What's new
Fantasy Football - Footballguys Forums

Welcome to Our Forums. Once you've registered and logged in, you're primed to talk football, among other topics, with the sharpest and most experienced fantasy players on the internet.

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

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)
You should be fine. Check out this primer from the FDIC and maybe call the institution to confirm you are setup quickly.

Also, Bank of America should still have an FDIC sweep program that you could opt into. That may be more of a thing for Merrill customers and may have less coverage since they closed their charter banks though.
 
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.

You have $500k and can only open one account. Do you choose the regional bank that's overly exposed to a higher-risk industry where the teller knows your name? Or the diversified national bank where they don't know your name and pay 10bps less on deposits?
 
JPM estimates that the program could inject $2tr of liquidity. They assume the big banks won’t tap it.
Which would be inflationary, no?

I confess I don't know the mechanics but sounds like either a) a form of QE or b) if Treasury ended up purchasing underwater securities they would need to print money to do so.
 
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.
The EU has much stricter standards around interest rate risk in the banking book so they should not have the unrealized loss problem that SVB and other regionals are experiencing. So I would expect hikes to matter less there.
 
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.
The issue right now is not the financials but confidence. Cutting 25 bps injects confidence in a decisive way. It also gets a jump on the coming rate cuts with the economy going flatlined. This is based on my thinking that the previous rate hikes will really start to hit the markets and inflation will decline anyways while the economy will struggle.

It won't happen. I know I sound like the crazy person that goes against what everyone else is saying. It is what it is. I have gone through enough "well, maybe I am wrong, everyone else says this... so, I will go with it too" and I am too old to care now. If I am wrong, I am wrong and I will own it. But then again, it will like proving a negative.

I will say that the CPI numbers were still more stubborn than I expected them to be but it does show a continued trend of easing inflation.

I would also overhaul the FDIC insurance coverage. No one understands how it is set up now... so simplify it and increase the coverage. Again, it is not about the coverage itself but instilling faith and confidence in the banking system which is really what the FDIC insurance is all about anyways.
 
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.
Correction... big banks hate consumers. For example, a particular CEO of one large bank comes out and publicly says they don't want to do mortgages. Their attitude on all consumer banking is basically "Well... we don't want to do this crap so if you really want to do business with us, we will give you less (interest on deposits, rewards, etc) and rape you with high fees, interest (mortgages, equity lending, etc) which is the price you give up for the privilege of banking with us." They expect consumers to bank with them because consumers are dumb and don't know better.

Credit Unions and smaller banks live on consumers. They actually treat consumers, in both customer service and product/service offerings, like valued customers and not numbers to be annoyed with.
 
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.

You have $500k and can only open one account. Do you choose the regional bank that's overly exposed to a higher-risk industry where the teller knows your name? Or the diversified national bank where they don't know your name and pay 10bps less on deposits?
Neither. Most likely an NCUA insured CU in a co-owned account with my wife.

If you force that out as an option, then I am putting it in a smaller bank, again, co-owned account with my wife, with full FDIC coverage and gain more on return than the crap piss on me with a bad attitude from a big bank. And it is funny you think that the difference in actual value is 10 bps.

Chase savings account. .01% interest all balances.
But wait... if you get the Premier Savings account because you are such a great consumer.... .02% on all balances.

I just picked my wife's bank, not cherry picking...
Balances at or greater than $250K 2.32% interest.

Zero risk of deposits. Fully FDIC insured. Getting 2.32% return versus the .02% on my $500K from a national bank. Not even a decision to make.
 
Last edited:

A group of financial institutions are in talks to deposit roughly $20 billion in First Republic, sources told CNBC’s David Faber. The group includes Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup and others, the sources said.

The deal is not done yet, the sources said. The plan does not call for an of acquisition of First Republic. The sources noted the amount was a moving target. Other reports said the deposit boost could be as much as $30 billion.
 

What they're saying: "Even prior to this shock, bank lending conditions had begun to tighten to levels that typically precede recessions," Matthew Luzzetti, chief U.S. economist at Deutsche Bank, tells Axios.

