How should one keep track of whether one's banks have non-negligible crypto exposure, so that one may move one's money to safer institutions well in advance of the inevitable disaster?
UncleOxidant
Can we get some kind of "Crypto Free" label/certification on banks and credit unions that don't engage in crypto activities?
tim333
I don't know about labels but if you call most banks and say do you accept money paid in from crypto transactions in my experience they'll say no thanks. It's getting quite hard to find ones that will touch it due to money laundering regulations / risks.
The fdic “call reports” are the ones you want. They have bulk download but it’s been ages since I looked at the format.
cyanydeez
how long until this report is made efficient by removal?
e40
Exactly. I don’t get the end game here. People are going to lose a lot of money.
Incipient
Mum and dads are going to lose a lot of money. The vast majority of decision makers will get advance notice of anything problematic, and move out.
koolba
This is what a proper balance sheet is supposed to address. It’s fine to have different tiers of assets and liabilities as long as the net capitalization requirements for the parts are valid.
kylehotchkiss
My spider sense tells me Wells Fargo will be one of the first to go all in, they've generally been an org that makes solid, future-focused decisions right?
dist-epoch
Empirically, banks which get involved in any kind of financial activity tend to blow up: lending money, mortgages, forex trading, interest rate trading, ...
mmooss
It's the opposite. Regulated banks do not blow up - that's the point of regulation, to prevent those disasters.
Every bank will get involved in crypto if they haven’t already
hx8
I remember when the entire point of crypto was to avoid banks
cykros
I remember when that was the point of Bitcoin. Just about every other crypto out there is more fiat than fiat itself is, between centralization and arbitrary issuance.
And it still is for many; the banks just sort of want to throw their two cents in about that. And it turns out, the worst thing about bitcoin is that it's money for enemies; nobody can stop them from doing so (well, aside from their own regulators). Sort of how something being permissionless works.
8note
design wise, crypto looks most like banks being wallets and blockchains being a way for banks to agree on interbank transfers
hcknwscommenter
Because there is no energy efficient way to do an interbank transfer right? Right?
That was never the entire point of crypto. That was probably a point you tethered yourself to avoid it, etc. You don't seem like a fan.
hx8
Quite the opposite actually. In 2008-2010 most of the conversations I was involved with around crypto were around how dangerous fiat currency can be, and how valuable it is to have an algorithmically scarce resource that couldn't be printed by a central bank while still enabling digital transfers. The conversations were steeped in lack of trust of central banks, and it felt like a techno-splinter group of the Occupy movement. What conversations around crypto were you having during this time?
Mostly I was surprised by the indecision to modify the original bitcoin protocol to allow for more transaction throughput and the vast amount of energy that the bitcoin blockchain ending up consuming. Furthermore, while I understood the potential for fraud I was not expecting both the volume of fraudsters and the scope of some individual frauds.
UncleOxidant
And now the crypto is going to be in the banks.
UncleOxidant
Every bank? I suspect that at least a few banks will be prudent. I hope there's some way to tell which banks are heavily into crypto and which aren't.
thegreatpeter
Every bank. Stable coins like USDC (Circle) are going to continue growing! It processes billions of dollars of payments each year.
Retric
Most banks specialize quite a bit, they aren’t going to jump in unless crypto gets 100x as large as it is now and the growth just isn’t there.
tim333
Most are not keen due to anti money laundering.
Lerc
Empirically, a lot of early ventures into any area tend to blow up.
The first people to try are, almost by definition, the risk takers.
That is not to say they all blow up, or even that the ones that blow up do so because of this particular venture. Just high risk taking is correlated with both blowing up and trying the new thing first.
They may blow up from some completely unrelated risky venture.
mmooss
Regulated banks are designed specifically not to blow up, because they take the money of innocents, of taxpayers, and the rest of the economy with them. That was a cause of the Great Depression, the 'Great Recession' of 2008, and many similar negative events.
That's why the US created the Federal Reserve, deposit insurance (FDIC), and bank regulation - to prevent those things.
