Bunk Moreland said:

---

cgh1999 said:

---

bmks270 said:

---

cgh1999 said:

---

Silicon Valley made a big mistake with the tenor of rehear investment portfolio. But, they were well collateralized…just not set up for rising rates. The Fed "bailout" is allowing bank's liquidity against their securities portfolios without having to sell bonds at a loss to provide liquidity. This will help quite a bit and won't actually cost the tax payer. The Banks will repay these loans at a standard fed borrowing rate.

What this won't fix is the broader problem that caused SVB to need to sell their bonds. Quantitative tightening is removing liquidity from the market (that should never have been there). We will see more and more of this as Banks try to adjust to a new deposit equilibrium.

---

What are they going to pay back the loans with?

Sounds like they're just slowing the bleeding, not stopping it. Does this just give them more time to slowly lower the interest rates?

---

Banks will be able to borrow at fed funds rate (4.75%) against all of their bonds at par, even if the bonds aren't worth as much. This will allow them to continue lending at a higher rate.

As I mentioned earlier, liquidity amongst all banks was shrinking. Lots of banks were in a position of needing to sell bonds at a loss to bolster liquidity. Now they don't have to sell.

I've talked to bankers at "safe" banks, mega banks, community, regional, etc. We are ALL looking for deposits. Loan standards are tightening for two reasons- potential credit risk and liquidity concerns.

While I don't love this decision, I can assure you it was needed. Bank capital is significantly higher than the last financial crisis. Credit standards have improved. No one could have foreseen the Fed removing liquidity and raising rates faster and farther than ever. You can't underwrite that risk.

---

"no one could have foreseen" every major disruption ever. The difference since 08 is we're not in the business of letting the benefactors during glory years take their medicine.

Nobody will learn a lesson. There will be strong words and amazing interviews and inspiring soap box speeches and then we'll go through this again in 10-15 years because NOTHING WILL CHANGE.

But good for the millionaires and billionaires who will get to keep their craft going. At the end of the day it really is all about not disturbing their life in any way.

---

In 2008 there was a culture of fraud and lack of due diligence with high risk loans being rated safe.

Hopefully the fraud is gone and we have more due diligence now.

As I get older and have now lived through two down cycles, the importance of diversification is becoming more and more apparent. Even "safe" assets like bonds got wrecked.

You can't think of every possible what if scenario, but you can be diversified to reduce the percentage of your portfolio exposed to a black swan.

The way to win it seems is to simply not get wiped out. So never hold a single position large enough that would wipe you out if it moved against you.

It's hard to avoid some losses in times of fear and panic because non-correlated assets become correlated during panics and black swans.

Unfortunately, investing top performers can't be proven to be anything more than dumb luck rather than skill. Chasing top performance requires concentrated bets which expose you to the risk of being wiped out by one position.

For professional bankers, profits incentivize concentrated bets.

so 6% inflation new normal it is

best of luck gents

The Fed is now bailing out two banks (Bail in didn't last!).
But don't forget that the Fed itself is insolvent. It has exactly the same problem as SVB — it paid top dollar for bonds whose prices have fallen, driving the Fed deep into neg equity (along with BoJ, ECB...)

— Alasdair Macleod (@MacleodFinance) March 12, 2023

96ags said:

---

cgh1999 said:

---

bmks270 said:

---

cgh1999 said:

---

Silicon Valley made a big mistake with the tenor of rehear investment portfolio. But, they were well collateralized…just not set up for rising rates. The Fed "bailout" is allowing bank's liquidity against their securities portfolios without having to sell bonds at a loss to provide liquidity. This will help quite a bit and won't actually cost the tax payer. The Banks will repay these loans at a standard fed borrowing rate.

What this won't fix is the broader problem that caused SVB to need to sell their bonds. Quantitative tightening is removing liquidity from the market (that should never have been there). We will see more and more of this as Banks try to adjust to a new deposit equilibrium.

---

What are they going to pay back the loans with?

Sounds like they're just slowing the bleeding, not stopping it. Does this just give them more time to slowly lower the interest rates?

---

Banks will be able to borrow at fed funds rate (4.75%) against all of their bonds at par, even if the bonds aren't worth as much. This will allow them to continue lending at a higher rate.

