📈 SVB failure triggers deposit flight out of the regional banks

“So I think there's a chance that if the federal government doesn't step in here, the whole regional banking system could be decimated, and you're just going to be left with four too big to fail banks.”

“Folks, when you look at the equity tier of these regional banks, people are liquidating the equity tier because they know that that is the first domino to fall if banks go into receivership. Please act accordingly. You can see it in the ETFs. You can see it in the trade flows. This is not a Silicon Valley problem anymore.”

“Because then you will see a lot of people trying to move money away from any institution that stores their money in some sort of security that's not 100% liquid like cash. And that's going to cause a massive run.”

“And I think what we know and what we're seeing is the next dominoes are already falling.”

“However, it has also now, I think, created a situation where people are less confident about them. And so the money flows are going from the regional banks to the systemically important banks, the SIBs.”

“Because if it's two trillion for everybody else but the top four, what's the gap for the top four? That looks like it's somewhere between a trillion and two trillion.”

“The banks are saying we don't have enough liquidity right now to cover our needs, which are highly volatile right now because basically depositors are moving out of community and regional and small banks into the big four so-called systemically important or CIP banks.”

“If you look at how well run Citi, B of A, Wells and JPMR relative and contrast them to the sub GSIBs, it's like night and day.”

“One was these long dated bonds having unrealized losses, which is causing problems in regional community banks. The second piece of it is the commercial real estate crisis, which I think is metastasizing right now, which is also going to be a banking crisis once all those unrealized losses come due.”

“And if that happens, they'll continue to be incredible stress on the banking system and more banks are going to break.”

“I mean, if you saw what happened around the whole banking crisis that I think is still going on in slow motion, I mean, the amount of animosity both towards the banks that went under and the idea of potentially bailing them out, and then also the animosity towards JP Morgan when it actually bought First Republic.”

“major US banks are facing large unrealized losses. Bank of America had unrealized losses of $131 billion on securities in Q3”

“Well, book value is a term that you need to put in quotes. So my question would be, what are the rules around the real mark to market? Because I think that when we talked about the banking crisis, the biggest problem was these guys were playing fast and loose with valuations.”