Welp, the feds bail out the banks again. Allowing them to borrow at the FED window at FED rate and use an asset that could be 30% underwater.
Essentially they can ride this out with a spread of FED funds minus ~1.5% (which is what most of these HTM securities are).
Small loss for banks so they can continue to make stupid decisions.
What this will do is give JP more room to raise rates short term as he doesn't have to worry about banks liquidity now.
Market should rally from here and not look back as the 5.5-5.75 is pretty priced in.
Pain to come in the real world and lending will dry up. Why take a chance with my capital at a bank when I can make 5% at the FED.
All hail mega banks and S&P 500 companies... They are our overlords now.
Essentially they can ride this out with a spread of FED funds minus ~1.5% (which is what most of these HTM securities are).
Small loss for banks so they can continue to make stupid decisions.
What this will do is give JP more room to raise rates short term as he doesn't have to worry about banks liquidity now.
Market should rally from here and not look back as the 5.5-5.75 is pretty priced in.
Pain to come in the real world and lending will dry up. Why take a chance with my capital at a bank when I can make 5% at the FED.
All hail mega banks and S&P 500 companies... They are our overlords now.