As I mentioned earlier, liquidity amongst all banks was shrinking. Lots of banks were in a position of needing to sell bonds at a loss to bolster liquidity. Now they don't have to sell.

I've talked to bankers at "safe" banks, mega banks, community, regional, etc. We are ALL looking for deposits. Loan standards are tightening for two reasons- potential credit risk and liquidity concerns.

While I don't love this decision, I can assure you it was needed. Bank capital is significantly higher than the last financial crisis. Credit standards have improved. No one could have foreseen the Fed removing liquidity and raising rates faster and farther than ever. You can't underwrite that risk.

---

"We are all looking for deposits"

Yet fixed rates on deposits are still at record lows.

Doesn't seem to jive to me

---

They're long term assets all pay low interest, they can't afford to pay higher rates on the deposits than they are making off of their assets.

bmks270 said:

---

96ags said:

---

cgh1999 said:

---

bmks270 said:

---

cgh1999 said:

---

Silicon Valley made a big mistake with the tenor of rehear investment portfolio. But, they were well collateralized…just not set up for rising rates. The Fed "bailout" is allowing bank's liquidity against their securities portfolios without having to sell bonds at a loss to provide liquidity. This will help quite a bit and won't actually cost the tax payer. The Banks will repay these loans at a standard fed borrowing rate.

What this won't fix is the broader problem that caused SVB to need to sell their bonds. Quantitative tightening is removing liquidity from the market (that should never have been there). We will see more and more of this as Banks try to adjust to a new deposit equilibrium.

---

What are they going to pay back the loans with?

Sounds like they're just slowing the bleeding, not stopping it. Does this just give them more time to slowly lower the interest rates?

---

Banks will be able to borrow at fed funds rate (4.75%) against all of their bonds at par, even if the bonds aren't worth as much. This will allow them to continue lending at a higher rate.

As I mentioned earlier, liquidity amongst all banks was shrinking. Lots of banks were in a position of needing to sell bonds at a loss to bolster liquidity. Now they don't have to sell.

I've talked to bankers at "safe" banks, mega banks, community, regional, etc. We are ALL looking for deposits. Loan standards are tightening for two reasons- potential credit risk and liquidity concerns.

While I don't love this decision, I can assure you it was needed. Bank capital is significantly higher than the last financial crisis. Credit standards have improved. No one could have foreseen the Fed removing liquidity and raising rates faster and farther than ever. You can't underwrite that risk.

---

"We are all looking for deposits"

Yet fixed rates on deposits are still at record lows.

Doesn't seem to jive to me

---

They're long term assets all pay low interest, they can't afford to pay higher rates on the deposits than they are making off of their assets.

---

But deposits are designed to offset assets, they're offsetting their lending.

People get pissy that gas prices are slow to come down compared to how fast they go up. The banks are the worse. Deposit rates go up, they make less money. So possible bank earnings come down and more interest they pay out to deposits, less available to lend which has it's own challenges.

96ags said:

---

cgh1999 said:

---

bmks270 said:

---

cgh1999 said:

---

Silicon Valley made a big mistake with the tenor of rehear investment portfolio. But, they were well collateralized…just not set up for rising rates. The Fed "bailout" is allowing bank's liquidity against their securities portfolios without having to sell bonds at a loss to provide liquidity. This will help quite a bit and won't actually cost the tax payer. The Banks will repay these loans at a standard fed borrowing rate.

What this won't fix is the broader problem that caused SVB to need to sell their bonds. Quantitative tightening is removing liquidity from the market (that should never have been there). We will see more and more of this as Banks try to adjust to a new deposit equilibrium.

---

What are they going to pay back the loans with?

Sounds like they're just slowing the bleeding, not stopping it. Does this just give them more time to slowly lower the interest rates?

---

Banks will be able to borrow at fed funds rate (4.75%) against all of their bonds at par, even if the bonds aren't worth as much. This will allow them to continue lending at a higher rate.

As I mentioned earlier, liquidity amongst all banks was shrinking. Lots of banks were in a position of needing to sell bonds at a loss to bolster liquidity. Now they don't have to sell.

