More Serious Than I Thought (Silver)
The real problem is that BofA may now be short 800 million oz of physical silver without a chance of ever being able to pay that silver back, except at much higher prices – as it must do someday. At least, that’s the way I see it – based upon public data from the US Treasury Department and my knowledge of how nutty are these precious metals loans.
The seriousness of this issue is rooted in the scale of the numbers. If Bank of America is short 800 million oz of silver, as the data in the OCC report strongly suggests, then that means every dollar higher in the price of silver translated into an $800 million open (unrealized) loss. Every $10 move equates to an $8 billion loss. A hundred dollar move higher from here equates to an $80 billion loss. Can BofA fund such losses or will taxpayers be called upon to bail the bank out? Even the slightest hint of such a development should be enough to require immediate clarification from the regulators and BofA and there’s a lot more than the slightest hint in the OCC report.
https://silverseek.com/article/more-serious-i-thought
Under Dodd-Frank if a bank becomes insolvent they can take the money deposited in bank accounts at the bank and use it to cover their losses. Think Italy and Cyprus. If this is done there is the $250,000 guarantee by the FDIC, but the bank under the law doesn’t owe the money confiscated. They give the account holders equity stock in their insolvent company.