Fun fact.
Many US banks hold long-duration Treasuries that are currently underwater. They don't have to mark their unrealized losses to market because they plan to hold them to maturity.
This works as long as they don't have a highly-volatile deposit base that pulls money out and forces them to sell their Treasuries at an inopportune time and lock in a loss and thus risk insolvency.
😰
bank runs are just getting started… 🍿
I doubt it.
Small industry-specific banks will fail while the large and diversified ones will pick up the business.
This continues a trend of more and more bank assets consolidating towards the top.
I have a couple of larger banking customers and this is 100% what happens. One of mine is so good at doing it, that the govt essentially gives them first right of refusal in purchasing these failed banks because they can integrate and take over quickly.
Wife’s grandfathers is on the board at a small bank. FDIC loves them now because stayed small and makes good loans. Same strategy was gettin true chastised in 2005.
Agreed, it will mirror the centralization of business that happened during COVID. Unfortunately creating less diversification in the industry and more wealth being controlled by fewer big players.
If only there was a way to invert this trend 🧡🙃
Oh great. Further centralization and bigger monopolies
How about Credit Unions? Are they considered small industry-specific players?
This consolidation towards the top is described as a feature for the Federal Reserve cartel in The Creature From Jekyll Island by Edward Griffin. When formed, one of the key tenants of the Fed was to stop the growth of competitive banks. These failures are a part of their cartel plan.
JFC.
Good thing all of my Dollars have been turned into Bitcoin and Wine. 🧡🍷
#[0]
We’re looking at you, Silvergate.
I doubt they hold that much treasuries to begin with. They probably have less than 3% in reserves.
Isn't it role of Fed to provide emergency liquidity in case of bank run? In theory it should work if interest on that is lower than long term treasuries.
would be a real shame
How about Credit Unions? Are they considered small industry-specific players?
I was waiting for a punch line or supwr fact involving Canada ...
Soooo bank run time to start the party?
Same to china banks
Fun fact: just because you don’t make your unrealized loss does not mean your portfolio is not at risk.
#[0]
Ignorant guy from Europe here, what's the news?
I assume Silvergate bank discussion -> https://www.theguardian.com/technology/2023/mar/09/crypto-bank-silvergate-liquidation-sector-turmoil-wind-down-ftx-exchange
The bank my business uses asks for financials every year for line of credit. I want to ask them for their financials to make sure they sre solvent.
Only problem is I don't know what to look for on a banks balance sheet.
#[0]
We need more bank runs.
They will happen, just need patience and in the mean time buy #bitcoin consistently.
bank run
bank run!
BANK RUN!!!
Do the recent events change your view on the banking industry (eg. ITUB, HDB, etc.)?
Wow, the timing on this one, Lyn.
Lyn, thinking about the Fed, I know you expect tangible book value to go negative in the coming weeks. At what point do they get liquidity constrained? We all know that they can "print"...but, can they print the interest owed on overnight deposits?
Yes they can.
Lyn correct me if I’m wrong please, but in the case of svb they did a horrendous job of managing their duration risk over the past year as rates spiked and they didn’t hedge.
And forgive me if you have mentioned this elsewhere, but it’s my understanding that there are several if not many more institutions who may be in a similar spot.
You’d think the risk desk would have hedged the deposit I/O velocity.
Narrator: 😬
they called it is a “risk-free”.