I've talked to bankers at "safe" banks, mega banks, community, regional, etc. We are ALL looking for deposits. Loan standards are tightening for two reasons- potential credit risk and liquidity concerns.

While I don't love this decision, I can assure you it was needed. Bank capital is significantly higher than the last financial crisis. Credit standards have improved. No one could have foreseen the Fed removing liquidity and raising rates faster and farther than ever. You can't underwrite that risk.

---

"We are all looking for deposits"

Yet fixed rates on deposits are still at record lows.

Doesn't seem to jive to me

---

Money market rates are north of 4% at most banks. Banks won't offer long term CD's at high rates because history has shown that the FED will drop rates, then we'd be upside down on those accounts.

bmks270 said:

---

96ags said:

---

cgh1999 said:

---

bmks270 said:

---

cgh1999 said:

---

Silicon Valley made a big mistake with the tenor of rehear investment portfolio. But, they were well collateralized…just not set up for rising rates. The Fed "bailout" is allowing bank's liquidity against their securities portfolios without having to sell bonds at a loss to provide liquidity. This will help quite a bit and won't actually cost the tax payer. The Banks will repay these loans at a standard fed borrowing rate.

What this won't fix is the broader problem that caused SVB to need to sell their bonds. Quantitative tightening is removing liquidity from the market (that should never have been there). We will see more and more of this as Banks try to adjust to a new deposit equilibrium.

---

What are they going to pay back the loans with?

Sounds like they're just slowing the bleeding, not stopping it. Does this just give them more time to slowly lower the interest rates?

---

Banks will be able to borrow at fed funds rate (4.75%) against all of their bonds at par, even if the bonds aren't worth as much. This will allow them to continue lending at a higher rate.

As I mentioned earlier, liquidity amongst all banks was shrinking. Lots of banks were in a position of needing to sell bonds at a loss to bolster liquidity. Now they don't have to sell.

I've talked to bankers at "safe" banks, mega banks, community, regional, etc. We are ALL looking for deposits. Loan standards are tightening for two reasons- potential credit risk and liquidity concerns.

While I don't love this decision, I can assure you it was needed. Bank capital is significantly higher than the last financial crisis. Credit standards have improved. No one could have foreseen the Fed removing liquidity and raising rates faster and farther than ever. You can't underwrite that risk.

---

"We are all looking for deposits"

Yet fixed rates on deposits are still at record lows.

Doesn't seem to jive to me

---

They're long term assets all pay low interest, they can't afford to pay higher rates on the deposits than they are making off of their assets.

---

I'm not buying that. Banks are loaning at 6% to 8%. Doesn't make sense that they can't pay 4.5% on deposits.

I got tired of my regional bank's 0.1% interest and moved essentially all my cash to Vanguard/Fidelity money markets at 4.5%. The big banks will take advantage of you every chance they get.

MemphisAg1 said:

---

bmks270 said:

---

96ags said:

---

cgh1999 said:

---

bmks270 said:

---

cgh1999 said:

---

Silicon Valley made a big mistake with the tenor of rehear investment portfolio. But, they were well collateralized…just not set up for rising rates. The Fed "bailout" is allowing bank's liquidity against their securities portfolios without having to sell bonds at a loss to provide liquidity. This will help quite a bit and won't actually cost the tax payer. The Banks will repay these loans at a standard fed borrowing rate.

What this won't fix is the broader problem that caused SVB to need to sell their bonds. Quantitative tightening is removing liquidity from the market (that should never have been there). We will see more and more of this as Banks try to adjust to a new deposit equilibrium.

---

What are they going to pay back the loans with?

Sounds like they're just slowing the bleeding, not stopping it. Does this just give them more time to slowly lower the interest rates?

---

Banks will be able to borrow at fed funds rate (4.75%) against all of their bonds at par, even if the bonds aren't worth as much. This will allow them to continue lending at a higher rate.

As I mentioned earlier, liquidity amongst all banks was shrinking. Lots of banks were in a position of needing to sell bonds at a loss to bolster liquidity. Now they don't have to sell.

