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***OFFICIAL*** Bank Failure/Crisis Thread (1 Viewer)

Seeing more and more calls for backstopping all depositor losses for all banks to avoid runs. Off we go again with privatized gains and socialized losses. And LOFL at the taxpayer not paying for these losses. Whether through the front door of income taxation or the backdoor of higher bank fees and/or broader inflation, the people will pay for this ********. History rhyming once again.
The solution to failed regulation…….More regulation and intervention!! It’s amazing right?
If this was such an easy problem to diagnose why wouldn’t further regulation in that area make sense?

if all deposits were guaranteed and not a random figure of $250m, it would eliminate a run. just saying.
The government would be incented to enact regulations that actually work to stabilize the industry then as well, rather than regulations that seem to be dominated by politics and PR.
 
Credit Suisse thinking this will spread?
They have a very high CET1 ratio as of last financail release (ratio of best assets) of 14.1% (for example JPM's is 13.2% and required level is just 4.5%). Of course confidence matters more than anything else and the credit dafault swaps are ugly - https://www.bnnbloomberg.ca/credit-...-18-times-ubs-9-times-deutsche-bank-1.1895747. As SVB and, of course Lehman is the best example, if faith is lost in them that can bring down the house very quickly. I would think Switzerland would be forced to prop them up as they are a systematic risk type bank for Switzerland/Europe.

ETA - CS isssues are also unrelated to SVB and much of its own making. They have been poorly run for a decade plus.
 
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The markets for the world’s safest and most liquid assets, the government bonds issued by the U.S. and other rich countries, are coming under immense stress Wednesday following a week of worries about the health of global banks.
Liquidity, the capacity to trade quickly at quoted prices, has fallen sharply in two of the keystone markets, those for U.S. Treasurys and German bunds, traders said. Difficulties in trading are now spreading to many other markets, including those for derivatives that firms and traders use to lock in prices and hedge risks weeks and months ahead of time, such as options, futures and swaps.

“A trade that should take seconds took minutes,” said Jon Jonsson, a fixed income portfolio manager at Neuberger Berman.
One factor driving the disruption has been the massive flows into and out of Treasurys and bunds. Demand for these so-called haven assets typically rises in times of stress in markets, but prices for safe bonds have been under pressure for much of the past year as the Federal Reserve and other global central banks sharply raised interest rates in a bid to fend off inflation.

“You can’t have a conversation with Treasury traders without them going on a rant about Treasury liquidity,” said Hani Redha, a multiasset portfolio manager at PineBridge Investments. “That just means that moves get amplified. You’re going to get overshoots in both directions.”


Jeffrey P. Snider

@JeffSnider_AIP


The lesson of Bear: firms all over the world are going to be building even bigger liquidity cushions, reducing leverage like crazy, and hedging the hell out of everything like they never have before (including '08). We have evidence for that one.
 
Per WSJ: Odds now 60/40 Fed will pause interest rates vs. 25bps rise due to recent banking turmoil.

Here's how traders see rates unfolding in the coming months, per CME Group, which calculates implied probabilities from the price of interest-rate futures:
  • A rate rise at the Fed's March 21-22 meeting is still in the cards. Traders think there's a less than four-in-10 chance that the Fed will raise rates by a quarter of a percentage point. There's a more than six-in-10 chance the central bank will hold rates in a range of 4.5%-4.75%.
  • The Fed could lower rates in early summer. Rates traders figure there's a 50% chance that the Fed's benchmark rate will be lower than it is now after the bank's June 13-14 meeting.
  • Rate cuts by year end are seen as a near certainty. Traders think there's a near-zero chance that rates will stand at or above their current range by the end of the Fed's December meeting. They figure there's a 53% chance that the Fed will have cut rates by a percentage point or more.
 
Per WSJ: Odds now 60/40 Fed will pause interest rates vs. 25bps rise due to recent banking turmoil.

Here's how traders see rates unfolding in the coming months, per CME Group, which calculates implied probabilities from the price of interest-rate futures:
  • A rate rise at the Fed's March 21-22 meeting is still in the cards. Traders think there's a less than four-in-10 chance that the Fed will raise rates by a quarter of a percentage point. There's a more than six-in-10 chance the central bank will hold rates in a range of 4.5%-4.75%.
  • The Fed could lower rates in early summer. Rates traders figure there's a 50% chance that the Fed's benchmark rate will be lower than it is now after the bank's June 13-14 meeting.
  • Rate cuts by year end are seen as a near certainty. Traders think there's a near-zero chance that rates will stand at or above their current range by the end of the Fed's December meeting. They figure there's a 53% chance that the Fed will have cut rates by a percentage point or more.
They should drop a 25 bps now but no one has the balls for that. It is always funny to me that the academics in the Fed don't understand how the previous raises are still working through the system.

