Hey DIB! Quick chart here on the frequency of American bank failures over time. The data is from the FDIC's list of failed banks, chart built with a bunch of javascript + some tools from yarn.tech to build out an SVG. Interactive post, with plenty of analysis, here: https://yarn.pranshum.com/banks2

What are you trying to say? 😰

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meme of the tornado coming

Current economic thinking: bank failures are independent random variables, so the probability of multiple failing at the same time is low

How do figure there’s 3 groups over 90 years

Who says this? If this was the thought there wouldn’t have been a rush to shore things up this week both in the us and credit suisses

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But those are not all banks. If you said recessions then yes

It’s like millions of dollars cried out and we’re suddenly silenced.

The big failures haven't even started yet

That’s just not true. We literally do bank contagion simulations and there’s a ton of research on this topic. Prevailing economic thinking is precisely the opposite of what you said.

I have no idea about economics or finance or whatever but I highly highly doubt bank failures are even anywhere near independent

I have no idea about economics or finance or whatever but I highly highly doubt bank failures are even anywhere near independent

Also if that was true, wouldn’t the distribution here be highly highly unlikely?

Do waves happen to match the deregulation of banks by republican presidents?

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this would probably be better inflation adjusted

Yes and no.

The waves correspond IMO to the weakening of Glass-Staegall for sure.

But Republican Presidents aren’t necessarily the chief culprits. DIDMCA was signed by Carter and Glass-Steagall was repealed by Clinton. Reagan and Bush did more than their fair share, but banking deregulation was definitely a bipartisan affair.

Also serves as a handy chart of the life cycle of Glass-Steagall.

It completely makes sense. Outside of fraud or gross incompetence bank regulations should ensure banks remain solvent. Only when the economy is rocked dramatically will a bank fall and those factors will effect all the banks at the same time.

Winning comment

Its been interesting seeing all the different ways of visualizing the back failures.

The best charts always have no y axis!

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I think it might be a bit like phase transitions in supercooled fluids, for example. You drop the temperature slow enough (in this particular case it's interest rates going up instead of temperature going down) that the water ends up in this very precarious equilibrium. The tiniest disturbance or impurity initiates a phase transition to ice, and that spreads across the entire liquid.

What would this waveform sound like if you fed it through a DAC?

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What type of chart is it? Never seen one before, but looks great.

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Bar graph, align center

I'm interest rate drops strangled bank revenues, the 80s is the worst as that was their peak and largest basis point drop per decade in modern history

It's how the worst failures weren't at the worst points of the decade ie the bottoms of those decades/ crisis, but later as rates fell massively or sat near zero for years.

...I can't tell if this is a serious compliment or a sarcastic complaint.

I thought it was a frequency graph mirrored?

nice Freudian slip there.

The cycle of what .. ?

What's the Y axis? Bank numbers or bank size ?

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I think each dot is a bank that failed, yo!

Now do an overlay showing government regulation and deregulation of the banking industry through time.

you need actual data for data to be beautiful. This graph has no meaning

Bank runs are confidence driven too. So occasional failures happen from incompetence or one-off circumstances. But when systemic confidence is threatened you get big clusters.

The y-axis is obvious, guys. Below the x-axis is the number of banks that failed and above the x-axis is the number of executives who benefitted from the failure.

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Looks like a dread sight of some kind

This graph literally provides ample evidence of many bank failures across time that are not part of an identifiable wave.

Gosh darn it, maybe we should study pattern repeats in time! That’s a great idea! I wonder if I need an advanced physics or mathematics degree or if I can start with phi or pi… or the planets?

Could you please link to your source page directly, so it's obvious where you got your data? People here obviously will have questions about the methodology.

Also, what is the bin size on your chart?

(For example, seeing as there was no FDIC in 1934, and local banks would not have been on any kind of registry, I'm sure we'd all like to see whether the dataset attempts to do an adjustment for this or leaves the data raw. Also, the standard for a "bank failure" has changed significantly since the FDIC and associated regulations were established. In case people haven't noticed, SVB is still around and now solvent -- so is it a failure comparable to 1934?)

In case anyone is taking this seriously, this is a 1-dimensional visualization, so there isn’t a y-axis unit. The dataset is “bank failures”, and each data point has 1 quantity associated with it: the year. You put a dot for each data point, and then you dodge/jitter them up and down so you can see how many there are without them overlapping. It’s kind of like a discretized violin plot, I generally hear this called a “beeswarm” plot. There’s nothing to label on the y-axis.

The white dots are also bank failures right? They contradict your claim that a bank failure has only occurred during times of systemic breakdown.

But what does it SOUND like?

The first sentence mentions fraud and incompetence.

Exactly what I came to say.

>There’s nothing to label on the y-axis.

Except for exactly what you just described. Just because there is no dimension does not mean you do not label it. "N" is dimensionless in the y-axis of a histogram, but it is always labeled as "Number of X binned by Y".

Oh look, that's exactly the same kind of chart as OP's!