> They may blow up from some completely unrelated risky venture.
That's not the case with regulated banks.
TeeMassive
Half of the Great Depression was caused by tariffs.
tmpz22
It also pushed Japan to invade all of Asia because they were an island nation dependent on trade (and ironically had been an upstanding world citizen and significant member of the League of Nations).
bryant
> Half of the Great Depression was caused by tariffs.
The downvotes might be because it's unrelated to the discussion, but it's also not really wrong. The exact impact of the Smoot-Hawley Tariff Act probably can't be quantified, but it's well agreed that it contributed significantly to the extent of the depression itself due to the retaliatory tariffs triggered and the resulting drop in global trade. (Institutional access needed - https://www.cambridge.org/core/journals/journal-of-economic-...)
Empirically, a lot of people who go to casinos also go bust.
phkahler
Statistically everyone who goes to casinos for a long time loses.
bluGill
All the casino employees win despite going for a long time. Even when they lose they win - my cousin repairs slot machines, at the end of every shift he gets paid to lose the last of his test budget.
Lerc
Yes, but you can't then say that they went bust because they went to the Bellagio.
int0x29
Most of those people aren't gambling with other people's money that they have a fiduciary obligation with.
phtrivier
Well, the writing was on the wall.
We'll love bailing out the crypto scammers like we bailed larger banks.
None of us will benefit. Those who will, well, good for them, I suppose. That big pool will surely be full of, wet water, I suppose ?
It's not like anything matters anymore, right ? Enjoy !!!!
api
Irony: the first Bitcoin block has a link to an article about the bank bailouts, highlighting how it was created to be an alternative.
What started as an attempt to get away from the worst kinds of financial capitalism turned into an absurdist parody of it.
A take away of mine from the whole saga is: it’s actually very hard to get money to do useful things.
Money “wants” to scam, pump and dump, and most of all to gamble. A casino is what every financial system “wants” to become. Take away the regulations and rules and casinos is all you get.
I feel like a loose analogy can be made with trying to build a heat engine, to get energy that “wants” to just dissipate into entropy to do useful work.
Maybe there’s some kind of weird connection there. Useful investments are a lot harder — meaning less thermodynamically favorable, less likely to exist, lower entropy — than scams and bullshit and gambling. If money has an easy way to flow why would it take the hard way?
phtrivier
Interesting parralel, i'll go even further: given that the quantity of speech is infinite, but only a statistically insignificant part of it corresponds to truth, does it mean that truth-seeking is also going against the laws of thermodynamics ?
api
Probably. An infinite amount of bullshit can be created for free, but checking it is expensive. Actual truth gathering is also very expensive.
miohtama
For the context, here is the Financial Services Committee hearing on the topic, and what led to these events
It's crazy how America is just devolving into an interlocking set of ever more obvious financial scams.
malfist
It's called the American dream because you have to be asleep to believe it
FloorEgg
You say that as if it hasn't been going on for at least decades. I'd wager that there's some perspective that could argue it's a default mode of society and financial systems, that occasionally is hard to notice during rapid increases in prosperity.
mmooss
It hasn't been going on for decades. Prior banking crises were because of holes in regulation (and of course bad behavior by banks) that were unknown to the public, regulators, and most of the banking industry. Regulators didn't give the green light to participate in highly risky activities that the public was already aware of.
There is always risk - everyone takes some risks - but the matter of degree is everything. Some people risk crossing the street against the light, some people go skydiving, some people climb in Yosemite without a rope.
FloorEgg
I wasn't talking about risk, I was talking about fraud. There's a lot of fraud going on, and probably always has been and always will be. It becomes obvious when the pie is shrinking, and it's hard to notice when the pie is growing rapidly.
You're using a straw man about risk to argue against my point instead of addressing it directly.
