Ok, so play it out and how does it work?
JP Morgan, Chase, BofA, and the others will be “forced” by the government to buy out the competitors at discount prices, assume the bad debts, and we will bail them out. To do otherwise creates more panic in the banking industry.
I am not trying to be argumentative, but recent history demonstrates that the probable outcome is what I wrote above.
There is also a matter of which properties are most at risks with the highest debt to capital ratios. These are generally not the little retail spaces that are most in danger, it is the post-Covid high dollar properties that lost tenants in big cities. My understanding from credible market folks is that much of that market is owned directly by the big boys.
If I am wrong or you have better knowledge I will gladly defer, but I suspect a bail out is coming and given recent history you can bet it will mostly benefit the big 5 banks and Blackrock with my kids on the hook for it.
I didn’t write there’d be no bailouts. I wrote that most commercial paper is held by smaller and regional banks, after you wrote most of it was held by the larger ones.
Around 70% of commercial paper is held by bank other than the top 25.
You’re likely right about bailouts - regardless of bank size. And yes, when smaller institutions fail the larger tend to gobble them up.
The problem with that is, sometimes nobody wants them. They view the assets as liabilities believe it or not, and they can be.
The Swiss government had to basically bribe and coerce USB into taking Credit Suisse.