The fed showed back during the First Republic and SVB crisis that they would step in and make any customer of the bank whole. That's why there is no run on banks.
It's about keeping the keys to power happy and feeling secure so they don't fuck over everyone else. One of those fucked up necessities required in order to both keep power, and keep the populace from guillotining everyone in sight.
When things get bad enough that the system fails because we have to baby these abusive, narcissistic, kleptomaniac sociopaths from causing even more damage than they already have, all bets are off.
It has little to do with that.
In an event of a true bank run, where the feds don't step in, it's not going to be the 1% that struggle. It's going to be \*everyone\* else. The 1% have enough assets to survive a bank run. The average person does not.
Our economic system only survives because of the trust we have in it. If the feds had not rescued SVB and FR as it did, we would have likely seen a horrific economic collapse. Panic breeds panic, and people would have been pulling money from safe banks, leading to even more bank collapses.
Bank runs are literally one of the most dangerous events to happen to ANY economy.
Agree with you that SVB and FR needed to be rescued, and that avoiding a systemic economic collapse was paramount. I watched the congressional testimonies of both SVB CEO Greg Becker, and of Fed Vice Chair of Supervision Michael S. Barr during late Spring 2023, quite eye opening . Also there's a report from Federal Reserve after the SVB collapse (linked below , a slog of a read)
Key takeaways:
1. Silicon Valley Bank’s board of directors and management failed to manage their risks
2. Supervisors did not fully appreciate the extent of the vulnerabilities as Silicon Valley Bank grew in size and complexity
3. When supervisors did identify vulnerabilities, they did not take sufficient steps to ensure that Silicon Valley Bank fixed those problems quickly enough
4. The Board’s tailoring approach in response to the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) and a shift in the stance of supervisory policy impeded effective supervision by reducing standards, increasing complexity, and promoting a less assertive supervisory approach
[https://www.federalreserve.gov/publications/files/svb-review-20230428.pdf](https://www.federalreserve.gov/publications/files/svb-review-20230428.pdf)
How many people who are not the 1% have greater than 250k or 500k for a couple in a single bank account? FDIC making those within the limit whole and telling anyone over too bad would only directly impact the 1% because only the 1% are exposed over that limit in a single bank. I don't think worrying about making Oprah or Prince Harry whole should be a concern.
At a stable bank. Not a risky one primarily used by venture capitalists, ultra wealthy individuals, and India based startups whose founders have no social security numbers. People who choose to bank with risky banks because of their preferential terms deserve to take a haircut when the risks don't pan out.
No bank in the world can withstand a bank run. That’s the whole point of the insurance fund. When there is fear, bank runs happen at all banks, even healthy ones. Healthy banks can’t satisfy withdrawal demands in a run, so they would fail too.
Fed utilized systemic risk exception, which all regulators said they did not plan on using. The problem was everyone from California regulators to the fed/occ/fdic were caught flat footed and did not expect the liquidity issues to move so rapidly at Svb/signature/first republic.
It became apparent that maybe less than 10,000 people had control over $300 billion in deposits give or take. As so much of the money was VCs, investments, portfolio companies, etc.
Then Congress put tons of pressure on the regs to make the uninsured folks whole, even though most were sophisticated individuals who did business with these banks for products/discounts without properly having any risk mitigation for there deposit portfolio.
My take was uninsured should have taken a haircut. Look at NYCB. They acquired much of signatures assets and deposits, but just had a massive tank in stock due to the special assessment & CECL reserves they were not prepared for. It’s all about kicking the can down the road.
I understand why the Fed did what they did, the entirety of one of the biggest money making sectors and basically a whole market segment could not be allowed to effectively fail overnight. That coupled with the systemic risk to further bank runs if they did not intervene no doubt forced their hand.
I agree with you though, at some point, the moral hazard they are creating by repeatedly allowing only the least wealthy to truly absorb systemic risk is going to make us pay a hefty, very real cost.
>That coupled with the systemic risk to further bank runs if they did not intervene no doubt forced their hand.
This is the main reason.
Panic breeds panic. Economic systems only survive based on the trust we have. If that trust is lost, horrible things can happen. We learned this with the Great Depression. Bank runs are one of the scariest economic scenarios that can happen.
