Small and midsize banks are basically in the position middle-class homeowners with underwater mortgages in 2008 who lost their jobs were.

Over the medium-term, their housing values and home-equity wealth were due to come roaring back.

But they don't have the liquidity to carry their position, and they're not important enough for anyone to front them cheap money until then, so they take the loss, cede to bigger, better-connected players who will enjoy the roarback. 1/

#BankingCrisis

Formally eliminating limits on deposit insurance might forestall the liquidity crises. Alternative, more generous Fed or other-government-agency lending terms for small and midsize banks than the already generous Bank Term Funding Program are probably the most likely way small and midsize banks will be saved, if they will be saved. /fin