Quietly starting to hide money under the matress

What in the world happened in the 80's? (I'm 20, cut me some slack)

So does deregulation. No correlation of course....

The fuck is this overlapping shit?

I think what OP is trying to point out is that, upon multiple banks failing--be it a few to a dozen--there is evidence that the number of failures has a cascading effect. It seems to me (=opinion, not certified) that there is a certain threshold whereupon the number of bank failures is detrimental enough to the economy (or other banks) that there are more "waves"--as OP put it--of bank failures in a short amount of time. I think they (OP) used the long time span to signify that these "waves" (or clusters) of failures are repeat occurrences.

>"Glass-Steagall was repealed by Clinton"

Clinton signed the law, but he didn't create the Gramm-Leach-Bliley Act of 1999 that repealed Glass-Steagall. That was three republicans who created the bill and got it passed in a republican controlled Congress in both houses. Banks had wanted to deregulate their activities since at least the 1980s. Republicans gave banks the deregulation that they so desperately wanted. It was a disaster.

Yes, there was bipartisan support, but the ratio was more like 2 republicans to one democrat voting in favor in the House, and nearly 90% of democrats in the Senate voting against.

Had democrats controlled the Senate, it would likely have failed, and we would not have had the huge mergers that happened or the resulting "too big to fail" problem where the failure of those financial institutions brought down the entire economy.

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>"During debate in the House of Representatives, Rep. John Dingell (Democrat of Michigan) argued that the bill would result in banks becoming "too big to fail." Dingell further argued that this would necessarily result in a bailout by the Federal Government."

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Yeah there’s almost always some bank failures.

But there seems to be a cut off, like there’s always some bank failures every year, but once you hit ~10+, a wave is inevitable

(Tbh, I think this could have been visualized better)

OP is making a joke. Glass-Steagall was the post-Great Depression banking regs implemented.

The joke is that we have waves of regulation that you can see in these failures. Failures spike and everyone clamors to regulate. Then the wave stops and everyone forgets about the past and slowly deregulates. Then we get hit with another wave and the “Glass-Steagall cycle” starts again.

Oh boy... Google it.

Better make it gold, bills can devalue even if no one knows where they are

Right and the commenter I was responding to was focused on the role of Presidents, not Congress.

I was disagreeing that “Republican Presidents” were primarily to blame for banking deregulation when Carter and Clinton had both signed deregulation bills, including the repeal of Glass-Steagall. Clinton has signaled his support for repeal from as early as 1995. Clinton has since defended this decision and insisted it didn’t contribute to the Great Recession.

So I stand by the conclusion that that Democratic Presidents don’t have a better record than GOP presidents when it comes to major banking deregulation. However, I also disagree with your congressional analysis - the bill was already stalled before joint negotiations. The final version passed 90-8 in the Senate - I don’t support the idea that a Democratic Senate would have killed the bill beyond all negotiation given that President Clinton had been in support of repeal.

I always wonder if the S&L crisis was not manufactured in order to get ahold of farms. Just like the 2008 crisis grabbed all the homes.

Are those two lonely dots to the right the two absolutely behemoth banks that went under? The 2nd and 3rd biggest of all time? If so, this kind of makes this graph misleading.

>"and the commenter I was responding to was focused on the role of Presidents, not Congress."

Yes, and you both focus on people who did not create the legislation that shipwrecked the economy. That was conservatives in Congress and the banking industry. Carter and Clinton had no hand in drafting legislation. Clinton was culpable also, having not vetoed it, but it may have been overridden. Not likely, but possible. He made a bad decision, working with the GOP. It ruined us.

You don't support my well reasoned conclusion that the GOP were responsible for the repeal of Glass-Steagall, but you're not correct in that, and the vote shows the truth of it. Had Democrat controlled the Senate, the repeal effort would certainly have been defeated, and therefore there would be no bill for Clinton to sign or not sign. A president cannot veto a bill that does not exist. This is why voting for Democrats matters, because the banking collapse of 2008 was disastrous, and it could have been prevented.

I mean most poor economic situation happen i pairs. We can remake this map with foreclosures too right?

Y axis?

We don't have this here, son

Can't be bank size. The two failed banks last week total a third of a trillion dollars which is the size of the largest failed bank (washington Mutual) in 2008. Those 3 banks massively dwarf all other failed banks where they barely rank in comparison.

Does this mean there is going to be another big financial/economic crisis fairly soon?

This is a great analogy. What we saw in the past three waves was a handful of failures that triggered a "flight to safety". Customers started moving their money to safer places; i.e. larger banks or liquid assets. That left smaller banks without the required capital reserves, which led to more failures and more withdrawals.

I would call it a beeswarm plot. It’s essentially a type of dot plot, and can be thought of as a non-summarized version of a boxplot, histogram, or violin plot (non summarized meaning you plot each individual observation rather than a summary metric like median, total, density, etc.).

The gap reduces and the frequency increases !!

That would be the interesting follow-up. What happened after the Great Depression that made it so only very few banks failed and didn't immediately result in a domino effect?

mb, i couldn't see all of the dots on my phone