It looks like I will be right on my previous predictions to rates... just about on time too.
 
FWIW, I asked my wife, who is a regional manager for what I would describe as a very small regional bank, if they were seeing a lot of deposit withdrawals and she said no.
Just asked a buddy of mine at a CU. He said a couple of clients moved some cash out to be under the $250K but nothing big. Really not seeing cash flow out.
 

Switzerland is under pressure from at least one major government to intervene quickly on Credit Suisse, a source familiar with the situation told Reuters, after the Swiss bank led a rout of European bank stocks on Wednesday.
 
Per WSJ: Odds now 60/40 Fed will pause interest rates vs. 25bps rise due to recent banking turmoil.

Here's how traders see rates unfolding in the coming months, per CME Group, which calculates implied probabilities from the price of interest-rate futures:
  • A rate rise at the Fed's March 21-22 meeting is still in the cards. Traders think there's a less than four-in-10 chance that the Fed will raise rates by a quarter of a percentage point. There's a more than six-in-10 chance the central bank will hold rates in a range of 4.5%-4.75%.
  • The Fed could lower rates in early summer. Rates traders figure there's a 50% chance that the Fed's benchmark rate will be lower than it is now after the bank's June 13-14 meeting.
  • Rate cuts by year end are seen as a near certainty. Traders think there's a near-zero chance that rates will stand at or above their current range by the end of the Fed's December meeting. They figure there's a 53% chance that the Fed will have cut rates by a percentage point or more.
Meanwhile, the 1-month bill is trading about 50bps beneath SOFR
 
I know I am on an island on this with the cut in the Fed Funds rate but instead of taking decisive action to end this crisis with a cut of 25 bps they seem to be trying to do juuuuuuuuuust enough and if they judge that wrong then guess what happens down the road? I am ok being the lone wolf crying in the forrest though.
 
Per WSJ: Odds now 60/40 Fed will pause interest rates vs. 25bps rise due to recent banking turmoil.

Here's how traders see rates unfolding in the coming months, per CME Group, which calculates implied probabilities from the price of interest-rate futures:
  • A rate rise at the Fed's March 21-22 meeting is still in the cards. Traders think there's a less than four-in-10 chance that the Fed will raise rates by a quarter of a percentage point. There's a more than six-in-10 chance the central bank will hold rates in a range of 4.5%-4.75%.
  • The Fed could lower rates in early summer. Rates traders figure there's a 50% chance that the Fed's benchmark rate will be lower than it is now after the bank's June 13-14 meeting.
  • Rate cuts by year end are seen as a near certainty. Traders think there's a near-zero chance that rates will stand at or above their current range by the end of the Fed's December meeting. They figure there's a 53% chance that the Fed will have cut rates by a percentage point or more.

Yeah, it's really been all over the place. Yesterday, there were 7/10 odds of a 25 bp hike.
 
FWIW, I asked my wife, who is a regional manager for what I would describe as a very small regional bank, if they were seeing a lot of deposit withdrawals and she said no.
This really explains your reaction to my comment earlier in the thread where I suggested people/businesses keep larger sums of money (greater than 250k) in larger, more established banks.
 
I know I am on an island on this with the cut in the Fed Funds rate but instead of taking decisive action to end this crisis with a cut of 25 bps they seem to be trying to do juuuuuuuuuust enough and if they judge that wrong then guess what happens down the road? I am ok being the lone wolf crying in the forrest though.
I'm firmly in the "pause" camp. No one has faintest clue whether this is just the tip of the iceberg or an isolated issue.

If you cut and turmoil settles down, but inflation stays high, then Fed directly compounds inflation and loses even more credibility by flip flopping.

If you raise and turmoil worsens and/or spreads, then Fed directly compounds financial/economic fallout.

But pausing gives flexibility to go either direction depending how things unfold. Seems most sensible (but what do I know).
 
I know I am on an island on this with the cut in the Fed Funds rate but instead of taking decisive action to end this crisis with a cut of 25 bps they seem to be trying to do juuuuuuuuuust enough and if they judge that wrong then guess what happens down the road? I am ok being the lone wolf crying in the forrest though.
I'm firmly in the "pause" camp. No one has faintest clue whether this is just the tip of the iceberg or an isolated issue.

