History Redux?

The recent bank collapses and related bailouts have brought back painful memories of the 2007/2008 financial crisis. Same show different day? Maybe, but certainly some of the same quick reactions by the executive branch will animate talking heads, dumb witted politicians and followers of both. Look for lots of different monkeys to be throwing lots of skata around in the weeks and months ahead.

So far two crypto banks (one on each coast) and a giant San Fran bank that catered to private equity firms and venture capitalists have failed. The steps taken over the weekend by the U.S. government to aid depositors of two of these banks will no doubt cause some private equity firms and crypto investors/criminals to breathe a sigh of relief. Not a great look to the populists among us, especially with respect to the private equity firms. So much for moral hazard.

Hopefully the regulators will get it right this time and find ways to hold those responsible for the bank failures accountable. As those in the know understood, in 2008 prosecutors and the regulators pulled their punches and cut a lot of corners in failing to go after the well known banks and executives. The ever changing number of cockamamie reasons given for why cases should not or could not be brought was an obvious tell.

Hopefully the prosecutors and regulators will do better this go round. There is little time to mess around and plenty of work to do It’s almost a certainty that they will find many snakes and bugs crawling around if the investigators choose the right rocks to look under. A few basic hints. Get moving today. Assign your best investigators and attorneys to the investigations and give them more than adequate resources to get the job done. No working from home.

A few rocks to look under. Scutinize the ties of the already indicted crypto players to the failed crypto banks and see who helped who in shady dealings, money laundering or similar crimes. Closely scrutinize the failed crypto bank disclosures regarding robust money laundering procedures and compliance. Was what they said anything close to reality? See what people in the know or their friends and family did in the days leading up to the bank failures. Sell stock, withdraw money, move to Hong Kong? Did those with a vested interest start saying or writing things, directly or indirectly, that weren’t true to prop up stock prices? How did some depositors know to withdraw money from the bank while others were left in the dark?

There is a lot of ground to cover and not much time. Learn the lessons to be drawn from the last financial crisis, less is really less, and the general public really doesn’t really care two shakes about the fate of banksters or appreciate nuanced arguments about whey they can’t be held accountable for major financial disastors. Otherwise the party in power now may soon become the party that was in power.