  • "We anticipate this shock is likely to lead to further risk aversion that will accelerate the tightening through this channel, making a recession by year-end even more likely," he said.
 
We bailed on Wells Fargo a few years ago when it was revealed they were literally thieving from their customers -- not metaphorically -- and moved to a credit union. I have no idea why I didn't do it decades ago. IMO everything is better.
Not snark. How is it better? We have one in our building but I never understood the difference or cared enough to switch
 
We have one in our building but I never understood the difference or cared enough to switch
I'm sure someone else can explain better than me how they're structured, but I believe they're run more conservatively in general and have less exposure to the broader banking world (I like that, for reasons that should be obvious today).

It's also serves just my county (IIRC, living or working in my county is the pre-req for having an account there). So they're legit tied to the community.

Our rates are both higher (for deposits) and lower (for loans) than they were thru Wells Fargo.

Just looking now, I can get a 36-month used car loan for 4.34% for example. I haven't shopped that but when I did the last time my CU rate was a very good. (ETA: Bankrate says the average for my credit score is 5.74%.)

And that leaves aside the ridiculous pleasure I took in telling Wells Fargo exactly why we were closing our accounts.
 
We bailed on Wells Fargo a few years ago when it was revealed they were literally thieving from their customers -- not metaphorically -- and moved to a credit union. I have no idea why I didn't do it decades ago. IMO everything is better.
Not snark. How is it better? We have one in our building but I never understood the difference or cared enough to switch

Credit Unions are owned by their members, not a corporation. When they were first created they were required to cater to a specific subset of people - Farmers for instance. Or, when I was in college there was one on campus that catered to the employees of the school and their families. My mother worked there so I was able to join. Nowadays, they seem to have expanded the allowed membership groups to the point that most people can join a credit union, but they're still owned by their members.
 
I have my HELOC through a local credit union. I agree the rates were better (that's why I went there) but to be honest the ability to move money in and out of the CU is a real PITA. There's a limit of like $6k per day and it takes days before the transactions process. To move money from my Chase checking account to pay my CitiCard balance is instantaneous from Citi's perspective (as a pending credit) and next business day for Chase to process it.

Not speaking for everybody, but for people like me with families; with households to run; with lots of liquid moving through bills, credit cards, and bank accounts; who are looking to avoid interest by paying balances monthly and need to time with pay cycles, the big box banks offer much more robust self-service options.
 
JPM estimates that the program could inject $2tr of liquidity. They assume the big banks won’t tap it.
Which would be inflationary, no?

I confess I don't know the mechanics but sounds like either a) a form of QE or b) if Treasury ended up purchasing underwater securities they would need to print money to do so.
The Fed is loaning money with the securities as collateral. The Treasury just backstopped it. Inflationary? I’m not sure. Banks would simply be replacing one liability (deposit) with another (loan).

Fed balance sheet did see a $305bn jump in emergency loans the past week. Emergency loans peaked at $130bn in April 2020. GFC height was $437.5bn in October 2008. It appears loans to SIVB and SBNY were around $143bn (the two banks were around $330bn in total assets). Central Bank swap lines increased $61bn.

Interestingly there was little use of BTFP ($12bn). Banks mostly borrowed via the discount window.
 

Interestingly there was little use of BTFP ($12bn). Banks mostly borrowed via the discount window.
Given that it was 25B, you don't think half is a substantial amount?

I still hate this bailout - not just a bailout, but one we're paying for with passthru FDIC fees. If this was Wichita Valley Bank depositors would have been left to hang.
 

Interestingly there was little use of BTFP ($12bn). Banks mostly borrowed via the discount window.
Given that it was 25B, you don't think half is a substantial amount?

I still hate this bailout - not just a bailout, but one we're paying for with passthru FDIC fees. If this was Wichita Valley Bank depositors would have been left to hang.
$25bn was the Treasury backstop. The total program size can be whatever the Fed wants to lever it to. The $25bn was to cover any losses. I was a little surprised everyone just borrowed via the Discount Window.
 
