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Many small US banks not ready to borrow from Fed in an emergency

The lightning-fast collapse of Silicon Valley Bank this spring laid bare an inconvenient truth: Some U.S. banks are not prepared to borrow from the Federal Reserve if they need to, and a Reuters analysis shows that problem is most acute among the nation's smallest banks. SVB, a top-20 bank with over $210 billion in assets at the time it failed, had an insufficient stash of collateral and in the year before it went down had not tested its access to the "discount window" through which the Fed doles out emergency loans. It's a vulnerability that has come into stark relief si...

Modeling the Legend, or, the Trouble with Diamond and Dybvig: Part II SHARE [This is the last half of a two-part critique of Douglas Diamond and Philip Dybvig's highly influential paper purporting to show that fractional reserve banking systems are inherently unstable. Part I can be found here. ] Sauce for the Goose… Half a century after the fact, the "aggregate uncertainty" version of the Diamond-Dybvig model appeared at long last to offer solid proof of the inherent instability of ordinary banks, together with an equally solid foundation for government deposit insurance. But no soon...