Our Insights


This month Jason Weaver discusses 2008 banking, 2023 banking and recovery time.




In 2008, Banks had a credit problem (with risky loans with very little safe assets)

In 2008, banks had 23 dollars of liabilities for every dollar they had in liquid cash (highly leveraged & illiquid)



Today, banks have a higher ratio of assets in cash and Treasury/agency securities

On average, banks have less subprime lending exposure today too

Today, the problem is liquidity and duration (interest rate) risk

Banks have used new deposits to buy Treasury/agency securities when rate were low

Fed raised rates at the quickest % pace of all time (0.08% to 4.57% in 1year, or a 57x increase).

Inverse relationship with rates and bond prices have created unrealized losses for bank balance sheets



History has shown financial markets have rebounded from market shocks, posting strong long-term gains.

The average loss during a “crisis” event is -16.7%

The average gain 1 year later is +31.3%

In 2008 when Lehman collapsed, the market fell -39.6% in 2 months

o1 Month Later, SPX was up +18.3%

o1 Year Later, SPX was up +48.8%