If you cut and turmoil settles down, but inflation stays high, then Fed directly compounds inflation and loses even more credibility by flip flopping.

If you raise and turmoil worsens and/or spreads, then Fed directly compounds financial/economic fallout.

But pausing gives flexibility to go either direction depending how things unfold. Seems most sensible (but what do I know).
I'm firmly in the "they should pause, but they are on a runaway train and are going to raise because they said they would" camp.

:clyde:
 
I'm surprised that backing off rate hikes is even on the table.

We all know we need a hard landing. So at the slightest hint of a hard landing, we're going to panic and re-make the same mistake we just made like 3 times in the last decade that got us here in the first place?

Rip the damn band-aid off. Let the crappy companies with crappy greedy mismanaged leadership fail. Tech bros and bankers have had a decade of unlimited gains, they should be able to handle it. The people that can't handle it are the single moms working 2 jobs who have gotten none of the benefits of the last decade, and are now getting kicked in the nuts by inflation.

Because inflation still SUCKS. It's crazy to me that people are happy with the current inflation numbers. 6% is still terrible. And the only reason it's "only" 6% is because it's been going on long enough that we're now comparing inflation against ALREADY INSANELY HIGH INFLATION from a year ago. Prices were out of control in February 2022. And now we're 6% HIGHER than that, and that's good?

I refuse to believe we are now entrenched in a world where a crappy little rice chicken bowl that's half the size it used to be at a fast food restaurant costs $16.50, but I just paid that for exactly that yesterday. It's stupid. Groceries are still more expensive every time you go to the grocery store, even as people have this thought in the back of their head that it's getting better. But even if we don't notice as we plan our next $4000 ski vacation, the people that can barely afford groceries definitely notice.

People are still spending like crazy. Stupid amounts. Even if a rate cut will take a year to actually make a difference to the inner workings of the economy, as someone upthread mentioned it's the optics that will be the problem. People are still spending, and they're chomping at the bit to spend more. The optics change, we'll go right back to it overnight. It's time for pain. It's the only way.
 
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I'm surprised that backing off rate hikes is even on the table.
Me too.

I was on team transitory 12 months ago, and I still think the underlying causes were temporary, but inflation is clearly much more persistent than anyone expected and I hope they keep fighting it.
 
FWIW, I asked my wife, who is a regional manager for what I would describe as a very small regional bank, if they were seeing a lot of deposit withdrawals and she said no.
This really explains your reaction to my comment earlier in the thread where I suggested people/businesses keep larger sums of money (greater than 250k) in larger, more established banks.
No, I already explained my response. Your position is based in not understanding how FDIC Insurance works. It is pretty much that simple.

But, since you want to infer that I am making statements because of.... I don't know.... protecting my wife's job I guess, let's address that. I have absolutely no problem admitting my disdain for larger, "more established" whatever that means, banks. Why? I have worked for big banks and I have worked for smaller banks. As you might imagine, I have a number of friends and contacts in the industry after spending short of 20 years working in banking. I have first hand experience and plenty of second hand information about how banks work when it comes to the consumer. Big banks are horrible for the consumer. Absolutely horrible. They make decisions basically coming down to "how can we get away with sucking our customers life savings out of them the most" on a consistent basis. I have seen it. Lived it. Smaller banks actually do tend to have people making decisions more based in "how can we deliver value to our clients and be fair while making money". It would be an absolute horrible for this country if there was further consolidation of banks being fed to the "too big to fail" behemoths that have very little interest in the American consumer.

I am actually the biggest fan of Credit Unions for most banking needs. I have no family connections of employment to any CU. I left banking completely and I am a Mortgage Broker now because it is the best option for mortgage lending for most consumers. I am a consumer advocate at heart. If I could do that as my full time job then I would. But the next best thing is for me to work in an area where I believe I can help the most people do the most good for their lives versus the people slinging mortgages in these big banks that when the door is closed and it is just us Mortgage Loan Officers talking brag about how they "don't sell price, they sell service" which is code for, I screw my clients over while making them feel like they are getting some sort of value for it because I am such a great salesman- look at me!

Happy to dig into this more for you if you want. Whether it is explaining how FDIC Insurance works or how the large "most established" banks are absolutely horrible for you as a consumer... or anything else you wish.
 
