[DoodleBob]

Indeed, the current banking crisis has some parallels to 2008, says Neil Fligstein, a sociologist at the University of California, Berkeley who has extensively studied the financial crisis. “Banks are finding themselves with investments that are losing big money, and when depositors come in, they can’t turn them into something liquid fast enough to pay back people who want their deposits,” he says. “That’s what happened in 2008—people had all these mortgage-backed securities and no one knew what they were worth.”

There is a massive difference between 2008 - where capital bases eroded due to credit losses on either CMBS or residential mortgage loans - and 2023 where a handful of banks failed to accurately duration-match their assets and liabilities.

In addition, in 2008 the largest banks in the US were FORCED to take "bailout money." The closest thing to that in 2023 is what appears to be a quasi-managed rescue of First Republic.

Any article on banking where the chief Authority is a sociologist from UC Berkeley pushing a book he wrote, is highly suspect. But in this current environment, Deplorables seem to lap up the MSM, academics, and cranks from the left coasts. We may as well be DU.

[EBH]

Now they are just being ‘forced’ to take on the failing banks.

Nothing to see or understand here because it looks different from 2008 and even the 1930 mortgage crisis.

[Vermont Lt]

Do you think FR will be the end of it? The Fed moved rates up again yesterday, and that will impact the exact same thing that took out the last ones. Or do you think the $318b that was injected last week will float them?

[cgbg]

It is a bit more complicated than you presented it.

For starters some banks still do hold commercial mortgages—we are talking office buildings with very high vacancy rates.

The large banks have a wide variety of derivative holdings—easily susceptible to a wide range of counter-parties that could fail to meet their end of the deal.

That (plus the obvious interest rate risk—loaned long term, owe depositors short term) is the reason .gov had to step in to protect all depositors—the banks have—again—taken on more risk than they can handle—and large depositors trust them as far as they can throw them.

So—while the original article probably overstated the similarities to 2008 imho you understated it.