Sure the fraud methods evolve, but the idea that it's some new recent phenomenon is what I'm arguing against.
mmooss
It's the same mistake misconceiving of fraud rather than risk: The issue isn't its existance - of course there will be some somewhere - but the degree. It's like saying it rains everywhere - which is true - so everywhere is the same in terms of drought, floods, etc., and we shouldn't build dikes, storm sewers, water storage, etc. It's nonsensical.
The argument also fails logically: If there is all this fraud, why would we be seeking more? Someone just told me the US should invade Mexico because there has always been warfare. Same bizarre argument.
Let's minimize fraud and warfare, not increase them dramatically (because there has been fraud and warfare before).
I mean, I guess it did peak in 2008, and also in the S&L scandal in the 80s, but still bitcoin serves no conceivable practical purpose. At least CDOs in principle were supposed to get people homes even if they were mostly a scam.
chews
No, a CDO by definition is a rehypothecation of an asset that really didn't need it, it was just a means to let others bet on what seemingly was a sure thing until it was not. Not only was the underlying security, it's derivative, and an insurance product to boot, that's why insurance companies also got bailouts.
This massive failure is what created the need for bitcoin, a means in which to trap energy (you need to spend money to make bitcoin) and store/move it digitally, then you get the benefit of a visible record of transfers and stores.
As a silvergate, signature, and SVB customer they didn't hedge their t-bill duration risk properly, experienced a co-ordinated bank run and had to sell their assets off at a discount, making them insolvent.
mmooss
CDOs allowed more finance to flow to housing, which in itself is a good thing - we need more housing. The problem was that the investments were highly risky - to the point of almost certain disaster - and regulators and most of the financial industry overlooked it.
But securitizing housing finance isn't in itself a bad thing.
> This massive failure is what created the need for bitcoin
How did the 2008 financial crisis create a need for cryptocurrency? How does it solve the problem of unregulated, high risk financial activity? How does it stop those things from tanking the whole economy? It would seem to make regulation even harder.
"need for bitcoin" I don't get this. There is no need for bitcoin. You can have a visible record of transfers and stores without bitcoin. Heck we already do. Any old database will do. You can even write in COBOL or ALGOL
viraptor
> so long as they manage their risks appropriately.
One of these days, just like most bitcoiners today have, the government is going to learn the hard way that bitcoin and crypto are not the same, and should not be treated the same. One has no issuer, the other has them. One has an immutable ledger, the other is full of examples of rollbacks and even lost ledgers (lookin' at you XRP). One is peer to peer, the other has a small in group calling the shots on protocol changes, due to node running being out of reach of consumer hardware. Heck, a lot of them don't even try to hide this, using proof of stake (read: oligarchic operations) rather than proof of work, which was the crux of how bitcoin was made to be trustless.
But like I said, this is something most bitcoiners had to learn the hard way, and the government and institutions are new to this game. With any luck they'll figure it out quickly, but it might be tough given how much lobbying money is being thrown around by the issuers of these shitcoins. Note how many CEO's we're seeing in these crypto summits...and be reminded that you'll never see the CEO of Bitcoin anywhere.
guelo
Crypto VC's purchase of a seat at the Trump oligarchy circle is certainly paying off.
tim333
In other news:
"World Liberty Financial, the cryptocurrency company started by Donald J. Trump and his sons, announced on Tuesday that it was planning to sell a digital currency called a stablecoin..."
How should one keep track of whether one's banks have non-negligible crypto exposure, so that one may move one's money to safer institutions well in advance of the inevitable disaster?
The fdic “call reports” are the ones you want. They have bulk download but it’s been ages since I looked at the format.
See my comment in this same subthread: https://www.hackerneue.com/item?id=43510850
The normal procedure is that the blown up bank is sold to another bank and the _depositors_ are bailed out by deposit insurance.
There are ~4500 banks in the US and about 2 blow up a year https://www.fdic.gov/bank-failures/failed-bank-list
And it still is for many; the banks just sort of want to throw their two cents in about that. And it turns out, the worst thing about bitcoin is that it's money for enemies; nobody can stop them from doing so (well, aside from their own regulators). Sort of how something being permissionless works.