FWIW, I asked my wife, who is a regional manager for what I would describe as a very small regional bank, if they were seeing a lot of deposit withdrawals and she said no.
This really explains your reaction to my comment earlier in the thread where I suggested people/businesses keep larger sums of money (greater than 250k) in larger, more established banks.
No, I already explained my response. Your position is based in not understanding how FDIC Insurance works. It is pretty much that simple.

But, since you want to infer that I am making statements because of.... I don't know.... protecting my wife's job I guess, let's address that. I have absolutely no problem admitting my disdain for larger, "more established" whatever that means, banks. Why? I have worked for big banks and I have worked for smaller banks. As you might imagine, I have a number of friends and contacts in the industry after spending short of 20 years working in banking. I have first hand experience and plenty of second hand information about how banks work when it comes to the consumer. Big banks are horrible for the consumer. Absolutely horrible. They make decisions basically coming down to "how can we get away with sucking our customers life savings out of them the most" on a consistent basis. I have seen it. Lived it. Smaller banks actually do tend to have people making decisions more based in "how can we deliver value to our clients and be fair while making money". It would be an absolute horrible for this country if there was further consolidation of banks being fed to the "too big to fail" behemoths that have very little interest in the American consumer.

I am actually the biggest fan of Credit Unions for most banking needs. I have no family connections of employment to any CU. I left banking completely and I am a Mortgage Broker now because it is the best option for mortgage lending for most consumers. I am a consumer advocate at heart. If I could do that as my full time job then I would. But the next best thing is for me to work in an area where I believe I can help the most people do the most good for their lives versus the people slinging mortgages in these big banks that when the door is closed and it is just us Mortgage Loan Officers talking brag about how they "don't sell price, they sell service" which is code for, I screw my clients over while making them feel like they are getting some sort of value for it because I am such a great salesman- look at me!

Happy to dig into this more for you if you want. Whether it is explaining how FDIC Insurance works or how the large "most established" banks are absolutely horrible for you as a consumer... or anything else you wish.
Would you agree that there’s less risk of a larger, more established bank going under versus a smaller/midsize bank?
 
I know I am on an island on this with the cut in the Fed Funds rate but instead of taking decisive action to end this crisis with a cut of 25 bps they seem to be trying to do juuuuuuuuuust enough and if they judge that wrong then guess what happens down the road? I am ok being the lone wolf crying in the forrest though.
I'm firmly in the "pause" camp. No one has faintest clue whether this is just the tip of the iceberg or an isolated issue.

If you cut and turmoil settles down, but inflation stays high, then Fed directly compounds inflation and loses even more credibility by flip flopping.

If you raise and turmoil worsens and/or spreads, then Fed directly compounds financial/economic fallout.

But pausing gives flexibility to go either direction depending how things unfold. Seems most sensible (but what do I know).
They can't raise now. They are backed into a corner on that.
The more politically acceptable way forward would be for them to go on a bond buying spree again while keeping the Fed Funds rate steady.

I understand why I am along on the cut... it takes balls to say 'the slight trend down will continue as the moves we have already done continues to work through the system'.

The Fed pretty much always takes the cautious route. If they weren't such stubborn morons holding to inflation being transitory when it clearly was not and acted earlier then they wouldn't have had to play so much catch up and it likely would not have been as much of an impact on the system for these moron banks.
 
FWIW, I asked my wife, who is a regional manager for what I would describe as a very small regional bank, if they were seeing a lot of deposit withdrawals and she said no.
This really explains your reaction to my comment earlier in the thread where I suggested people/businesses keep larger sums of money (greater than 250k) in larger, more established banks.
No, I already explained my response. Your position is based in not understanding how FDIC Insurance works. It is pretty much that simple.

But, since you want to infer that I am making statements because of.... I don't know.... protecting my wife's job I guess, let's address that. I have absolutely no problem admitting my disdain for larger, "more established" whatever that means, banks. Why? I have worked for big banks and I have worked for smaller banks. As you might imagine, I have a number of friends and contacts in the industry after spending short of 20 years working in banking. I have first hand experience and plenty of second hand information about how banks work when it comes to the consumer. Big banks are horrible for the consumer. Absolutely horrible. They make decisions basically coming down to "how can we get away with sucking our customers life savings out of them the most" on a consistent basis. I have seen it. Lived it. Smaller banks actually do tend to have people making decisions more based in "how can we deliver value to our clients and be fair while making money". It would be an absolute horrible for this country if there was further consolidation of banks being fed to the "too big to fail" behemoths that have very little interest in the American consumer.

