Banking Crisis: Weekend fun starts from Friday, then why are bankers nervous from Friday? – everyone loves friday but why bankers are afraid of it
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Market commentator Kobeissi Letter said in a tweet that most banks sank on Friday itself. For example, on March 14, 2008, there was a cash crisis on Bear Stearns. It was a Friday. Similarly, Friday was the last trading day before Lehman Brothers declared itself bankrupt. It is a matter of September 12, 2008. Washington Mutual was taken over by regulators on September 26, 2008, the biggest bank collapse in US history. Coincidentally, that day was also Friday. Recently, on March 10, the Silicon Valley Bank of America was taken over by the regulators. That day was also Friday. It is the second largest bank collapse in US history.
More than 26,000 banks drowned
Similarly, $10 billion was withdrawn from Signature Bank on March 10 itself. That day was Friday. Two days later, the US regulators took it into their possession. UBS bid on March 17, 2023 to save Credit Suisse from sinking. That day was also Friday. According to data from the US Fed Reserve, between March 8 and 22, US banks lost deposits worth $225 billion. Last week this figure stood at $126 billion. It is clear from this that the banking crisis is not completely over yet. Over 26,000 banks have failed in the US in the last 100 years. In 1920, the number of banks in the country was 31,000, which has come down to 4,200 in 2022. Even now America has the largest number of banks in the world.
When a bank is in bad shape, regulators don’t want to do anything that could create panic among customers. That’s why they calmly plan a takeover and do it over the weekend. The Federal Deposit Insurance Corporation (FDIC) has the responsibility of taking over the sinking banks in America. According to its spokesperson David Barr, earlier most banks were closed on weekends. This would have given the FDIC 60 hours to do its job. Then a team of 45 to 6 people used to enter with printers, computers, copiers. But now smaller teams are on site. Most people work from home or office.
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weekend disaster
These teams stay awake all night sifting through the accounts of the bankrupt banks to find out which assets can be sold. The purpose behind this exercise is that everything should be rectified before the market opens on Monday. Usually, before the market opens on Monday, the new owner of the bank comes to the fore. As we saw in the case of Credit Suisse. The Swiss government was trying to get everything right before the market opened on Monday. Eventually his efforts paid off and Credit Suisse was sold to rival UBS.
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