Posted on 05/02/2023 9:34:54 AM PDT by CFW
The twin crashes in US commercial real estate and the US bond market have collided with $9 trillion uninsured deposits in the American banking system. Such deposits can vanish in an afternoon in the cyber age.
The second and third biggest bank failures in US history have followed in quick succession. The US Treasury and Federal Reserve would like us to believe that they are “idiosyncratic”. That is a dangerous evasion.
Almost half of America’s 4,800 banks have already burned through their capital buffers and are running on negative equity. They may not have to mark all losses to market under US accounting rules but that does not make them solvent. Somebody will take those losses.
“It’s spooky. Thousands of banks are underwater,” said Professor Amit Seru, a banking expert at Stanford University. “Let’s not pretend that this is just about Silicon Valley Bank and First Republic. A lot of the US banking system is potentially insolvent.”
(Excerpt) Read more at finance.yahoo.com ...
Also same status at Silicon Valley Bank
“PacWest (PACW) and Western Alliance (WAL) plunged Tuesday as investors remain convinced the worst is not yet over for troubled regional banks.
***
Other regional banks also plummeted, including Zions (ZION), Comerica (CMA) and Key (KEY).”
Um, we are still sorting it.
“Also same status at Silicon Valley Bank”
Those depositors got lucky with a fed bailout!
By "it", I presume you mean CBDCs?
That is why CBDC is only a transition. As a 'fiat', it too will suffer inflation. There is no future for any fiat - the dollar or CBDC. It's taken 110 years for the FED dollar to inflate to its imminent crash. For a fiat CBDC, I think its crash will be relatively quick, as we become more fiat-savvy.
PM-based financial system is Constitutional. It is the only ultimate path for us as a civilized free society.
That’s true. That also applies to most business bank accounts. That’s why bigger banks are so attractive to large customers. Ford Motor Co. doesn’t maintain 1,800 different bank accounts to meet its payroll while protecting itself under the FDIC’s $250,000 deposit insurance limit.
The guy was an absolute genius.
LOL
Keep telling yourself that.
Or you could look at the OCC and SEC’s Rules for computing regulatory net capital. If that isn’t good enough, review ASC 820 for fair value that your assets have to get reported on.
Asserting that Municipal, Corporate, Agency, and Treasury fixed income does not get marked to market is one of the most freaking hilarious things I think I have read here!!! KUDOS TO YOU SIR! LOL
First rule of any money management “never go long in bonds”. Some things never change. People still buy it though... some of our buyers were asking for 40 year paper 3 years ago. Insanity.
Yeah, but not from an economic apocalypse. And we were about 2-3 weeks away in September 2008.
The problem for banks like SVB came when depositors began withdrawing huge sums of money. Once that happened, the bank was forced to sell billions of dollars worth of those HTM assets. Not only did this mean they had to sell them at a huge loss due to rising interest rates, but once they began selling off those HTM assets they were required (under banking regulations) to re-designate their entire portfolio of those bonds from HTM to AFS ("available for sale") assets -- at current market values.
Three years ago was around the time a financial advisor in my business circles was raising the possibility of the U.S. entering a “negative interest rate” environment … so it doesn’t shock me that big players might be looking to lock in even minuscule interest rates for the long term.
Rate pause likely.
“President Joe Biden on Monday finally requested that House Speaker Kevin McCarthy (R-CA) negotiate the debt limit during a meeting to be held on May 9 to avoid default, a move that contradicted the White House’s previous official position.”
No increasing spending = no need for rate increase considering banks are already failing under the strain. Need a pause to catch up on liabilities.
Emperor dopey joe’s decree that those with good credit be punished in order to compel banks to loan to those with bad credit will surely save the banks. No?
Banking experts agree. Mark to market is not required:
“Banking experts agree.” What could possibly go wrong?
their “reserves”
There is your KEY WORD. Reserves are not assets. It was a big deal a few years ago when AAA municipal debt was declared “reserve eligible”.
The runs started after audit season and the larger depositers saw what was happening to ASSETS. Reserves were ok until the end.
Not quite that simple...
“For banks that are not considered under FASB’s definition to be “public business entities,” there is good news regarding footnote disclosures of the fair value of all assets and liabilities: these disclosures will no longer be required. However, banks that are public business entities will be required to disclose the value of their loans at the so-called “exit price” – a major change for most banks.”
Valuations are disclosed.
And the use of 12 year old articles about the current Mark practices is about 4 amendments to ASC 820 out of date and the article was 3 years before the standard was adopted.
You’re banking experts changed their knowledge when the CPA’s told ‘em to.
The HGExperts article is 13 years old and was written 5 years before ASC 820 became standard.
I quoted the other article in another response — pretty clear that for a public bank that things need to get disclosed.
.... And this is yet another reason why they had to get rid of Trump. He disrupted their planned economic destruction timetable.
Bush and Obama both agree on this......but rah rah, go team R!.....”Any Republican is still better than any Democrat’....yeah, if you’ve got $h*t for brains, I guess.
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