Comments on: “Have a contingency plan for 750-1000 bank failures over the next six months”: Leading Academic http://allaboutalpha.com/blog/2008/09/30/have-a-contingency-plan-for-750-1000-bank-failures-over-the-next-six-months-leading-academic/ A finance blog about hedge funds, portable alpha and alternative investing. Mon, 13 Feb 2012 11:26:54 +0000 http://wordpress.org/?v=abc hourly 1 By: Reinko http://allaboutalpha.com/blog/2008/09/30/have-a-contingency-plan-for-750-1000-bank-failures-over-the-next-six-months-leading-academic/comment-page-1/#comment-137459 Reinko Sun, 05 Oct 2008 21:17:33 +0000 http://allaboutalpha.com/blog/?p=3458#comment-137459 Campbell Harvey might be the widest read professor in financial stuff but he is completely wrong in 750 to 1000 banks going to the FDIC in the next six months. From the financial point of view he is likely very right: from the financial point of view it could be true that 750 to 1000 banks dive under the 8% rule for taking in reserves. I think the Harvey guy only understands finance and not the broader picture: The FDIC only takes action when the 3% threshold on reserves is taken. Beside this the SEC is sitting on the sidelines with forbidding that evil 'mark to market' rule 157. Furthermore the Americans are a so called 'vivid and thriving' economy so they will pump up at least a 1000 things preventing the insights of the Harvey guy get real. At most we will have 10% of this meaning 70 to 100 bank failures but to be honest I do not see such stuff in practice materializing over the next 6 months... America is very simple to understand: When a 100 banks every 6 months is too expensive it will not happen in the public domain. It will happen in future finance stuff until they cannot borrow anymore... Campbell Harvey might be the widest read professor in financial stuff but he is completely wrong in 750 to 1000 banks going to the FDIC in the next six months.

From the financial point of view he is likely very right: from the financial point of view it could be true that 750 to 1000 banks dive under the 8% rule for taking in reserves.

I think the Harvey guy only understands finance and not the broader picture:

The FDIC only takes action when the 3% threshold on reserves is taken.
Beside this the SEC is sitting on the sidelines with forbidding that evil ‘mark to market’ rule 157.

Furthermore the Americans are a so called ‘vivid and thriving’ economy so they will pump up at least a 1000 things preventing the insights of the Harvey guy get real.

At most we will have 10% of this meaning 70 to 100 bank failures but to be honest I do not see such stuff in practice materializing over the next 6 months…

America is very simple to understand: When a 100 banks every 6 months is too expensive it will not happen in the public domain. It will happen in future finance stuff until they cannot borrow anymore…

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