I am actually the biggest fan of Credit Unions for most banking needs. I have no family connections of employment to any CU. I left banking completely and I am a Mortgage Broker now because it is the best option for mortgage lending for most consumers. I am a consumer advocate at heart. If I could do that as my full time job then I would. But the next best thing is for me to work in an area where I believe I can help the most people do the most good for their lives versus the people slinging mortgages in these big banks that when the door is closed and it is just us Mortgage Loan Officers talking brag about how they "don't sell price, they sell service" which is code for, I screw my clients over while making them feel like they are getting some sort of value for it because I am such a great salesman- look at me!

Happy to dig into this more for you if you want. Whether it is explaining how FDIC Insurance works or how the large "most established" banks are absolutely horrible for you as a consumer... or anything else you wish.
Would you agree that there’s less risk of a larger, more established bank going under versus a smaller/midsize bank?
No. There is nearly no risk with FDIC insured deposits. FDIC insured deposits are not just $250K unless you have no family etc.
If the FDIC insured deposits were not able to be covered then the only scenario that that happens in is these too big to fail banks failing and basically taking down the US government along with them. Short of that, are you married and no kids? $500K coverage and then I have to wonder why you have so much cash sitting in a bank account.... and even more so if you take it to these too big to fail banks that gladly give you next to nothing in interest for the honor of banking with them.
 
FWIW, I asked my wife, who is a regional manager for what I would describe as a very small regional bank, if they were seeing a lot of deposit withdrawals and she said no.
This really explains your reaction to my comment earlier in the thread where I suggested people/businesses keep larger sums of money (greater than 250k) in larger, more established banks.
No, I already explained my response. Your position is based in not understanding how FDIC Insurance works. It is pretty much that simple.

But, since you want to infer that I am making statements because of.... I don't know.... protecting my wife's job I guess, let's address that. I have absolutely no problem admitting my disdain for larger, "more established" whatever that means, banks. Why? I have worked for big banks and I have worked for smaller banks. As you might imagine, I have a number of friends and contacts in the industry after spending short of 20 years working in banking. I have first hand experience and plenty of second hand information about how banks work when it comes to the consumer. Big banks are horrible for the consumer. Absolutely horrible. They make decisions basically coming down to "how can we get away with sucking our customers life savings out of them the most" on a consistent basis. I have seen it. Lived it. Smaller banks actually do tend to have people making decisions more based in "how can we deliver value to our clients and be fair while making money". It would be an absolute horrible for this country if there was further consolidation of banks being fed to the "too big to fail" behemoths that have very little interest in the American consumer.

I am actually the biggest fan of Credit Unions for most banking needs. I have no family connections of employment to any CU. I left banking completely and I am a Mortgage Broker now because it is the best option for mortgage lending for most consumers. I am a consumer advocate at heart. If I could do that as my full time job then I would. But the next best thing is for me to work in an area where I believe I can help the most people do the most good for their lives versus the people slinging mortgages in these big banks that when the door is closed and it is just us Mortgage Loan Officers talking brag about how they "don't sell price, they sell service" which is code for, I screw my clients over while making them feel like they are getting some sort of value for it because I am such a great salesman- look at me!

Happy to dig into this more for you if you want. Whether it is explaining how FDIC Insurance works or how the large "most established" banks are absolutely horrible for you as a consumer... or anything else you wish.
Would you agree that there’s less risk of a larger, more established bank going under versus a smaller/midsize bank?
No. There is nearly no risk with FDIC insured deposits. FDIC insured deposits are not just $250K unless you have no family etc.
If the FDIC insured deposits were not able to be covered then the only scenario that that happens in is these too big to fail banks failing and basically taking down the US government along with them. Short of that, are you married and no kids? $500K coverage and then I have to wonder why you have so much cash sitting in a bank account.... and even more so if you take it to these too big to fail banks that gladly give you next to nothing in interest for the honor of banking with them.
You say “no” and then continue on about the fdic insured deposits. I didn’t ask you about that.
 
You
FWIW, I asked my wife, who is a regional manager for what I would describe as a very small regional bank, if they were seeing a lot of deposit withdrawals and she said no.
This really explains your reaction to my comment earlier in the thread where I suggested people/businesses keep larger sums of money (greater than 250k) in larger, more established banks.
No, I already explained my response. Your position is based in not understanding how FDIC Insurance works. It is pretty much that simple.

