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Everyone loves Fridays. Unless you’re a banker, banking regulator, lawyer or journalist in the middle of a financial crisis.
That’s because when banks fail, they have a tendency to do so on Friday. See here, courtesy of a tweet from the Kobeissi Letter, a market commentator:
- Friday, March 14, 2008: Bear Stearns hit by liquidity crisis.
- Friday, Sept. 12, 2008: Last trading day before Lehman Brothers declares bankruptcy.
- Friday, Sept. 26, 2008: Washington Mutual seized by regulators marking largest bank collapse in US history. [Welllll, technically, regulators swooped in after the market close on Thursday evening and WaMu filed for bankruptcy on Friday.]
- Friday, March 10, 2023: Silicon Valley Bank seized by regulators, the second biggest bank failure in US history.
- Friday, March 10, 2023: Signature Bank sees $10 billion in withdrawals; seized by regulators two days later.
- Friday, March 17, 2023: UBS bids for Credit Suisse to avoid its collapse.
So, *Seinfeld voice* what’s the deal with Fridays?
The short answer: They’re a lot less messy.
Here’s the thing: Regulators would prefer not to freak out customers and spread panic. When a bank begins to wobble, regulatory authorities usually have enough lead time to plan a takeover and time it to go down when most folks are relaxing over the weekend.
“Back in the day, most banks were not open over the weekend, so if they were closed COB [close of business] on a Friday, it gave the FDIC 60 hours to turn it around for reopening,” said David Barr, a spokesman for the Federal Deposit Insurance Corporation, the agency that supervises bank takeovers.
It’s amusingly similar to how movies and TV make it seem.
“A team of 45 to 60 people would enter with printers, computers, copiers, boxes, etc.,” Barr said. “Now, we have a much more streamlined team on site with the bulk of the work being done from home or the office.”
Teams often pull all-nighters to settle a failed bank’s accounts and figure out what assets can be liquidated. The ultimate goal is to get the institution cleaned up and ready to reopen on Monday morning, ideally under new ownership.
“That involves discarding any material with the old bank’s name on it — like posters, cashiers’ checks, and marquee signs — and putting the new bank’s paperwork, advertisements, and employees in place,” Slate wrote during the 2008 banking crisis.
Of course, Barr notes, a bank failure can happen any day of the week, especially when problems arise suddenly.
For example, back in 1999, First National Bank of Keystone was closed on a Wednesday. “There was massive fraud and half the bank’s assets were missing,” Barr said. “So, it was closed on a Wednesday and the FDIC was issuing checks for a payout the following Tuesday” becayse Monday was Labor Day, and all banks were closed. “That was very unusual.”
Similarly, Silicon Valley Bank’s unraveling happened at a head-spinning pace nearly three weeks ago. Supercharged by social media panic, depositors yanked $42 billion on Thursday 9 March. By Friday morning, SVB expected to face a run of $100 billion. “They did not have the collateral sufficient to support discount window letting,” the Fed’s vice chair for supervision told Congress this week.
Rather than wait until the end of the day, California regulators intervened around midday on Friday 10 March, putting the bank into FDIC receivership.
By Sunday night, regulators had invoked the “systemic risk exception” for Silicon Valley Bank and Signature Bank, allowing the FDIC to guarantee all deposits, even those above the $250,000 cap. That made all customer funds available through the FDIC-operated bridge bank come Monday morning.
But, hold on…today is Friday. Have we managed to avoid a bank failure this week, a sign that the worst of the turmoil is behind us? (I’d say cheers to that, if I weren’t so superstitious and shell-shocked.)
RELATED: On our latest Nightcap show, Ellevest CEO Sallie Krawcheck digs into the role of remote work and how it played a role in SVB’s collapse.
Number of the day: $176,000
$176,000
The average annual bonus on Wall Street last year was $176,000.
Yes, that’s bonus pay. And that figure was a 26% drop from the 2021 average. Put another way: The average Wall Street bonus last year is more than double the median annual income for US households.
Oh, but Allison, you have to remember that’s taxed at like 50%…
Shut up. That’s still an $88,000 boatload of cash getting dumped into your bank account, and it is still much, much more than the median US household income of $70,800.
Skinny cans
Anyone else notice how skinny cans are these days?
You’re not alone. My colleague Nathaniel Meyersohn, a reporter with an eagle eye for retail trends, explains that skinny cans are, in fact, in.
Exhibit A: Topo Chico, Simply and SunnyD recently launched alcoholic seltzers and cocktails in tall, thin cans. Similarly, Day One, Celsius and Starbucks
(SBUX) have lines of rather svelte sparkling water and energy drinks.
Why are our beverages suddenly so slim?
It’s a bunch of corporate psychological trickery. Brands are trying to subtly signal that their new drinks are healthier than the stouter-canned beer and sodas you’re used to.
“Consumers see slim cans as more sophisticated, which makes them feel more sophisticated,” said Duane Stanford, the editor of industry trade publication Beverage Digest. “For people who spend $3 for a mushroom elixir, they want the package to signal trendy too.”
Wait. I’m sorry — mushroom? What is going on?
Here’s Nathaniel:
Traditionally, beverage companies opted for the 12 oz. squat model to allow more room to advertise the contents of their drink on the body of the can with colorful details and logos.
Companies have even been panned for switching to skinny can models. In 2011, Pepsi released a “taller, sassier” version of its traditional can. The can, presented at New York’s Fashion Week, had the tagline: “The New Skinny.” It was widely criticized as offensive and the National Eating Disorders Association said the company’s comments were both “thoughtless and irresponsible.”
But like all trends, they come and go. Slim cans of the 2010s? Offensive. Slim cans of the 2020s? Chic. (I blame Ozempic.)
There’s also a branding incentive for skinny designs, in theory. You can squeeze more 12 oz skinny cans on store shelves, warehouse pallets and trucks than wider cans, said Dave Fedewa, a partner at McKinsey who consults for retail and consumer packaged goods companies. That means higher sales and cost savings.
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