I've talked to bankers at "safe" banks, mega banks, community, regional, etc. We are ALL looking for deposits. Loan standards are tightening for two reasons- potential credit risk and liquidity concerns.

While I don't love this decision, I can assure you it was needed. Bank capital is significantly higher than the last financial crisis. Credit standards have improved. No one could have foreseen the Fed removing liquidity and raising rates faster and farther than ever. You can't underwrite that risk.

---

"We are all looking for deposits"

Yet fixed rates on deposits are still at record lows.

Doesn't seem to jive to me

---

They're long term assets all pay low interest, they can't afford to pay higher rates on the deposits than they are making off of their assets.

---

I'm not buying that. Banks are loaning at 6% to 8%. Doesn't make sense that they can't pay 4.5% on deposits.

I got tired of my regional bank's 0.1% interest and moved essentially all my cash to Vanguard/Fidelity money markets at 4.5%. The big banks will take advantage of you every chance they get.

---

In my experience, the big banks haven't needed your deposits. They've got billions of public funds, large corporate deposits, etc. The average consumer/small business is just a number.

If you want to get paid interest, a community bank is your best bet.

cgh1999 said:

---

MemphisAg1 said:

---

bmks270 said:

---

96ags said:

---

cgh1999 said:

---

bmks270 said:

---

cgh1999 said:

---

Silicon Valley made a big mistake with the tenor of rehear investment portfolio. But, they were well collateralized…just not set up for rising rates. The Fed "bailout" is allowing bank's liquidity against their securities portfolios without having to sell bonds at a loss to provide liquidity. This will help quite a bit and won't actually cost the tax payer. The Banks will repay these loans at a standard fed borrowing rate.

What this won't fix is the broader problem that caused SVB to need to sell their bonds. Quantitative tightening is removing liquidity from the market (that should never have been there). We will see more and more of this as Banks try to adjust to a new deposit equilibrium.

---

What are they going to pay back the loans with?

Sounds like they're just slowing the bleeding, not stopping it. Does this just give them more time to slowly lower the interest rates?

---

Banks will be able to borrow at fed funds rate (4.75%) against all of their bonds at par, even if the bonds aren't worth as much. This will allow them to continue lending at a higher rate.

As I mentioned earlier, liquidity amongst all banks was shrinking. Lots of banks were in a position of needing to sell bonds at a loss to bolster liquidity. Now they don't have to sell.

I've talked to bankers at "safe" banks, mega banks, community, regional, etc. We are ALL looking for deposits. Loan standards are tightening for two reasons- potential credit risk and liquidity concerns.

While I don't love this decision, I can assure you it was needed. Bank capital is significantly higher than the last financial crisis. Credit standards have improved. No one could have foreseen the Fed removing liquidity and raising rates faster and farther than ever. You can't underwrite that risk.

---

"We are all looking for deposits"

Yet fixed rates on deposits are still at record lows.

Doesn't seem to jive to me

---

They're long term assets all pay low interest, they can't afford to pay higher rates on the deposits than they are making off of their assets.

---

I'm not buying that. Banks are loaning at 6% to 8%. Doesn't make sense that they can't pay 4.5% on deposits.

I got tired of my regional bank's 0.1% interest and moved essentially all my cash to Vanguard/Fidelity money markets at 4.5%. The big banks will take advantage of you every chance they get.

---

In my experience, the big banks haven't needed your deposits. They've got billions of public funds, large corporate deposits, etc. The average consumer/small business is just a number.

---

Yep, what little I've kept in a smaller bank is paying more than the bigs, but still far below the investment firms.

96ags said:

---

plain_o_llama said:

---

Here is the press release for the Bank Term Funding Program

https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm

The additional funding will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution's need to quickly sell those securities in times of stress.

---

I'm sure there will be no consequences of incentivizing more risk taking in the financial sector.

---

SVB management is getting pink slips and equity holders are getting vaporized. I would say the risk-takers suffered some consequences.

I've got a sizable chunk in a 12 month CD right now. It's in one of the large well-known banks.

I'm debating taking the penalty, and moving back to a savings account so it's insured. The penalty is only 1 months interest.

Thoughts?

AgGrad99 said:

---

I've got a sizable chunk in a 12 month CD right now. It's in one of the large well-known banks.