But, since you want to infer that I am making statements because of.... I don't know.... protecting my wife's job I guess, let's address that. I have absolutely no problem admitting my disdain for larger, "more established" whatever that means, banks. Why? I have worked for big banks and I have worked for smaller banks. As you might imagine, I have a number of friends and contacts in the industry after spending short of 20 years working in banking. I have first hand experience and plenty of second hand information about how banks work when it comes to the consumer. Big banks are horrible for the consumer. Absolutely horrible. They make decisions basically coming down to "how can we get away with sucking our customers life savings out of them the most" on a consistent basis. I have seen it. Lived it. Smaller banks actually do tend to have people making decisions more based in "how can we deliver value to our clients and be fair while making money". It would be an absolute horrible for this country if there was further consolidation of banks being fed to the "too big to fail" behemoths that have very little interest in the American consumer.

I am actually the biggest fan of Credit Unions for most banking needs. I have no family connections of employment to any CU. I left banking completely and I am a Mortgage Broker now because it is the best option for mortgage lending for most consumers. I am a consumer advocate at heart. If I could do that as my full time job then I would. But the next best thing is for me to work in an area where I believe I can help the most people do the most good for their lives versus the people slinging mortgages in these big banks that when the door is closed and it is just us Mortgage Loan Officers talking brag about how they "don't sell price, they sell service" which is code for, I screw my clients over while making them feel like they are getting some sort of value for it because I am such a great salesman- look at me!

Happy to dig into this more for you if you want. Whether it is explaining how FDIC Insurance works or how the large "most established" banks are absolutely horrible for you as a consumer... or anything else you wish.
Would you agree that there’s less risk of a larger, more established bank going under versus a smaller/midsize bank?
No. There is nearly no risk with FDIC insured deposits. FDIC insured deposits are not just $250K unless you have no family etc.
If the FDIC insured deposits were not able to be covered then the only scenario that that happens in is these too big to fail banks failing and basically taking down the US government along with them. Short of that, are you married and no kids? $500K coverage and then I have to wonder why you have so much cash sitting in a bank account.... and even more so if you take it to these too big to fail banks that gladly give you next to nothing in interest for the honor of banking with them.
You say “no” and then continue on about the fdic insured deposits. I didn’t ask you about that.
You asked about risk and I answered about risk.
 
We definitely have a disconnect here. Nevermind.

I still stand by my statement.

We at least agree about better customer service at smaller banks and that CUs are awesome.
 
We definitely have a disconnect here. Nevermind.

I still stand by my statement.

We at least agree about better customer service at smaller banks and that CUs are awesome.
It goes well beyond customer service but yes, we can leave it where we stand and move on. With the possible exception to their wealth management (and I wouldn't lock that in either) 99% of what big banks offer sucks and a consumer can get WAY more value.... lower/higher interest rates, rewards, perks, less fees, etc from community/regional banks and CU's.
 
CPI and PCE have long been corrupted by statistical and accounting tricks. In the decade prior to 2021, we experienced significant, monstrous inflation in housing, education, healthcare, childcare, energy and retirement assets. Since 2021, we experienced the same and worse in some of those, and most everything else, most notably food. It's fugly out there. Spent $12.69 this morning for the same takeout breakfast burrito that cost me ~$8 from 2010-2021. One of many, many examples I have seen. 8% inflation, my ***.
 
Here is Credit Suisse 5 year CDS (insurance against blowing up in the next 5 years). The higher the number, the more likely the bank blows up. Lehman blew up around 640. Credit Suisse is bigger than Lehman and Bears combined. This issue has the possibility of damaging a lot of US banks if not handled soon.

 
CPI and PCE have long been corrupted by statistical and accounting tricks. In the decade prior to 2021, we experienced significant, monstrous inflation in housing, education, healthcare, childcare, energy and retirement assets. Since 2021, we experienced the same and worse in some of those, and most everything else, most notably food. It's fugly out there. Spent $12.69 this morning for the same takeout breakfast burrito that cost me ~$8 from 2010-2021. One of many, many examples I have seen. 8% inflation, my ***.

 
FWIW, I asked my wife, who is a regional manager for what I would describe as a very small regional bank, if they were seeing a lot of deposit withdrawals and she said no.
This really explains your reaction to my comment earlier in the thread where I suggested people/businesses keep larger sums of money (greater than 250k) in larger, more established banks.
No, I already explained my response. Your position is based in not understanding how FDIC Insurance works. It is pretty much that simple.

