"Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and we're certainly not looking. And the reforms have been put in place means that we're not going to do that again ."
Meanwhile, there's still a risk of contagion. With the government rescuing Signature and Silicon Valley Bank depositors, not all the downside has been contained , according to Wharton finance professor, Itamar Drechsler.
"One obvious issue is that the plan treats the two banks, SVB and Signature, as a special case, in the hopes that this will not have to be done for many other banks," Drechsler told me. "But then it leaves the incentive for uninsured depositors at other banks to run."
"What we understand so far is that this capital was completely mismatched from a duration perspective, as the bank invested in longer-dated treasuries and other fixed-income securities such as mortgage-backed paper," Gateway Credit investment chief Tim Gramatovich told me.
"This continued on even though the Fed was telling everyone for the past year that rates are going up. For a $200 billion bank to have no interest rate risk controls is staggering."
How do the bank failures of the last few days impact your outlook for the market and for Fed policy? Tweet me ( @philrosenn ) or email me ( firstname.lastname@example.org ) to let me know.
In other news:
2. US stock futures fall early Tuesday , as investors brace for the key inflation report which could signal whether the Fed will pause rate hikes this month. Meanwhile, shares of First Republic Bank were up more than 20% in premarket, after closing down nearly 62% Monday. Here are the latest market moves .
3. Earnings on deck: Volkswagen, Guess?, and more, all reporting .
4. Goldman Sachs named the best growth stocks to buy into as SVB troubles rock the industry. With financial stocks taking their sharpest losses in years, the firm's strategists laid out the 12 names on track for strong earnings growth. See the full list .
9. The chief investment officer of Morningstar Wealth's Americas unit said investors focused on the next recession are missing the point. She said, instead, the priority should be on certain investments that can bring profits in any economic landscape. Here are the areas she's recommending to buy into right now.
10. This chart shows how the failures of SVB and Signature compare with other major collapses. The former's $209 billion in assets at the time of its collapse makes it the second-biggest banking failure ever. Dig into the numbers.