Collapse of Signature Bank & SVB: Financial Analyst on What It Means for Depositors: Jeremy Lakosh

About this episode

A special emergency episode recorded the Monday after Silicon Valley Bank and Signature Bank collapsed, with recurring guest Jeremy Lakosh (Seeking Alpha writer) walking through the mechanics in plain language. Lakosh explains how banks flush with COVID-era deposits bought long-duration US treasuries and mortgage-backed securities when rates were near zero, then watched those securities' market value erode as the Fed raised rates — leaving ~$150 billion in unrealized losses across the banking system. He details the "unrealized vs. realized loss" mechanic that turns a routine balance-sheet fact into a bank run the moment a bank is forced to sell and disclose the loss, digital banking's role in making runs happen "at lightning speed," and practical advice (treasury sweeps, CDs, community banks) for depositors and farmers sitting on cash. The conversation closes with Lakosh's prediction that this is a "Bear Stearns" moment rather than a full recession trigger, that the Fed should hold or raise rates further despite the pain, and that a bigger liquidity event still lies ahead later in the cycle.

“The banking system as a whole, during the height of the COVID pandemic, when they were flooded with easy money, purchased a significant amount of US treasuries because there was nowhere else to put that money.”

“There is a concern with the Fed that non-banking financial institutions are going to begin to experience liquidity problems as well, because they are holding a significant number of mortgage-backed securities which also have eroded in value.”

“A bank run is always in history occurred quickly, but now it can occur at lightning speed... we can use a cell phone and be connected to multiple financial institutions right here.”

Key moments

• The mechanical root cause — banks bought treasuries during zero-rate COVID years; rising yields tanked their market value.
• Biden's morning address promising FDIC-limit depositors "access" to funds without confirming a full backstop.
• Why unrealized losses become realized losses the moment a bank needs liquidity — and why disclosure itself triggers the run.
• Digital banking as an accelerant — bank runs that once took days now happen in hours via smartphone.
• Non-bank mortgage REITs (Penny Mac, etc.) as a second, less-regulated wave of the same mortgage-backed-securities exposure.
• Anecdote of 80 solicitation calls in two weeks after a routine credit pull — evidence of desperation in the mortgage origination industry.
• Practical advice for farmers/businesses sitting on cash — treasury sweeps and community bank CDs over "flight to the big four."
• Lakosh's prediction: this event resolves within the week, rates hold or rise, and the real recession-triggering liquidity event comes later.

Notable quotes

“The realized loss when I publicly announce it creates the bank run... you've got to be able to do that without broadcasting to the world that you have [a problem].”

“We don't need to physically walk into a bank anymore... a bank run can occur at lightning speed.”

“I got over 60 calls from mortgage companies in a period of two weeks.”

“I think this event is more like a Bear Stearns in 2008... a major credit event, but it does not turn us into a recession — yet.”