My husband asked me why this bank liquidated so fast

I said one thing that could get a bank liquidated is debt ratio. I don't know why it has more debt than equity all of a sudden but I know why it collasped overnight: not have enough to pay for its interbank loans. Another reason is bank run, when depositors all rush to withdraw capitals for higher yield assets. Bank deposits are low yielding assets, bank will run out of money quickly. And the institutions can sense the danger the bank faces. So the massive withdraws are very dangerous for banks. Not small individual deposits but large investors. They can take away large deposits and they are very watchful. Small individual depositors are lazier on this.

The debt ceiling problem also applies to congress. How much debt can a country have to maintain its balance sheet? 

At least on paper, United States cannot have red all over the balance sheet. We have money, trillions of capitals. But cook the book is also important.

所有跟帖： 

• The bank's debt to asset ratio was already negative end 2022 -goingplaces- ♀ (1057 bytes) () 03/11/2023 postreply 18:34:06

• The high interest rate is one important trigger -elfie- ♀ (275 bytes) () 03/12/2023 postreply 06:57:52