Will My Bank Fail?

[+ augustus]

1 hour ago, ThroatCummer said:

That's the crux of the problem.  They tied up assets in really long, illiquid bets (which were completely safe, by the way) and people came running for their money. There is a social media aspect here that could be listed as a contributing factor in all of this. Something banks never had to deal with in centuries and decades past. 

There has always been a mismatch between assets and liabilities in the banking system.  The banks since the 1930's have been able to borrow from the Fed and the FHLB when they needed cash in a hurry and would put their bonds up as collateral.  But it's a bit deeper than that now because 1) their bond holdings have lost value because of the rise in interest rates the last year and 2) many of their loans are going bad. 

[Luv2play]

6 hours ago, augustus said:

There has always been a mismatch between assets and liabilities in the banking system.  The banks since the 1930's have been able to borrow from the Fed and the FHLB when they needed cash in a hurry and would put their bonds up as collateral.  But it's a bit deeper than that now because 1) their bond holdings have lost value because of the rise in interest rates the last year and 2) many of their loans are going bad. 

As I understand it the Fed has made their discount window available to all banks in the US with looser rules since last weekend. Now they can borrow funds in exchange for the security of the bonds they hold at face value and not the depreciated values as a result of the rise in interest rates. 

The NYT is reporting this evening that banks are making great use of this and tens of billions have been borrowed from the Fed this week to increase banks' liquidity to meet any demand on their deposits by customers withdrawing their money.  

[+ tassojunior]

several of the big banks have exposure to credit card debt. i don't remember where I pulled this from a few weeks ago for a story on cc defaults but credit card defaults have soared to Great Recession levels as people deplete their lockdown savings. I'm not sure how the few homeowners who still have adjustable-rate mortgages or home equities are doing either. and then there's Europe and China contagion even with us propping up Europe. granted, it's not the scale of 2009 with the residential mortgage collapse, but it's not nothing. and commercial real estate is shaky like residential was in early 2008 and it has loans. 

Edited March 18, 2023 by tassojunior

[pubic_assistance]

On 3/18/2023 at 2:41 PM, tassojunior said:

credit card defaults have soared to Great Recession levels

Inevitable.

Forced Covid shut downs for six months + another six months of heavy restrictions + another year of limitations on businesses as well as shortages and problems with shipments left most of the country in debt.

Banks rejoiced in 2022 with record profits on the books from credit spending, but once the various pandemic related financial support systems  sponsored by the Federal Government were shut down it was a given that thousands of defaults would follow. 

Edited March 20, 2023 by pubic_assistance
grammar

[Rudynate]

Scary things afoot at First Republic.  I tried to pay a massage provider from a Paypal account linked to my checking account.  The are delaying disbursement until 3/31.  I guess I need to pull my money. 

 

 

[+ augustus]

2 hours ago, Rudynate said:

Scary things afoot at First Republic.  I tried to pay a massage provider from a Paypal account linked to my checking account.  The are delaying disbursement until 3/31.  I guess I need to pull my money. 

 

 

Especially since, I'm pretty sure, there is no blanket deposit insurance at First Republic over the 250k limit as was granted to SVB.

[pubic_assistance]

6 hours ago, Rudynate said:

Scary things afoot at First Republic.  I tried to pay a massage provider from a Paypal account linked to my checking account.  The are delaying disbursement until 3/31. 

 

 

 They appear to be putting delays on all transactions that will make it look like their cash is low.

I transfered money out and it took 10 days when it normally would have cleared in 24 hours.