Steven Kelly

New paper: "Rushing to Judgement and the Banking Crisis of 2023" At the two-year anniversary of the crisis, @thejonrose and I present 7 facts that are overlooked in the standard account of the crisis: chicagofed.org/publications/w…

@pascalsroom This is a wild story

@vtg2 Dollar Bill is the man.

“My best guess, but spoken with no conviction at all, is that this gets sorted out somehow in the next few weeks”

New paper on bank runs with Correia and Luck: "Bank Runs With and Without Bank Failure" Questions: - What are the determinants of runs? - When do bank runs result in bank failure? - Can runs trigger the failure of healthy banks and amplify small shocks into large crises? - Are runs themselves the initial cause of financial distress or are they a symptom of deeper fundamental solvency problems in the financial system? What we do: - Apply LLMs to historical newspapers to uncover over 4,000 runs on individual banks in the pre-FDIC US banking system from 1863 to 1934. Capture the most famous runs (Bank of the US - Merge data on runs and other bank-level events discussed in newspapers (suspensions, failures) to bank-level fundamentals (harder than it sounds!) What we find: (1) Runs are considerably more likely in weak banks, but can also occur in strong banks, especially in response to negative news about the real economy or the broader banking system. (2) However, runs typically only result in failure for banks with weak fundamentals [see figure below]. Strong banks survive runs through various mechanisms, including interbank cooperation, equity injections, public signals of strength, and suspension of convertibility (3) At the local level, poor fundamentals necessary for runs to translate into large declines in lending. Moreover, bank failures (with and without runs) translate into substantially larger declines in deposits and lending than runs without failures. Overall takeaways: - Poor fundamentals are key for whether runs pass through into failure and have severe consequences for the broader economy. - The findings temper the view that small shocks can result in large jumps to bad equilibria via runs on demandable debt. Full paper here. Comments welcome. Given the methodology and evolving AI tools, we expect to make refinements to the runs database over time. Any input is welcome. static1.squarespace.com/static/58f6b1c…

@khaslett “pays for itself”? My scam sensors are going off 😂

@StevenKelly49 What about vacuuming your car? Car washes are EXCELLENT. If you have a membership, it pays for itself if you get it washed every 2 weeks!

The car wash place I'm a member of will send me notifications if it's been 20 days since I've gotten my car washed, and it totally works on me. 😭

@khaslett nothing a quick squeegee at the gas station can't fix. Certainly not every 20 days??

@StevenKelly49 Also I will apparently hit like… locust when I’m driving on the interstate in certain rural stretches.

@khaslett It's called rain.

@StevenKelly49 Are you bragging that you’ve never had to park outside under a tree? It sounds like you are.

Nominative determinism that this has the same name as the original CDS product created by JPMorgan? cc/ @gilliantett

Me trying to explain the Industry season finale:

@i_aldasoro Read it right when it came out! Nice piece.

@StevenKelly49 ICYMI anderseninstitute.org/bank-equity-pr…

Chair Hill on stablecoin flows: "It is worth noting, however, that this likely would not have a material impact on the aggregate deposits in the banking system [... ] but this would have impacts on the nature and distribution of deposits across the system" fdic.gov/news/speeches/…

@ FinTwit:

NYT's @jessemckinley: "Why the Word 'Tranche' Is Having a Moment" nytimes.com/2026/03/10/sty…

The Board seemed to invoke the authority through gritted teeth: "It was reiterated that the Board would prefer that this authority not be used, and that this action did not set a precedent for other institutions that were not similarly affected by the pending legislation."

The invocation of Section 13(3) is (rightfully) associated with widespread banking stresses and a pandemic. But also, in 1980, the Fed invoked it to lend up to $5 million to a $100-million bank in Kansas.

The Fed invoked its Section 13(3) emergency lending authority in...1980? Some new FOIA releases tell the story: withoutwarningresearch.com/p/1980-the-sma…

i’m tired of hearing about euribor grandpa! well that’s too damn bad!

Secretary Bessent remarks today too: "A Reset on Liquidity Regulation" home.treasury.gov/news/press-rel…

"Weekly aggregate disclosure makes [discount window] borrowing potentially detectable by markets. Above-market interest rates make borrowing costly, even for testing. Markets interpret any usage as a sign of fragility."