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

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.
Right. Opinion vs opinion by analyst. I could've worded my post better, sorry. I was wondering (before I posted that article) if there had been some announcement by the Fed that I had missed. I see now that it was mostly Chase analyst speculation.
 
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.
Right. Opinion vs opinion by analyst. I could've worded my post better, sorry. I was wondering (before I posted that article) if there had been some announcement by the Fed that I had missed. I see now that it was mostly Chase analyst speculation.
This article gives a good summary of what has been issued to date. It was really that $2T comment I was objecting to as it is used to scare people. Almost 2/3rds of that discount window figure was from one firm (First Republic).

When it comes to analysis of the money markets though, Crandall's Money Market Observer is the gold standard.
 
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.
Right. Opinion vs opinion by analyst. I could've worded my post better, sorry. I was wondering (before I posted that article) if there had been some announcement by the Fed that I had missed. I see now that it was mostly Chase analyst speculation.
This article gives a good summary of what has been issued to date. It was really that $2T comment I was objecting to as it is used to scare people. Almost 2/3rds of that discount window figure was from one firm (First Republic).

When it comes to analysis of the money markets though, Crandall's Money Market Observer is the gold standard.
Good read. Thanks!
 
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.
A good point too. To paraphrase from a convo earlier around some of the fallout on this topic: "Sending the wire is easy, figuring out the accounting takes time"
 
UBS seemed very against a merger with CS.
Seriously. The Swiss Government is basically holding a shotgun and saying “You need to marry my daughter. She’s pregnant. No, it’s not yours. Also she smokes and hates football and nags about everything and will cheat on you repeatedly and spend all of your money and you can forget about housework and did I mention she has 17 cats?”
 
UBS seemed very against a merger with CS.
Seriously. The Swiss Government is basically holding a shotgun and saying “You need to marry my daughter. She’s pregnant. No, it’s not yours. Also she smokes and hates football and nags about everything and will cheat on you repeatedly and spend all of your money and you can forget about housework and did I mention she has 17 cats?”
I get that they want to do this to instill confidence, but it just leaves the impression things are much worse than publicly known at CS...
 

“Look, this was not the best solution, but it dominated the other two, which was either nationalization, or trying to wind down the bank,” the chief economic adviser at Allianz SE and a Bloomberg Opinion columnist told Bloomberg TV on Sunday. “It’s not clean, but of the available options, this was the best one that they could have had.”
 
In 2006, Credit Suisse had a market cap of $70B.

By 2016, they had a market cap of $30B.

By 2022, they had a market cap of $10B.

Today, they were acquired for $2B
 

At least two major banks in Europe are examining scenarios of contagion in the region's banking sector and are looking to the Federal Reserve and the ECB for stronger signals of support, two senior executives close to the discussions told Reuters.

The fallout from the crisis of confidence in Credit Suisse Group AG and the failure of two U.S. banks could ripple through the financial system next week, the two executives separately told Reuters on Sunday.

The executives said that their banks and the sector are well capitalised and liquidity is strong, but they fear that the crisis of confidence will sweep up more lenders.
 

UBS Group AG Chairman Colm Kelleher said he will manage down Credit Suisse Group AG’s investment bank, curtailing a source of losses in recent years in a move that potentially spells the end for plans to carve out parts of the unit under the CS First Boston brand.

“Let me be very specific on this: UBS intends to downsize Credit Suisse’s investment banking business and align it with our conservative risk culture,” Kelleher said Sunday at a press conference announcing the deal. “We will be de-risking a lot of the tricky businesses that we are inheriting.”
 

New York Community Bancorp Inc. is pursuing a deal to acquire failed Signature Bank, according to people familiar with the matter.
The Federal Deposit Insurance Corp. could announce a deal for Signature as soon as this week, said the people, who asked to not be identified because the matter isn’t public. No final decision has been made and talks could collapse. Representatives for New York Community Bancorp and the FDIC didn’t immediately reply to messages seeking comment.


The U.S. Federal Deposit Insurance Corp (FDIC) is planning to relaunch the sale process for Silicon Valley Bank after failing to attract buyers in its latest auction, with the regulator seeking a potential break-up of the failed lender, according to people familiar with the matter.

One of the options under consideration by the regulator is a sale process for the private bank of SVB for which bids are due on Wednesday, according to one of the sources, who requested anonymity as these discussions are confidential.
 

First Republic Bank saw its credit ratings downgraded deeper into junk status by S&P Global, which said the lender's recent $30 billion deposit infusion from 11 big banks may not solve its liquidity problems.
S&P cut First Republic's credit rating three notches to "B-plus" from "BB-plus," and warned that another downgrade is possible. Other ratings were also lowered.
 