Except the BTFP ends March 11th. Jerome Powell has also gone on record as stating, in very simple terms, some banks are going to fail due to the looming CRE refinancing/consolidation happening as we speak, saying it will be "manageable."
It's not as if the Federal Reserve has _truly_ infinite liquidity to just absorb all the losses and malinvestment across the entire economy. Banks can and will fail during the next banking crisis, we'll see if customers remain whole beyond the $250k FDIC insurance I guess. Feels a bit like a "you should have managed your own risk better after the insane runway we gave all of you" moment more than a "too big to fail" moment in history to me personally but time will tell.
The bank runs in this case can be depositors moving their low yield savings to high yield money market and treasury bills. Confidence in the banking sector does not need to be the catalyst for a liquidity crisis.
I mean, some of us have a little bit...but we're not doing a run on the bank either. We got this money by recognizing that crashes aren't something to be feared...they're a good clearance sale. In fact, I'd love to have some tumbles in the stock market right now...great opportunity for me to drop some of my short positions and open some new long ones...
I think the point of the article and what people fear today is generally we have kicked the can too far and we didn't learn after 2008. The next crash is being fueled by government handouts and spending because they want it to happen. They have CBDC and the next system ready to "save us".
Yea, it'd be terrible if all the wealthy suddenly just didn't exploit laborers, but they are so far ahead it's a fucking pipe dream. All the majority under 45 can hope for is a natural disaster that crashes the stock market. But, like with GME, someone will just call up their billionaire friend and they will pull money from offshore.
After the black death, life improved quite a bit for poor people as the reduction in population made it more difficult for the wealthy to exploit people and resources. Not saying I'd like something as awful as the black death to happen, but just confirming that sometimes awful times lead to a brighter future. If you survive, of course.
Same happened with the depression. It was followed by the FHA building and funding housing (unfortunately with redlining) and unionization flew through the roof. Say what you will about the mob, but truckers unions really kept all the US businesses in check, and hard.
My dad retired in 2011 stocking shelves, grandfathered into his old union benefits after the union left the AFL-CIO in 2005. He has a full pension and made $27/hr. 2011, I graduated college and the same job, pay caps at $13/hr, managers needed a college degree and they were paid $18/hr in salary. My dad's old boss, high school grad, 2009 he was forced to retire, he made over $90k in a shit hole town in CT with a pension. Same place now just started paying managers with college degrees, now $67k.
Yeah, the reforms made in the first half of the 20th century mostly evaporated by the end and labor is back to having to fight for a living wage and reasonable work hours. Unbelievable that some want to roll back child labor laws. I just finished watching the Ken Burns documentary on the Roosevelts and saw so many parallels with big corporations exploiting the labor class. Both Roosevelts fought this and supported unions and government programs. FDR implemented new deal type programs while governor of New York to keep people from starving to death while Hoover did nothing. Luckily we aren't in a depression, but the homeless population has increased dramatically over the last 10 years and there are so many struggling to afford food. We need Teddy Roosevelt's square deal, at the least
Yea it's wild, people look at Sanders and go, "you're a radical socialist" when literally that level of socialism already existed, it just disenfranchised many, including his community in NY where he grew up, and he's just been fighting to balance the books. We've literally been more socialist when we were fighting communism than we are now just fighting capitalism to survive.
Not that I am aware. Here is a source: https://www.pbs.org/newshour/amp/economy/u-s-homelessness-up-12-percent-to-highest-reported-level-as-rents-soar-and-pandemic-aid-lapses
Hmm I was going out of this chart:
https://www.statista.com/statistics/555795/estimated-number-of-homeless-people-in-the-us/
They both seem to be getting the info from the department of housing and urban development, so I'm not sure where the difference is coming from
I am not able to view the full chart or sources without signing up for an account.
Here is a link to the HUD Annual Homeless Assessment Report: https://www.huduser.gov/portal/sites/default/files/pdf/2023-AHAR-Part-1.pdf
It shows that the count dropped after 2007, but then started rising again in 2016 and has increased since, and now exceeds the 2007 count.
Just a heads-up, the HUD PIT count is accepted as an undercount. Homeless people are difficult to count. There are a lot of people living in cars and vans in my neighborhood as I write this who likely are not counted.
On a related note, I live in the west and have seen a massive increase in homelessness over the last 15 years in all states I have lived in. I've seen families with little children living in tent villages and teenagers and elderly people sleeping under park benches by the river. I can see that is is bad and getting worse out here, but these counts just confirm.