If this was Wichita Valley Bank depositors would have been left to hang.
I’ve seen this kind of baseless comment numerous times from certain sections of the online information ecosystem (If this was an Alabama bank or Farmers Valley Bank, nothing would have happened, etc.) , and it’s easy to do since it’s an unprovable hypothetical. But there’s been nothing from the current administration that’s indicated their decisions to help out are informed by how the electoral college voted in that particular area. Like, for example, with disasters like wildfires.
 
JPM made a point that banks need time to setup their systems for the BTFP, hence the heavy use of the discount window. That makes sense as the BTFP seemed the more favorable program.
 
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.
Correction... big banks hate consumers. For example, a particular CEO of one large bank comes out and publicly says they don't want to do mortgages. Their attitude on all consumer banking is basically "Well... we don't want to do this crap so if you really want to do business with us, we will give you less (interest on deposits, rewards, etc) and rape you with high fees, interest (mortgages, equity lending, etc) which is the price you give up for the privilege of banking with us." They expect consumers to bank with them because consumers are dumb and don't know better.

Credit Unions and smaller banks live on consumers. They actually treat consumers, in both customer service and product/service offerings, like valued customers and not numbers to be annoyed with.
This is accurate, but also....it takes 2 to tango. For some reason I have conversations with my customers, where most of the time I am telling them we no longer want to do business with them (commercial side) and more often than not I get push back. "We want to stay, we are not moving, blah blah blah". This happens a zillion times on the consumer side. The general population has zero understanding that a bank is a business. I ask the same people, "if you went to a restaurant, they charged you for forks and knives and spoons, charged you more than other people and places, sat you at a filthy table in the back of the kitchen, served you awful food and told you they didn't want your business, would you continue to eat there or find a new restaurant?" I mean, people are free to bank elsewhere, but feel that their $5,000- checking account deposit ensures loyalty and special privileges. Dumbfounding.
 
If this was Wichita Valley Bank depositors would have been left to hang.
I’ve seen this kind of baseless comment numerous times from certain sections of the online information ecosystem (If this was an Alabama bank or Farmers Valley Bank, nothing would have happened, etc.) , and it’s easy to do since it’s an unprovable hypothetical. But there’s been nothing from the current administration that’s indicated their decisions to help out are informed by how the electoral college voted in that particular area. Like, for example, with disasters like wildfires.
Given Yellen's comments I'm very comfortable in my assessment.
 
The advantage a CU has over banks is in taxes. CU's do not pay taxes and reinvest everything into their members who are the owners of the CU. This means that are most often able to do much better on average on products and services than banks. Not all CU's are created equal and just because they are a CU does not mean they do great or offer the best in everything. CU's are laser focused on the consumer. Many (most?) do not even offer any business banking products.

By charter, membership is open to whatever membership segment that they have. This depends on the CU but can be employers, city, county, state, organizations, military service, etc.
 
shocking that regulators would miss that in stress tests.
I believe I read somewhere SVB didn't have to undergo stress tests.
wtf? why not if they posed a systematic risk to the banking industry?
SVB was only declared a "systemic risk exception" by Yellen and the fed regulators during its emergency weekend mtg
i understand that, but why then? shouldn't they be looking at all large/mid banks to determine this? isn't that their job?
 
So apparently the Fed knew about the problems at SVB a year ago. This kind of torpedoes the theory that the ONLY reason this bank failed was due to a bank run:


As usual, our government not doing their job contributed to an issue they might have prevented.
 
So apparently the Fed knew about the problems at SVB a year ago. This kind of torpedoes the theory that the ONLY reason this bank failed was due to a bank run:


As usual, our government not doing their job contributed to an issue they might have prevented.
A bank doesn't have a bank run in a vacuum. Even if that reason is made up and rumor or because another bank with a similar profile failed, there needs to be something that makes depositors lose faith and "run to get their money out" of that bank.
 

UBS is in discussions to take over all or part of Credit Suisse, with the boards of Switzerland’s two biggest lenders set to meet separately over the weekend to consider Europe’s most consequential banking combination since the financial crisis, according to multiple people briefed on the talks.
 