NEW: The Fed and other global central banks announce an expansion in the frequency of dollar swap line operations. The standing swap lines currently conduct weekly dollar loan operations. Starting Monday, they will offer daily operations
Gonna need a 101 on what this one means.
Fed exchanges dollars with foreign central banks for some of their currency. Foreign central banks lend dollars to their own banks that need them.
 

NEW: The Fed and other global central banks announce an expansion in the frequency of dollar swap line operations. The standing swap lines currently conduct weekly dollar loan operations. Starting Monday, they will offer daily operations
Gonna need a 101 on what this one means.
Fed exchanges dollars with foreign central banks for some of their currency. Foreign central banks lend dollars to their own banks that need them.
Ok, but what difference does it make? I guess this helps spread money around for foreign banks to shore up their liquidity?
 

NEW: The Fed and other global central banks announce an expansion in the frequency of dollar swap line operations. The standing swap lines currently conduct weekly dollar loan operations. Starting Monday, they will offer daily operations
Gonna need a 101 on what this one means.
Fed exchanges dollars with foreign central banks for some of their currency. Foreign central banks lend dollars to their own banks that need them.
Ok, but what difference does it make? I guess this helps spread money around for foreign banks to shore up their liquidity?
Yeah basically the world runs on dollars. In crisis there can be a shortage of dollars worldwide which can break things. So the Fed conducts swaps to provide liquidity. This means there are issues starting to gum things up.
 
All you finance guys in here -- what sites/periodicals do you like to read for insights and information?
I currently subscribe to Bloomberg, The Economist, and the WSJ (this one was free, probably wouldn't pay). Used to subscribe to the Financial Times, but have not been impressed with it's quality in recent years.
 

NEW: The Fed and other global central banks announce an expansion in the frequency of dollar swap line operations. The standing swap lines currently conduct weekly dollar loan operations. Starting Monday, they will offer daily operations
Gonna need a 101 on what this one means.

It's not super uncommon for the Fed to engage in swap line operations with foreign central banks in times of stress. Happened in '08 and when COVID hit. These are not with all foreign central banks out there.

Generally, Fed lends dollars to foreign central bank in exchange for foreign currency. Foreign central bank loans the dollars to institutions/banks within their country who need it (perhaps they need to service debts in dollars for example). After a period of time, the foreign central bank then swaps back it's currency at pre-determined rate while paying some level of interest.

The Fed does not bear much risk in this transaction. The foreign central bank is taking on risk when it lends out to banks within their area (they charge interest to these institutions). This makes sense because the Fed would not know if this foreign bank that's asking for dollars is reputable or not, but the foreign central bank would know:

Reis: So instead, we came up with the swap lines, which are basically where the Fed lends the dollar, say, to the Bank of England, and the Bank of England then lends them to the UK based bank. Still, it is a lending operation, it is a lender of last resort. What happens when we put the foreign central bank in the middle in my example, the Bank of England, is that now that central bank is going to take on all the default risk from the loan. If the British bank doesn't pay, well, the Bank of England is the one who's on the hook because through the swap line it's given pounds to cover any risk from the Fed. But it also means that the Bank of England is the one doing all the monitoring, choosing who should get a loan, which banks are eligible, which collateral they should give, and so on.

Keeps dollars flowing overseas in times of stress when perhaps those flows could lock up a bit (which could exacerbate things).


Central banks around the world saw little takeup of new daily dollar funding efforts on Monday, a sign that strains in the global financial system remain contained for now.
The Swiss National Bank allotted $101 million in a daily seven-day maturity repo operation, the most since a week in October 2022 but well below previous times of broad funding stress. The Bank of England and Bank of Japan received zero bids, while the European Central Bank allotted just $5 million to a single bidder.
 
Winter is coming for banks holding commercial real estate loans and property owners, especially office and mixed-use. Valuations and cash flows are plummeting due to rising rates. We'll see if the Fed/gov't has a "tool" for them as well.

Smaller banks hold around $2.3 trillion in commercial real estate debt, including rental-apartment mortgages, according to an analysis from data firm Trepp Inc. that is almost 80% of commercial mortgages held by all banks.

This year will be critical because about $270 billion in commercial mortgages held by banks are set to expire, according to Trepp—the highest figure on record. Most of these loans are held by banks with less than $250 billion in assets.

If those loans pay off, it would reassure markets. But a large number of defaults could force banks to mark down the value of these and other loans, analysts say, reinforcing fears over the financial health of the U.S. banking system.

Many owners with floating-rate mortgages have to pay much more monthly debt service, cutting into their cash flows. Owners with fixed-rate mortgages will feel the pain of higher rates when they have to refinance.