But, since you want to infer that I am making statements because of.... I don't know.... protecting my wife's job I guess, let's address that. I have absolutely no problem admitting my disdain for larger, "more established" whatever that means, banks. Why? I have worked for big banks and I have worked for smaller banks. As you might imagine, I have a number of friends and contacts in the industry after spending short of 20 years working in banking. I have first hand experience and plenty of second hand information about how banks work when it comes to the consumer. Big banks are horrible for the consumer. Absolutely horrible. They make decisions basically coming down to "how can we get away with sucking our customers life savings out of them the most" on a consistent basis. I have seen it. Lived it. Smaller banks actually do tend to have people making decisions more based in "how can we deliver value to our clients and be fair while making money". It would be an absolute horrible for this country if there was further consolidation of banks being fed to the "too big to fail" behemoths that have very little interest in the American consumer.

I am actually the biggest fan of Credit Unions for most banking needs. I have no family connections of employment to any CU. I left banking completely and I am a Mortgage Broker now because it is the best option for mortgage lending for most consumers. I am a consumer advocate at heart. If I could do that as my full time job then I would. But the next best thing is for me to work in an area where I believe I can help the most people do the most good for their lives versus the people slinging mortgages in these big banks that when the door is closed and it is just us Mortgage Loan Officers talking brag about how they "don't sell price, they sell service" which is code for, I screw my clients over while making them feel like they are getting some sort of value for it because I am such a great salesman- look at me!

Happy to dig into this more for you if you want. Whether it is explaining how FDIC Insurance works or how the large "most established" banks are absolutely horrible for you as a consumer... or anything else you wish.

banks hate consumers because there is no money to be made in consumer banking, which we both know. i hate consumer banking.
 
FWIW, I asked my wife, who is a regional manager for what I would describe as a very small regional bank, if they were seeing a lot of deposit withdrawals and she said no.
This really explains your reaction to my comment earlier in the thread where I suggested people/businesses keep larger sums of money (greater than 250k) in larger, more established banks.
No, I already explained my response. Your position is based in not understanding how FDIC Insurance works. It is pretty much that simple.

But, since you want to infer that I am making statements because of.... I don't know.... protecting my wife's job I guess, let's address that. I have absolutely no problem admitting my disdain for larger, "more established" whatever that means, banks. Why? I have worked for big banks and I have worked for smaller banks. As you might imagine, I have a number of friends and contacts in the industry after spending short of 20 years working in banking. I have first hand experience and plenty of second hand information about how banks work when it comes to the consumer. Big banks are horrible for the consumer. Absolutely horrible. They make decisions basically coming down to "how can we get away with sucking our customers life savings out of them the most" on a consistent basis. I have seen it. Lived it. Smaller banks actually do tend to have people making decisions more based in "how can we deliver value to our clients and be fair while making money". It would be an absolute horrible for this country if there was further consolidation of banks being fed to the "too big to fail" behemoths that have very little interest in the American consumer.

I am actually the biggest fan of Credit Unions for most banking needs. I have no family connections of employment to any CU. I left banking completely and I am a Mortgage Broker now because it is the best option for mortgage lending for most consumers. I am a consumer advocate at heart. If I could do that as my full time job then I would. But the next best thing is for me to work in an area where I believe I can help the most people do the most good for their lives versus the people slinging mortgages in these big banks that when the door is closed and it is just us Mortgage Loan Officers talking brag about how they "don't sell price, they sell service" which is code for, I screw my clients over while making them feel like they are getting some sort of value for it because I am such a great salesman- look at me!

Happy to dig into this more for you if you want. Whether it is explaining how FDIC Insurance works or how the large "most established" banks are absolutely horrible for you as a consumer... or anything else you wish.

banks hate consumers because there is no money to be made in consumer banking, which we both know. i hate consumer banking.
You kidding me? Between a built in home mortgage pipeline and their safe deposit box profit centers, what's not to like about consumer banking?
 
CPI and PCE have long been corrupted by statistical and accounting tricks. In the decade prior to 2021, we experienced significant, monstrous inflation in housing, education, healthcare, childcare, energy and retirement assets. Since 2021, we experienced the same and worse in some of those, and most everything else, most notably food. It's fugly out there. Spent $12.69 this morning for the same takeout breakfast burrito that cost me ~$8 from 2010-2021. One of many, many examples I have seen. 8% inflation, my ***.