In a paper posted this week to the Social Science Research Network, the economists estimated how much market value individual U.S. banks' asset books have lost during the Fed's rapid rate-increasing campaign. The value of such assets, which often include as Treasury notes and mortgage loans, can fall when new bonds have higher rates.
The economists also examined the proportion of banks' funding that comes from uninsured depositors, or accounts with more than $250,000. They estimated that there are 186 U.S. banks where, if half of uninsured depositors quickly withdrew their funds, even insured depositors could face impairments because the bank wouldn't have enough assets to make all depositors whole, potentially forcing the FDIC to step in.
 

First Republic Bank is in talks to raise money from other banks or private equity firms by issuing new shares, in a desperate bid to bolster its finances, one day after the biggest U.S. banks gave it a $30 billion infusion, three people with knowledge of the process said.
The terms of any deal are still under discussion, two of the people said. A full sale of the bank is also possible, one of the people said. The bank’s market value shrunk to $4 billion on Friday from around $22 billion at the beginning of March.
 

Even with turmoil in the banking industry and uncertainty ahead, the Federal Reserve likely will approve a quarter-percentage-point interest rate increase next week, according to market pricing and many Wall Street experts.

Rate expectations have been on a rapidly swinging pendulum over the past two weeks, varying from a half-point hike to holding the line and even at one point some talk that the Fed could cut rates.

“They have to do something, otherwise they lose credibility,” said Doug Roberts, founder and chief investment strategist at Channel Capital Research. “They want to do 25, and the 25 sends a message. But it’s really going to depend on the comments afterwards, what Powell says in public. … I don’t think he’s going to do the 180-degree shift everybody’s talking about.”

“This might be one of those times where there’s a difference between what they should do and what I think they will do. They definitely should not tighten policy,” said Mark Zandi, chief economist at Moody’s Analytics. “People are really on edge, and any little thing might push them over the edge, so I just don’t get it. Why can’t you just pivot here a little and focus on financial stability?”

Zandi, who has been forecasting no rate hike, said it’s highly unusual and dangerous to see monetary policy tightening under these conditions.

“You’re not going to lose your battle against inflation with a pause here. But you could lose the financial system,” he said. “So I just don’t get the logic for tightening policy in the current environment.”

The biggest concern is that the Fed’s moves to arrest inflation eventually will take the economy into at least a shallow recession. Zandi said a hike next week would raise those odds.

“I think more rational heads will prevail, but it is possible that they are so focused on inflation that they are willing to take their chance with the financial system,” he said. “I thought we could make our way through this period without a recession, but it required some reasonably good policymaking by the Fed.
 

In a paper posted this week to the Social Science Research Network, the economists estimated how much market value individual U.S. banks' asset books have lost during the Fed's rapid rate-increasing campaign. The value of such assets, which often include as Treasury notes and mortgage loans, can fall when new bonds have higher rates.
The economists also examined the proportion of banks' funding that comes from uninsured depositors, or accounts with more than $250,000. They estimated that there are 186 U.S. banks where, if half of uninsured depositors quickly withdrew their funds, even insured depositors could face impairments because the bank wouldn't have enough assets to make all depositors whole, potentially forcing the FDIC to step in.
Seems like a pretty irresponsible headline for a paper that acknowledges: "...SVB had a disproportional share of uninsured funding: only 1 percent of banks had higher uninsured leverage."
 
so I'm seeing that they have injected 300 billion, and plan to inject up to 2 Trillion? Is that correct?
No, not really.
go on...
Your own article states, contrary to the headline:

Lou Crandall at Wrightson ICAP appears more circumspect about how quickly banks will ramp up their funding from the new facility. His reserve balance projections assume that combined activity at the discount window and the new Bank Term Funding Program rose by roughly $100 billion over the past week. That would take it above the discount window’s previous highs for the year to levels last seen amid the pandemic-related upheaval of 2020.


Data released yesterday afternoon supports this view rather than the projections from JPM.
 

Users who are viewing this thread

Top