Source - WSJ
 
All you finance guys in here -- what sites/periodicals do you like to read for insights and information?
I subscribe to John Mauldin’s free weekly newsletter and have been since 2002. It’s great. He saved me from buying a house during a real estate bubble.
And what's his current take on real estate?
I’ll have to go back over some recent newsletters. But guessing that indicators aren’t great.
 
All you finance guys in here -- what sites/periodicals do you like to read for insights and information?
I subscribe to John Mauldin’s free weekly newsletter and have been since 2002. It’s great. He saved me from buying a house during a real estate bubble.
And what's his current take on real estate?
I’ll have to go back over some recent newsletters. But guessing that indicators aren’t great.
I wonder what he will say about the 14.5% sales spike in Feb with the first median drop in value in a while.

Low inventory + high demand = no RE crash. Increase in rates have given a breather but so many are on the sidelines just waiting. I can't see significant unseasonal drops without massive shift in Increase of inventory. It isn't likely as people don't want to give up their mortgage that starts with a 2 or 3.

I have seen some prophecy a RE crash for over a decade now. If you keep saying it... and saying it... and saying it... eventually you will be right but it doesn't mean you were right.
 
All you finance guys in here -- what sites/periodicals do you like to read for insights and information?
I subscribe to John Mauldin’s free weekly newsletter and have been since 2002. It’s great. He saved me from buying a house during a real estate bubble.
And what's his current take on real estate?
I’ll have to go back over some recent newsletters. But guessing that indicators aren’t great.
I wonder what he will say about the 14.5% sales spike in Feb with the first median drop in value in a while.

Low inventory + high demand = no RE crash. Increase in rates have given a breather but so many are on the sidelines just waiting. I can't see significant unseasonal drops without massive shift in Increase of inventory. It isn't likely as people don't want to give up their mortgage that starts with a 2 or 3.

I have seen some prophecy a RE crash for over a decade now. If you keep saying it... and saying it... and saying it... eventually you will be right but it doesn't mean you were right.
100%. I want to move, but thanks to the refi you gave me a referral on in 2021, my 2.85% rate is like free money. I don't want to give that up at all.
 
All you finance guys in here -- what sites/periodicals do you like to read for insights and information?
I subscribe to John Mauldin’s free weekly newsletter and have been since 2002. It’s great. He saved me from buying a house during a real estate bubble.
And what's his current take on real estate?
I’ll have to go back over some recent newsletters. But guessing that indicators aren’t great.
I wonder what he will say about the 14.5% sales spike in Feb with the first median drop in value in a while.

Low inventory + high demand = no RE crash. Increase in rates have given a breather but so many are on the sidelines just waiting. I can't see significant unseasonal drops without massive shift in Increase of inventory. It isn't likely as people don't want to give up their mortgage that starts with a 2 or 3.

I have seen some prophecy a RE crash for over a decade now. If you keep saying it... and saying it... and saying it... eventually you will be right but it doesn't mean you were right.
Going to be an interesting dynamic. One hand you have people unwilling to sell. On the other you have home affordability as the worst…..well, ever. Some hot areas have already dropped 15-20% from their highs. Personally think we will largely have a stalemate in most areas until rates drop significantly.
 
All you finance guys in here -- what sites/periodicals do you like to read for insights and information?
I subscribe to John Mauldin’s free weekly newsletter and have been since 2002. It’s great. He saved me from buying a house during a real estate bubble.
And what's his current take on real estate?
I’ll have to go back over some recent newsletters. But guessing that indicators aren’t great.
I wonder what he will say about the 14.5% sales spike in Feb with the first median drop in value in a while.

Low inventory + high demand = no RE crash. Increase in rates have given a breather but so many are on the sidelines just waiting. I can't see significant unseasonal drops without massive shift in Increase of inventory. It isn't likely as people don't want to give up their mortgage that starts with a 2 or 3.

I have seen some prophecy a RE crash for over a decade now. If you keep saying it... and saying it... and saying it... eventually you will be right but it doesn't mean you were right.
I think there will be pockets of Real estate that will have a crash. The 14.5% sales spike was largely due to median and lower priced real estate selling. The luxury market has been slow for a while. Also—commercial real estate is not out of the woods. Right now the occupancy rates don’t look terrible because there are are lot of pre-existing leases that are being ridden out to their completions. Once they are—the odds are that a lot of companies will either drop their office models or really scale them back due to hybrid/remote work. With that said—I think that anybody with a long term horizon should consider real estate. It’s certainly been the best investment that I have ever made.
 
Owners with fixed-rate mortgages will feel the pain of higher rates when they have to refinance.
I was going to counter this but then about two posts later, there was this
It isn't likely as people don't want to give up their mortgage that starts with a 2 or 3
Which is where I'm at. Not that I would consider moving because I love where I live, my home, everything but why would fixed rate folks be forced to refinance unless they are getting now at 6+ and this comes back around in a few years.
 

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