It took less than an hour for someone to link to a burrito index after a complaint about price of a breakfast burrito.

This place has still got it! 👍
 
The mere fact that regulators designated two midsized banks as systemic implies they think the system is fragile. My instinct tells me that most regional and community banks are basically sound. The main thing we have to fear is fear itself cascading into bank runs that will force otherwise healthy banks to collapse.
Good article. Thanks for posting.

I highlighted the bolded in light of all the predictions the Fed will continue raising interest rates at the next meeting. Can't see how Powell can defend doing so while simultaneously de facto declaring a systemic threat largely caused by the exact same tightening policy.
If they do raise rates I think they say there are two problems with two answers. Higher rates to combat inflation and the BTFP for bank liquidity issues. They can keep raising rates while the BTFP firebreaks any financial stability issues.
Yes. But the BTFP is only backstopped to $25B in an industry of trillions. By declaring two banks systemic the Fed is admitting many more are at risk. Some quotes from a recent FT article:

The U.S. banking system’s market value of assets is $2 trillion lower than suggested by their book value of assets accounting for loan portfolios held to maturity. Marked-to-market bank assets have declined by an average of 10% across all the banks, with the bottom 5th percentile experiencing a decline of 20%.
10 percent of banks have larger unrecognized losses than those at SVB. Nor was SVB the worst capitalized bank, with 10 percent of banks having lower capitalization than SVB.

Even if only half of uninsured depositors decide to withdraw, almost 190 banks are at a potential risk of impairment to insured depositors, with potentially $300 billion of insured deposits at risk.

Prior to the recent asset declines all US banks had positive bank capitalization. However, after the recent decrease in value of bank assets, 2,315 banks accounting for $11 trillion of aggregate assets have negative capitalization. This calculation underscores that recent declines in bank asset values significantly decreased bank capitalization and bank insolvency risk.

JPM estimates that the program could inject $2tr of liquidity. They assume the big banks won’t tap it.
 
I know I am on an island on this with the cut in the Fed Funds rate but instead of taking decisive action to end this crisis with a cut of 25 bps they seem to be trying to do juuuuuuuuuust enough and if they judge that wrong then guess what happens down the road? I am ok being the lone wolf crying in the forrest though.
Why do you think a 25bps cut would be decisive? That should have zero impact on the bank liquidity issue. If we want to solve the underwater bonds, they would have to roll back most of the rate hikes to do that. The BTFP was the decisive action IMO. It would seem your anecdotal evidence supports that.

I know GS argues against the “long and variable lags” on policy. They say it’s reflected within months. Not sure I buy it.
 
ECB hiked their rates 0.50 this morning if anyone wants to use that as a predictor for the Fed.
I was interested in what they’d do. Their inflation issue is a little worse than ours but CS is a serious issue. You’d have to think the CBs are talking to each other. One would think this makes a Fed hike more likely.

FF futures back to 72% prob of 25bp hike.
 
I know I am on an island on this with the cut in the Fed Funds rate but instead of taking decisive action to end this crisis with a cut of 25 bps they seem to be trying to do juuuuuuuuuust enough and if they judge that wrong then guess what happens down the road? I am ok being the lone wolf crying in the forrest though.
Why do you think a 25bps cut would be decisive? That should have zero impact on the bank liquidity issue. If we want to solve the underwater bonds, they would have to roll back most of the rate hikes to do that. The BTFP was the decisive action IMO. It would seem your anecdotal evidence supports that.

I know GS argues against the “long and variable lags” on policy. They say it’s reflected within months. Not sure I buy it.
Rate cuts directly impact the valuations of bonds that drive bank liquidity metrics.
 
I think a rate hike next week while banks are collapsing will likely be looked back on as a mistake. Similar to not cutting rates in July and September of 2008.
 
My mom was asking me some questions and I have not been paying attention to this.

My parents have two bank accounts. One at Citizens and one at Bank of America. There are three names on the check: mother, father and me. I think we are all considered "owners" of the account but at the very least my two parents will be.

They have between 250-500k in one bank and over 500k in another (but less than 750k).

She wants to know if she should open another account at a 3rd bank and spread the money around.

Suggestions or advice?

My thought is that she is fine as is. My father is very old but when he passes I will make sure that I am definitely an owner of the account if I am not already, so that we can get double the $250k protection (assuming the $250k is for each owner and not per account)
 

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