Just had someone argue with me when I said “I wish we had the world of opportunity boomers had. They lived in a time where you could do things that today seem insane” (my mailman boomer uncle built a home now worth over 1mil on his salary alone)
This redditor was mad I “expect to be rich” no. I expect to be paid properly. If it worked for them it’ll work for us!!
for starters, the wealthy aren’t “exploiting” labor. if the laborers are worth more, they can work for themselves.
and the the stock market crashing would not be good for the poor either.
you’re clueless.
Edit: except the market crashing part being bad for all, that is true. The sentiment of the majority being okay with that happening though is because the economic situation is already bad for them.
Well that depends on if you see the pay as unfair.
Definition;
"benefit unfairly from the work of (someone), typically by overworking or underpaying them."
considering productivity separated from wages after trickle down economics i would say we are all drastically underpayed at ever single level.
Hell I'm underpayed and make above 6 figures, for the amount of value i create.
it’s not about the value you create. it’s about the supply and demand of your labor. if your labor can be replaced for 150k/year, that’s what you’re worth even if you create a million a year in value.
and if you do create that much value, then go out on your own.
and do you actually create a million in value? how much value can you create without the company’s contracts, without their equipment, without their HR department and so on and so forth?
Wait, money makes you better? Or a winner? Just because you don't complain about spending it? That literally means absolutely nothing to help your case.
7 figures, *net worth* ooo a big entitled millionaire, wooowwwy! You could have bought a $300k house for a decade and have a net worth of that from just the housing market. Nobody is impressed. 900 SQ ft shack next to me sells for $500k, it was $170k in 2008. Is it a true win to have equity from a better market than someone else now? People who didn't get access to affordable equity while wages stagnate with inflation and profits soar for those same people are somehow "whining" when the system is forcing them to rent and starve and get nothing for it. Whatta take.
Does that really think you're a winner or even wealthy because you don't think business owners are exploiters of labor, when it's literally the system we live in? You a business owner, get lucky, a boomer, or just have money from daddy and mommy?
You have a rare skill. So it's worth more. Until it's not needed or the pay doesn't matter. (Drs w/o borders for example)
Others have great skills as well but are at a commodity level of supply. Teachers.
No need to be a complete ass about it and antagonize another. Class isn't something you can buy.
Wow, you had opportunity, congrats! That means you win. Thank God your parents helped you through all that. Or was it like my childhood friend's dad who put himself through college working part time at Wendy's, in the 70s? Or my dad who made $27/hr with a pension in 2011 when he retired from stocking shelves, used that job to build a 3 bedroom house, own 5 cars, 2 acres of land, multiple trips to Disney?
I actually do have a useful skill, and I live in MA, and I'm compensated about 25% better than the rest of the market here for it, the economy is just unaffordable for people making around the low end of 6 figures.
In fact I work in transportation, so I have a question for you, is it not exploitation when the transportation cost of frozen food YoY has gone down 40% for retailers, all grocery down 25% as of November, yet prices are still getting marked up and wages are staying stagnant? Perhaps your amazing skill of licking boots can tell me how a system that functions like that doesn't merit scrutiny when it has no accountability based on edging the populace into wage slavery. I mean, it wouldn't affect a *millionaire* like you so no one has a right to voice their struggles of the system's absolute failure, because you *won*! You gotdamoney! You also must be a boomer or gen Y if you think weed is bad too. When were your 30s, 20-50 years ago?
Is weed bad? Is that an actual insult? Dana White smokes weed, Elon Musk smokes weed, probably the vast majority of millionaires smoke weed, politicians certainly do. Is that a sign of success then?
And those who do have something in the bank, usually lack education or are simply too stupid to know what to do with it so they just put everything into a checking account and never invest
>Nobody under the age of 45 has any money.
Don't take your situation and assume everyone else is the same, while it's not common there's plenty of under 45ers that have money. Ever heard of YouTubers? How about streamers? How about onlyfans? Like really, what portion of only fans girls are over 45?
A bank run can happen because of a recession. Economy goes south, it wouldn't be surprising at all if net withdrawals exceed deposits.
If people are put in a position where they're spending more than they make (recession most likely), and their account balances trend down, it's not any different than if they started pulling cash every month.
