[blackdog]

Money isn’t free?

[elpadre]

excerpted:

“...As a result of this lack of hedging, according to the FDIC’s quarterly report for the quarter ending March 31, 2023, unrealized losses on securities at U.S. banks stood at the staggering sum of $515.5 billion....”

Our national debt is around $32 trillion which takes more than $600 billion to service. What the hell is going on????

[WashingtonSource]

I guess risk management went out the window. Again. 2008 redux anyone?

[Fido969]

I didn’t know Bankers live and Colorado Bankers life are in rehabilitation. Colorado life annuity holder will be lucky if they get 60% of their contracts back.

[Maine Mariner]

You pay your depositors close to zero percent interest and invest in 10-15 year government bonds at 1.5 -2.00%. Then we have 4% inflation and those pesky depositors want to be compensated for that inflation and earn at least 4% on their money market accounts and CDs at the bank. And U.S. short term bonds are paying about 5.0% and money market accounts offered by brokerage houses are paying 4.5% The bank will have a problem magnified a 1000 fold as current market rates on those 10-15 year bonds are now paying 4.5% and yours are paying 1.5%-oops. Huge losses on your bond porfolio.

One of the first rules in banking and persona finance as well. Match the maturity of the interest you pay your depositors to the interest you receive on your loans.

[eyeamok]

Don’t worry, everything will be fine, the banks won’t run out of money, We will just print more as we need it...

[Attention Surplus Disorder]

Frickin' geniuses. The rate rises were reasonably well telegraphed, even months in advance. Not just as to direction, but as to size. And just in terms of "market savvy", it was certainly a distinct possibility that the Fed was not going to gingerly raise .25 at a time every 6 months. The markets had gone into paroxysms at even the hint of rate hikes for the past decade, but none of these guys, none of them thought the party would ever end. Plus the mathematics of the situation....when you are sitting at (eg; lending at) .5% yields and the Fed raises to a mere 1%, still crazy historical lows, rates have doubled against you and you'll be obliterated. It's a hell of a lot different than if you are lending at 3% and the Fed goes to 3.75%. And none of these so-called gooroos saw it coming or even clumsily got out of the way when it was clear it WAS coming.

[FlyingEagle]

These are the same bankers who require my industry to hedge commodity price risk aggressively.

[poinq]

They are talking about interest rate risk. So they have a 10 yr bond and the bond only pays 4%. Right now the value of the bond is lower because you can easily get a 5% bond. But you don’t really need to care unless you are forced to mark to market and hit some arbitrary capital requirement. The reality is the fed makes up the arbitrary capital requirement. And it can (and does) give the bank credit for the purchased price up to the value of the bond. And that is why other banks are not going under. Also, banks are getting over 5.5% overnight rate from the fed. So they have no need to gamble on bonds.

[Vermont Lt]

Remember, the Fed owns more mortgaged backed securities than just about anyone. I wonder how far under water those things are?

[Vermont Lt]

Most banks, especially smaller ones, were dumping their paper as soon as the ink dried. There isn’t much good money in servicing loans.