The Banks Are Going Down the Tubes YO Discussion

[GGG]

Originally Posted by Yoho

Things going swimmingly for US regional banks.

https://twitter.com/user/status/1653412591102746624

I’m not sure it’s really a problem here because the Fed is underwriting everything so if banks fail it’s just businesses failing not loss of funds. The underlying T-bills have a low coupon rate so a the value is terrible right now but provided inflation is controlled the real losses are a lot lower.

The Fed just has to work through the process of who is too big to fail and who gets wiped out. This is a little different than the housing crisis where the value of the asset was gone.

[Slava]

Originally Posted by Fuzz

This is good, weed out the weak. Here in Canada we only have a handful of banks, that are all healthy. The US has thousands, some failing. Ergo, do what Canada does. Oligopolies FTW.

So, the thing is, this past weekend played out exactly as planned. Banks fail, and in the US it’s not unexpected. It’s a different world than Canada where a bank failure is a huge deal in part because we have so few. But there are positives to the US system (no, I’m not advocating for 1500 banks in Canada!). For example, the regionals were the only banks lending in 2008-09. If I were given the power, an easy and rational solution is to guarantee the operational accounts in the US (and Canada for that matter) to an unlimited amount. This would give small businesses a lot of confidence to use those smaller banks and not feel like they had to stick with a too big to fail outfit.

[Mr.Coffee]

Originally Posted by GGG

I’m not sure it’s really a problem here because the Fed is underwriting everything so if banks fail it’s just businesses failing not loss of funds. The underlying T-bills have a low coupon rate so a the value is terrible right now but provided inflation is controlled the real losses are a lot lower.

The Fed just has to work through the process of who is too big to fail and who gets wiped out. This is a little different than the housing crisis where the value of the asset was gone.

People say that Canadian banks are impenetrable but that defies logic and common sense and is not correct. The government only backstops about I think 30%. If there’s a run, we are ####ed.

[GGG]

Originally Posted by Mr.Coffee

People say that Canadian banks are impenetrable but that defies logic and common sense and is not correct. The government only backstops about I think 30%. If there’s a run, we are ####ed.

The government just continues to backstop the withdrawals against the treasuries the banks have securing them. Essentially the government just lends the banks money to cover the liquidity and you do it in exchange for shares backing the loans.

The money is all there.

[Yoho]

This sure came quick.

https://twitter.com/user/status/1653369694345216001

[accord1999]

Originally Posted by Mr.Coffee

People say that Canadian banks are impenetrable but that defies logic and common sense and is not correct. The government only backstops about I think 30%. If there’s a run, we are ####ed.

Another option is that the CDIC retroactively raises the insured limit to a much higher level to reduce fear.

After the (now in hindsight small) July 2008 failure of IndyMac, Congress allowed FDIC to raise its limit to $250K, back dated to the beginning of 2008.

[CroFlames]

Where should we put our money?

[accord1999]

Originally Posted by CroFlames

Where should we put our money?

If you have <$100K in cash, any CDIC insured institution should be sufficient. If you have more, split it into multiple types of accounts or into another institution. The CDIC is backed by the full faith and credit of the Canadian Government so depositors within the $100K limit will get their money no matter what.



It's shareholders that get wiped out in a bank failure.

[bizaro86]

Originally Posted by Yoho

This sure came quick.

https://twitter.com/user/status/1653369694345216001

I mean, that doesn't include situations where banks sold themselves in distress in government mandated sales, some of which were about that size individually (Lehman at $600B, Wachovia at $500B)

[Hack&Lube]

Originally Posted by CroFlames

Where should we put our money?

Buy Rolexes, outperformed houses, gold, and stock indexes over the last 10 years.

[Yoho]

Originally Posted by Hack&Lube

Buy Rolexes, outperformed houses, gold, and stock indexes over the last 10 years.

And then the real crash happens and flushes all those things. Even gold tanked in 2008 crash.

The only thing that goes up in a recession/depression is the DXY.

https://twitter.com/user/status/1653933477090193409

[Jason14h]

Originally Posted by Hack&Lube

Buy Rolexes, outperformed houses, gold, and stock indexes over the last 10 years.

Trying to create demand for your asset class ! 4D chess at its finest

[Yoho]

This is pretty bang on.

https://twitter.com/user/status/1654447373320323074

https://twitter.com/user/status/1654453638071459841

[Slava]

Originally Posted by Yoho

This is pretty bang on.

https://twitter.com/user/status/1654447373320323074

I do have to laugh at the banks crying about short sellers, as if that’s their issue. In some of these cases (SVB), it’s just gross mismanagement.

[Yoho]

https://twitter.com/user/status/1654844084182306816

[Manhattanboy]

Treasury bills have no deposit risk and their returns are on par with CDs.

[bizaro86]

Originally Posted by Slava

I do have to laugh at the banks crying about short sellers, as if that’s their issue. In some of these cases (SVB), it’s just gross mismanagement.

I'm the last person to moan about short sellers (I regularly short all kinds of things and have written public short reports in the past). However, I do think financial institutions are a bit different, because they depend on trust.

If depositors see a headline "PacWest stock down 45% in banking crisis" they're a lot more likely to pull all their money, which then causes a banking crisis. And the more banks fail the more banks will be under suspicion. I think shorting banks during a crisis is irresponsible and don't do it.

I actually think the bigger issue is the sweet deal the FDIC cut JP Morgan on First Republic. Once you've set that precedent there's no reason for strong banks to take over the weaker ones without fdic backing, which only happens once they've failed. Right after that you saw TD cancel a deal to buy a big US regional, and the ones that are quietly shopping themselves aren't finding bidders for the same reason. Every buyer wants to get the FDIC special where the loans are guaranteed and they get a discount on the book.

[Yoho]

https://twitter.com/user/status/1656328253693370370

[Fuzz]

Originally Posted by zamler

Won't have to wait that long.

Are we doomed yet YO?

[FunkMasterFlame]

Have the christofacists seized our country yet?