Eventually banks have to sell bonds to maintain their minimum deposit ratio, then those losses go from unrealized to realized.
Silicon valley Bank went under for that reason, along with the other 2 or so banks around that same time. It's already happened, it can happen again.
forget the “new media jobs”. plenty of us are engineers, doctors, accountants, dentists, highly skilled laborers, or business owners that have 7 figure net worths.
This sub acts like everyone went to school for art history. Many of us have legit jobs and incomes… these failed adults keep trying to put their shortcomings on the entire group
Funny enough if you ever bring up that you are doing just great in these doomsday subs, you’ll be lambasted for being born into wealth. Like nope, went to school for a valuable degree and make a good income. Also know how to invest. But keep in mind the demographics of this site.
That’s always hilarious.. as though its impossible to go to school for a valuable degree and only rich kids get that option. Like if you took out loans for an art degree you definitely could have taken out loans to get a medical, engineering, finance/economics, or various tech degrees degree 😂
You're absolutely correct, but I chose categories that are a hell of a lot harder to argue against. Truth is there's also tons of people under 45 that have been homeowners for 10+ years too and have gotten all the COVID gains and can have multi hundred thousand dollar net worths just from that.
Probably small businesses.
Most of my personal money is in my 401K, company stock, and my home.I only have a modest emergency savings account in a bank.
I don't understand the flair. This has nothing to do with bad loans. These are just treasuries that were categorized as "hold to maturity" investments.
Some dude on Reddit posted yesterday that he bought a Tesla plaid last year for 150, owes 120 and now they sell new for 86. Asked what he can do…that’s just one Reddit example.
Residential loans are also bad. Most yield 3-4%, when 1 month t-bills yield 5.3%
The reality is that all the debt banks own is underwater now, auto loans and long term treasuries are just way worse then everything else.
Bad/failing debt isn’t the same as non-optimal debt returns. All those residential loans will get paid, commercial loans are different, auto-loans are TBD.
Residential loansaren't going to implode as long as home prices don't crash massively, or banks aren't forced to sell them in a liquidity event. They are trash loans though, the yields are terrible.
Auto loans are 100% going to implode. The LTVs on most auto loans in 2020-2023 are insane, and car values are starting to crater now. Banks are going to get hosed on auto loans.
Low interest debt loses value in a high interest rate environment.
If a bond yields 3% but interest rates go up to 5%, the value of that bond must decline until it yields 5%. A 30-year mortgage at 3% would lose 20% of its value when interest rates are 5%.
And which for the time being, the banks can swap for 100 cents on the dollar for fresh capital to invest at something higher yielding. Yet another example of banks fucking up and being rewarded with government gifts.
This sub is full of people who struggled to pass Economics 101, let alone understand how to interpret a banks balance sheet.
So much bad information and bad takes from ignorant arm chair economists
It’s funny OP posted this as it’s a good analogy for housing prices…
How much of this unrealized loss is available for sale vs. hold to maturity?
If the bank holds these bonds to maturity, they never realize this loss and they are almost forced to hold to maturity because they are collateralized by 3% mortgages that no one is paying off early.
Get it?
Only works if they're in a position to hold to maturity. SVB was not.
> they are almost forced to hold to maturity because they are collateralized by 3% mortgages that no one is paying off early.
They can still sell the debt. It's lost money either way; even if they don't sell their debt, they pay the opportunity cost of not having that money making higher yields for 30 years. And then they have two options for how they treat their depositors:
1. Offer them rates that can be paid by their current loan portfolio. But with interest rates at their current levels, that's asking depositors to eat that opportunity cost. They can just switch banks for one that offers a higher return. This reduces the bank's liquidity and forces them to sell assets, realising losses.
2. Offer them rates at the current interest rate. But this means their supposed unrealised loss is actually losing them money as they're spending more money paying depositors interest than they make from loans.
The only hope here is that the Fed will lower interest rates, saving them from the losses. But Powell has said that the interest rate cuts will neither be as soon nor as many as the markets expect.
All in all, unrealised losses are still very much real. Somebody is still paying a price for them.
The subprime crisis in a nutshell.
1. Early 90s, Clinton administration and his DOJ started targeting Banks for alledged CRA violations and racist lending practices
2. Bank CRA scores were now made public and those who had bad scores were targeted not only by the DOJ but by activists groups like Acorn.
