to Close a Bank

2min

12.

The Pressures on the FDIC to Not Press

3min

13.

The Systemic Risk Determination Grants the FDIC the Ability to Ensure Specific Banks Above $250,000

3min

14.

The OCC's Role in the Bidding Universe

2min

15.

The Systemic, Systemic Risk Count: A Letter to Jerome Powell

5min

16.

How the Government Forced Banks to Raise More Capital During the Great Financial Crisis

2min

17.

The Role of the FDIC in Financial Stability

4min

18.

The Importance of Slowing Down

4min

During her tenure as Chair of the Federal Deposit Insurance Corporation (FDIC) from 2006 to 2011, Sheila Bair managed over 300 bank failures, including the collapse of Washington Mutual in September 2008, the largest bank failure in American history.

Bair joins Forward Guidance to apply her vast experience to share insight on recent failures of Silicon Valley Bank, Signature Bank, and First Republic. Filmed the afternoon of May 18, 2023.

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Today’s show is brought to you by VanEck. Go to https://vaneck.com/ForwardGuidance

to access VanEck's Income Investing Yield Monitor.

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Follow @vaneck_us on Twitter, this episode's sponsor https://twitter.com/vaneck_us

Follow Sheila Bair on Twitter https://twitter.com/SheilaBair2013

Follow Jack Farley on Twitter https://twitter.com/JackFarley96

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Timestamps:

(00:00) Introduction

(06:37) Right Now, The Main Issue Is Interest Rate Risk

(12:56) What Causes A Bank Run?

(17:55) Are Bank Runs Faster In An Age of Mobile Banking?

(21:55) Van Eck Ad

(22:45) Money Market Funds and The Fed's Reverse Repo Facility Is Where A Lot Of Bank Money Is Going

(25:33) Risk Of Further Big Bank Consolidation

(29:51) Best Time To Shut Down A Bank Is Friday Night

(31:10) Federal Reserve Lending To Insolvent Institutions Increases The FDIC's Cost To Resolve Failed Banks

(32:53) How To Know When To Shut Down A Failing Bank

(34:51) "I Was Surprised At The Biden Administration's Level Of Involvement"

(37:12) The Systemic Risk Determination, Explained

(42:56) 2018 Loosening Of Regulation of Regional Banks

(47:35) Forcing Banks To Raise More Equity (i.e. sell stock)

(49:31) The Federal Reserve's Role As Bank Regulator

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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

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