massraider
Footballguy
Let's just get this out of the way:Kind of humorous that Credit Suisse's chairman is named Axel Lehman.
Jim Cramer is bullish on Credit Suisse
Let's just get this out of the way:Kind of humorous that Credit Suisse's chairman is named Axel Lehman.
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.If this was such an easy problem to diagnose why wouldn’t further regulation in that area make sense?The solution to failed regulation…….More regulation and intervention!! It’s amazing right?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.
if all deposits were guaranteed and not a random figure of $250m, it would eliminate a run. just saying.
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.Credit Suisse thinking this will spread?
Market Stress Snarls Trading in U.S. Treasurys
Liquidity, the capacity to trade quickly at quoted prices, has fallen sharply.www.wsj.com
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.”
Lol. I know him from years ago. We worked at the same company and crossed paths. Typical empty suit.Kind of humorous that Credit Suisse's chairman is named Axel Lehman.
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.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.
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.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.
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.
Meanwhile, the 1-month bill is trading about 50bps beneath SOFRPer 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.
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.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.
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.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 "they should pause, but they are on a runaway train and are going to raise because they said they would" camp.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.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.
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).
This is the technical term used in finance, right?Counterpoint: Money Machine go “brrrrrrrrr” and we start posting these all the time again:
Me too.I'm surprised that backing off rate hikes is even on the table.
No, I already explained my response. Your position is based in not understanding how FDIC Insurance works. It is pretty much that simple.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.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.
Would you agree that there’s less risk of a larger, more established bank going under versus a smaller/midsize bank?No, I already explained my response. Your position is based in not understanding how FDIC Insurance works. It is pretty much that simple.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.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.
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.
They can't raise now. They are backed into a corner on that.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.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.
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).
No. There is nearly no risk with FDIC insured deposits. FDIC insured deposits are not just $250K unless you have no family etc.Would you agree that there’s less risk of a larger, more established bank going under versus a smaller/midsize bank?No, I already explained my response. Your position is based in not understanding how FDIC Insurance works. It is pretty much that simple.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.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.
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.
I feel bad about my comments about the Fed now... don't take that personally.Me too.I'm surprised that backing off rate hikes is even on the table.
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.
You say “no” and then continue on about the fdic insured deposits. I didn’t ask you about that.No. There is nearly no risk with FDIC insured deposits. FDIC insured deposits are not just $250K unless you have no family etc.Would you agree that there’s less risk of a larger, more established bank going under versus a smaller/midsize bank?No, I already explained my response. Your position is based in not understanding how FDIC Insurance works. It is pretty much that simple.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.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.
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.
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 asked about risk and I answered about risk.You say “no” and then continue on about the fdic insured deposits. I didn’t ask you about that.No. There is nearly no risk with FDIC insured deposits. FDIC insured deposits are not just $250K unless you have no family etc.Would you agree that there’s less risk of a larger, more established bank going under versus a smaller/midsize bank?No, I already explained my response. Your position is based in not understanding how FDIC Insurance works. It is pretty much that simple.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.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.
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.
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.
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.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.
You'd have to work pretty hard for me to take a comment on the FED personallyI feel bad about my comments about the Fed now... don't take that personally.
Sounds like this burrito has experienced roughly 4% annual inflation.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 ***.
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 ***.
No, I already explained my response. Your position is based in not understanding how FDIC Insurance works. It is pretty much that simple.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.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.
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.
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?No, I already explained my response. Your position is based in not understanding how FDIC Insurance works. It is pretty much that simple.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.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.
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.
It took less than an hour for someone to link to a burrito index after a complaint about price of a breakfast burrito.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 ***.
The 'Burrito Index' has a way different view of inflation than the government does
College tuition, healthcare expenses, and even local taco trucks show that money is losing purchasing power much faster than the government says.www.businessinsider.com
Sounds like this burrito has experienced roughly 4% annual inflation.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 ***.
JPM estimates that the program could inject $2tr of liquidity. They assume the big banks won’t tap it.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: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.Good article. Thanks for posting.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.
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.
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.
Monetary Tightening and U.S. Bank Fragility in 2023: Mark-to-Market Losses and Uninsured Depositor Runs?
We develop a conceptual framework and an empirical methodology to analyze the effect of rising interest rates on the value of U.S. bank assets and bank stabilitpapers.ssrn.com
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 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 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.ECB hiked their rates 0.50 this morning if anyone wants to use that as a predictor for the Fed.
Rate cuts directly impact the valuations of bonds that drive bank liquidity metrics.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 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 know GS argues against the “long and variable lags” on policy. They say it’s reflected within months. Not sure I buy it.
Rate hike coming. It's already priced in.
What does the E.C.B. tell us about the Fed? Hard to know for sure, but that euro area central bankers are sticking with the inflation fight, and trying to separate it from financial stability, is clearly noteworthy.