A few comments for today:
I think *most* of the media is getting confused / mixed up / dramatic about regulation vs. enforcement. This is not an issue of creating / needing new rules, as much as it is about figuring out "why" things weren't enforced with known information. SVB's balance sheet woes were known in Q3/Q4 last year. It wasn't a secret in the banking community, everyone just assumed it would work out with time. VCs running their own bank wasn't a scenario. There was plenty of enforcement that could have been taken in Q4, mainly forcing the bank to raise capital and it wasn't required.
Politicians will look for ways to say they "took action", but the core of this is to tinker with stress testing to give some validation to the enforcement mechanisms needed.
I also hope the FDIC Insurance issues can be worked out. Everyone should
watch this clip starting at 1:15, it's a smaller state senator asking valid questions to Yellen. I'm halfway impressed a Senator knew this issue well enough to ask the right questions. Any of the senators from states without a top 30 metro area, regardless of party, could have asked this question. The community bank cohert is not happy about being charged for bailing out a California based bank with VC depositors who ran their own bank, the same bank that co-invested in their companies for 20 years, with no consequences to the VCs. Those assessment costs are real.
Should depositors be able to choose to pay an additional fee for insurance? Should the cap just be raised again, like it was in 2008, from $100,000 to $250,000? Should the larger banks pay larger assessments since they've already been declared a SIFI? The moral hazard and taxpayer questions here are valid.
As for the market today and my concern in general?
$FRC is not looking good today. My decision to dabble back into these preferreds may not be good. Other banks may have found their floor.
Overall, I'm more concerned about credit standards tightening up even more. Banks are looking at a margin squeeze, more expensive capital, and new assessments at the same time. The best way to mathematically deal with this is to stop growing and be sure not to add incremental credit risk on top of it. If the consequence of this uncertainty is a "lending strike", we could be in a world of hurt.