I'm debating taking the penalty, and moving back to a savings account so it's insured. The penalty is only 1 months interest.

Thoughts?

---

Why? The fed/fdic essentially guaranteed all deposits today. You shouldn't t be at risk. If you can make a better return, then maybe. But you don't need to do that.

cgh1999 said:

---

AgGrad99 said:

---

I've got a sizable chunk in a 12 month CD right now. It's in one of the large well-known banks.

I'm debating taking the penalty, and moving back to a savings account so it's insured. The penalty is only 1 months interest.

Thoughts?

---

Why? The fed/fdic essentially guaranteed all deposits today. You shouldn't t be at risk. If you can make a better return, then maybe. But you don't need to do that.

---

Gotcha. Even investment accounts? Didn't realize that.

AgGrad99 said:

---

cgh1999 said:

---

AgGrad99 said:

---

I've got a sizable chunk in a 12 month CD right now. It's in one of the large well-known banks.

I'm debating taking the penalty, and moving back to a savings account so it's insured. The penalty is only 1 months interest.

Thoughts?

---

Why? The fed/fdic essentially guaranteed all deposits today. You shouldn't t be at risk. If you can make a better return, then maybe. But you don't need to do that.

---

Gotcha. Even investment accounts? Didn't realize that.

---

Is the cD through the bank? If so, it's covered under FDIC

Yes sir. Thanks.

JUST IN - Signature Bank has been closed by U.S. regulators.

— Disclose.tv (@disclosetv) March 12, 2023

Which bank is that?

ETA:

MORE - New York Department of Financial Services (DFS) has taken possession of Signature Bank in order to protect depositors.https://t.co/mljrQewQMC

— Disclose.tv (@disclosetv) March 12, 2023

AgGrad99 said:

---

cgh1999 said:

---

AgGrad99 said:

---

I've got a sizable chunk in a 12 month CD right now. It's in one of the large well-known banks.

I'm debating taking the penalty, and moving back to a savings account so it's insured. The penalty is only 1 months interest.

Thoughts?

---

Why? The fed/fdic essentially guaranteed all deposits today. You shouldn't t be at risk. If you can make a better return, then maybe. But you don't need to do that.

---

Gotcha. Even investment accounts? Didn't realize that.

---

Investment accounts - I.e 401K, IRA, brokerages - are not FDIC insured. They can lose value. There is a different federal program called SIPC that covers investment accounts. The premise of SIPC is loosely "we will insure that your brokerage is holding the securities they say they are holding, but we are not insuring the value of those assets."

Edit to add: I see now you were asking about CDs, which are FDIC insured. I was referring to other assets like stocks, mutual funds, and ETFs.

Appreciate it.

BREAKING: Biden to give a speech on banking crisis tomorrow morning.

— unusual_whales (@unusual_whales) March 13, 2023

Quote:

---

Edit to add: I see now you were asking about CDs, which are FDIC insured. I was referring to other assets like stocks, mutual funds, and ETFs.

---

Back in the 90s I had to have CDs in branch banks all over because of that with varying maturities. My brother who was the banker in the family of a lawyer and insurance people, died a week after my first husband.

Had he still been alive, I would have allowed him to tell me how to break up the insurance settlements into different accounts

Or as I like to put it. "QE with extra steps." More memey

— ThePaulineIndex (@ThePaulineIndex) March 13, 2023

banks are so ****ed. this bailout will be 10x 2008-2009. at least.

2022: Jim Cramer recommends Signature Bank.

2023: Signature Bank shuts down.

How does he do it? pic.twitter.com/2QskFTUPe6

— kanekoa.substack.com (@KanekoaTheGreat) March 12, 2023

Even cartoons saw the #bankcrash coming👇 pic.twitter.com/Q0kGYY8Vwc

— John Rich🇺🇸 (@johnrich) March 13, 2023

how is this not just TARP all over again?

unless interest rates are going to reverse?

I wonder if we will see a panic of bank customers that are way below the 250k try to rush this week and pull out cash? If so, would it even matter?

this is so stupid there's no ****ing contagion here unless you think raising interest rates is the contagion