In this article, I am going to give a basic introduction to insolvency (bankruptcy), as well as a discussion of the principles of how losses are apportioned to the various classes of creditors of American banks.
Great write up as always, personally i would have liked to see the uninsured deposits get screwed over but you make a great point about the bottom feeders. In regards to your closing remarks can you recommend any literature regarding on how to start the process of reading bank balance sheets?
Despite deciding to write a banking primer, I was never a banking analyst. On the macro side, I only looked at aggregate balance sheets in the Flow of Funds accounts in different countries. I sometimes looked at financial statements, and the basic balance sheets were covered in my CFA textbook. (Probably out of print at this point, so you’d want to find a recent financial accounting textbook.) A lot of the complexity in banks is in the supplementary information, which is jurisdiction-specific. If I have questions, I’d ask my wife (an accountant), which is convenient for me, but not everyone has managed to marry an accountant. Looking at some bank analyst reports would give an idea of what they are looking at - without necessarily assuming their calls are correct.
What the balance sheet entries correspond to might involve some financial jargon, but it’s pretty easy to look up definitions as you go.
Great write up as always, personally i would have liked to see the uninsured deposits get screwed over but you make a great point about the bottom feeders. In regards to your closing remarks can you recommend any literature regarding on how to start the process of reading bank balance sheets?
Despite deciding to write a banking primer, I was never a banking analyst. On the macro side, I only looked at aggregate balance sheets in the Flow of Funds accounts in different countries. I sometimes looked at financial statements, and the basic balance sheets were covered in my CFA textbook. (Probably out of print at this point, so you’d want to find a recent financial accounting textbook.) A lot of the complexity in banks is in the supplementary information, which is jurisdiction-specific. If I have questions, I’d ask my wife (an accountant), which is convenient for me, but not everyone has managed to marry an accountant. Looking at some bank analyst reports would give an idea of what they are looking at - without necessarily assuming their calls are correct.
What the balance sheet entries correspond to might involve some financial jargon, but it’s pretty easy to look up definitions as you go.
Awesome thank you so much for the tips! Funnily enough the first group of analysts had FRC has their top short for 2023 lmao