[testfoobar]

Between this and Janet Yellen's shaky answer to the Senate regarding deposit flight from community banks on Thursday, I think regulators are prolonging this crisis. Each solution seems designed to address the localized problem but does not consider systemic effects.

1: With this weekends actions in Europe, how will the AT1 bond market react tomorrow?

2: With Yellen's uninspiring answer on Thursday regarding deposits in mid sized banks, what will depositors / bondholders / shareholders do?

Regulators need to address the system as a whole.

Yellen:

https://www.youtube.com/watch?v=Bcvl104tyRY

https://www.cnbc.com/2023/03/16/svb-signature-bank-failures-...

[bradleyjg]

Yellen really fumbled the answer and she should have had some slick thing prepared but at the end of the day it isn’t the answer that was the problem. It was that the apparently no one thought through the second order consequences of the SVB depositor bailout. This even though the explicit legal requirement was that the government actors determine it was necessary to prevent systemic risks to the financial system.

[markus_zhang]

No sane regulator would want the bomb to explode on his/her own hands. Volcker might be an outlier but everyone else is sane.

[lmm]

Everyone's trying to prop the banks up enough, but not too much; there's a fundamental tension between preventing a panic and ensuring that those who were prudent or otherwise are fairly compensated.