Mostly I was surprised by the indecision to modify the original bitcoin protocol to allow for more transaction throughput and the vast amount of energy that the bitcoin blockchain ending up consuming. Furthermore, while I understood the potential for fraud I was not expecting both the volume of fraudsters and the scope of some individual frauds.
The first people to try are, almost by definition, the risk takers.
That is not to say they all blow up, or even that the ones that blow up do so because of this particular venture. Just high risk taking is correlated with both blowing up and trying the new thing first.
They may blow up from some completely unrelated risky venture.
That's why the US created the Federal Reserve, deposit insurance (FDIC), and bank regulation - to prevent those things.
> They may blow up from some completely unrelated risky venture.
That's not the case with regulated banks.
The downvotes might be because it's unrelated to the discussion, but it's also not really wrong. The exact impact of the Smoot-Hawley Tariff Act probably can't be quantified, but it's well agreed that it contributed significantly to the extent of the depression itself due to the retaliatory tariffs triggered and the resulting drop in global trade. (Institutional access needed - https://www.cambridge.org/core/journals/journal-of-economic-...)
We'll love bailing out the crypto scammers like we bailed larger banks.
None of us will benefit. Those who will, well, good for them, I suppose. That big pool will surely be full of, wet water, I suppose ?
It's not like anything matters anymore, right ? Enjoy !!!!
What started as an attempt to get away from the worst kinds of financial capitalism turned into an absurdist parody of it.
A take away of mine from the whole saga is: it’s actually very hard to get money to do useful things.
Money “wants” to scam, pump and dump, and most of all to gamble. A casino is what every financial system “wants” to become. Take away the regulations and rules and casinos is all you get.
I feel like a loose analogy can be made with trying to build a heat engine, to get energy that “wants” to just dissipate into entropy to do useful work.
Maybe there’s some kind of weird connection there. Useful investments are a lot harder — meaning less thermodynamically favorable, less likely to exist, lower entropy — than scams and bullshit and gambling. If money has an easy way to flow why would it take the hard way?
https://financialservices.house.gov/news/documentsingle.aspx...
There is always risk - everyone takes some risks - but the matter of degree is everything. Some people risk crossing the street against the light, some people go skydiving, some people climb in Yosemite without a rope.
You're using a straw man about risk to argue against my point instead of addressing it directly.
Sure the fraud methods evolve, but the idea that it's some new recent phenomenon is what I'm arguing against.
The argument also fails logically: If there is all this fraud, why would we be seeking more? Someone just told me the US should invade Mexico because there has always been warfare. Same bizarre argument.
Let's minimize fraud and warfare, not increase them dramatically (because there has been fraud and warfare before).
This massive failure is what created the need for bitcoin, a means in which to trap energy (you need to spend money to make bitcoin) and store/move it digitally, then you get the benefit of a visible record of transfers and stores.
As a silvergate, signature, and SVB customer they didn't hedge their t-bill duration risk properly, experienced a co-ordinated bank run and had to sell their assets off at a discount, making them insolvent.
But securitizing housing finance isn't in itself a bad thing.
> This massive failure is what created the need for bitcoin
How did the 2008 financial crisis create a need for cryptocurrency? How does it solve the problem of unregulated, high risk financial activity? How does it stop those things from tanking the whole economy? It would seem to make regulation even harder.
> rehypothecation
?
How is this part enforced? Self review?
But like I said, this is something most bitcoiners had to learn the hard way, and the government and institutions are new to this game. With any luck they'll figure it out quickly, but it might be tough given how much lobbying money is being thrown around by the issuers of these shitcoins. Note how many CEO's we're seeing in these crypto summits...and be reminded that you'll never see the CEO of Bitcoin anywhere.
"World Liberty Financial, the cryptocurrency company started by Donald J. Trump and his sons, announced on Tuesday that it was planning to sell a digital currency called a stablecoin..."
I don't suppose that could be related?