Posted on 03/12/2023 7:44:13 AM PDT by Kaiser8408a
Are you ready?
Despite cries from Summers, Yellen and other the DC illuminati (Biden is oddly silent), US banks are NOT fine. In fact, banks in general are suffering from Fed rates increases due to holding of long-term Treasuries and MBS.
In fact, The Federal Reserve’s fight against inflation is causing serious problems, as exemplified by AOC. No, not THAT AOC. but bank Accumulated Other Comprehensive Income.
Accumulated Other Comprehensive Income (AOCI) are special gains and losses that are listed as special items in the shareholder equity section of a company’s balance sheet. The AOCI account is the designated space for unrealized profits or losses on items that are placed in the other comprehensive income category.
On the regulatory call reports, AOCI is added to regulatory capital. Since SVB’s AOCI was negative (because of its unrealized losses on AFS securities) as of Dec. 31, it lowered the company’s total equity capital.
Or this chart of vulnerable banks from Morningstar of unrealized losses and liquidity risk.
After Congress passed the greatly flawed Dodd-Frank banking legislation, bailouts of banks are prohibited. But bank BAIL-INs still exist. Banks use money from their unsecured creditors, including depositors and bondholders, to restructure their capital to stay afloat. Put simply, they can convert their debt into equity to increase their capital requirements. Although depositors run the risk of losing some of their deposits, banks can only use deposits in excess of the $250,000 protection provided by the Federal Deposit Insurance Corporation (FDIC).
In any case, the FDIC and Fed are weighing a special vehicle after SVB swiftly collapses. Special vehicle? Sounds an awful like the mega bank bailout of 2008 under Hank Paulson.
(Excerpt) Read more at confoundedinterest.net ...
This is controlled demolition intended to drive us to the central bank digital currency when the bank runs begin.
A more likely scenario is that people lose confidence in banking altogether — and they’ll have less confidence in a central bank than in their local bank branch.
it’s 2008 all over again. GM is failing, Banks are failing, Housing is way down...
We didn’t learn a damn thing from 2008 because failure was socialized. Until we let people/businesses fail we will continue this cycle.
System-wide bank health depends on how much of their long-term mortgages they sold to institutional investors and bundlers vs how much they are holding in-house.
People with $250,000 or less are FDIC insured... for now.
Print more money to bail them out, what could go wrong? When the Fed does the only run that’s going to happen is on wheel barrows at Home Depot.
The bigger story is the COMPANIES that have millions of dollars in deposits at risk … and their employees, vendors, and creditors.
If I am the CEO of a company like that and you present me with a “CBDC or nothing” option, I just never show up for work again and let my employees, vendors and creditors clean up the mess — or (more likely) NOT clean it up.
If the plan is to crash the US economy this makes perfect sense......but hey, I’m notoriously paranoid.
Just saw a talking head recommend a mutual fund that invests in large cap banks. The logic is that the big banks are not in trouble but they have gone down on the SVB scare so now is a good time to invest in them.
Even better.
The goal is complete economic collapse for the peasants.
It’s no paranoia when you are right or when they really are after you.
If regional banks go down the tubes, the larger banks left are much more controllable by the federal gov’t.
Yes. And they will have less competition.
You may have something. The banks and treasury are already testing, and have been for months, how a CBDC would work within the economy.
By exchanging cash deposits for CBDC which would not, at this point, be circulating in the economy, one could be looking at the Trojan Horse for implementation. The bank would remain solvent albeit accounts frozen, until the next stage.
There is a new one world currency on the extremely near horizon.
I’m not at liberty to divulge the name.
That is probably the clearest explanation of what is going on that I have read yet. I understand why SVB has no actuary department to assess risk, but where are all the actuaries at the other ESG banks and investment firms? Actuaries are anathema to ESG.
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