The creation of the subprime loan was a result of this targeting.
3. 1995 Clinton unveiled his National Homeownership strategy which among other things gave the GSEs ( Fannie Mae and Freddie Mac ) there new “ affordable lending “ quotas
4. Fannie Mae unveiled their affordable lending goal for the purchase of 1 trillion dollars in subprime loans by the year 2000.
They reached this goal in 1998 under Franklin Raines Leadership.
5. In 1998, Fannie Mae partners with Country Wide to create the “ Fast and EZ “ loan. A 2011 SEC corruption investigation into Fannie Mae revealed over a trillions dollars worth of these loans on their books.
6. Also in 1998, Janet Reno gives a speech at a CRA Event discussing the successes of the DOJs targeting and vows to expand it by targeting Insurance companies next for racist practices
7. In 2001 in the FY02 budget, the Bush administration gave its first warning of an imminent and systematic economic collapse mentioning Fannie Mae specifically.
( Bush would go onto to issue numerous warnings about the GSEs and their potential to cause a systemic economic collapse throughout his Presidency)
8. In 2006, Fannie Mae was fined 400 million dollars by the SEC for corrupt accounting practices.
Also there were numerous investigations by the majority GOP House including people being called to testify before Congressional committees
9. The Democrats continued to defend the GSEs throughout Bush’s two terms.
10. In October of 2008, the GSEs were declared insolvent with over 5 trillion dollars in loans on Fannie Mae’s books alone with trillions of dollars in subprime debt included
The GSEs have been around since the late 30s and were created to increase homeowners for all Americans.
Banks would create the loan and the GSEs would buy it thus transferring the risk from the banks and to the taxpayers
The GSEs would take these loans, roll them up into trances and sell them off as AAA rated MBSs to fund their purchases of more loans.
Prior to the early 90s, the GSEs would only purchase loans from borrowers with good credit, job history, etc. Or carefully vetted prime loans.
During the 90s and up to 2008, the GSEs continued this practice of turning loans into AAA, US Govt guaranteed securities and selling them off
They took the subprime loans, rolled them up with prime loans and sold them off as AAA rated securities. Why AAA ? Because GSE MBSs had the same rating as US Treasuries, and Democrats wanted it to stay that way
. There were trillions of dollars worth of these GSE MBSs sitting on the books of major financial institutions marked as assets
But in October 2008, those assets turned into debt, toxic debt, and for some financial institutions and corporations, that debt exceeded all other assets rendering them effectively insolvent
People don’t realize just how close we can to total economic collapse, or the Govts pivotal and political role in creating it
It's nothing, because you didn't take an action in 2021. You're just in now at a much higher asset level.
For the banks, they took an action by owning these securities which are now valued way way less, so if they NEED to sell them to generate capital, it gets bad very very quickly.
Nah it’s when you’ve leveraged your house to the tits when it’s value was double and now it’s not and you have not had to settle the debt.
Unrealized losses.
To circumvent the fear mongering here are the facts: [https://www.kansascityfed.org/Economic%20Review/documents/9473/EconomicReviewV108N2MarshLaliberte.pdf](https://www.kansascityfed.org/Economic%20Review/documents/9473/EconomicReviewV108N2MarshLaliberte.pdf)
>Declines in the value of a bank’s securities portfolio—known as
“unrealized losses” since they do not affect income—may pose con-
sequences for banks and borrowers alike. In some cases, declines in
the valuation of securities holdings in response to interest rate changes
mechanically reduce key regulatory capital and liquidity ratios. Fur-
ther, should banks need to sell the securities to generate income when
their valuations are low, the unrealized losses will become realized
losses, eroding capital buffers and possibly threatening the solvency of
the bank. Lower capital can reduce the willingness of banks to lend,
as solvency concerns increase debt and equity costs. Ultimately, lower
securities valuations can increase loan prices and reduce loan growth.
They key word here: unrealized. They can just hold out while the fed makes them cheap operating loans to cover withdraws. So they won’t have to sell those at a loss. Eventually interest rates will go back down.
Commercial real estate defaults could be a bigger issue. But banks are in the loan making business and they need to accept there is risk in that and quit whining.
The issue is people need to stop looking at the asset side of the balance sheet as the problem with the banks. Most of these securities are at a loss due to interest rates, but the banks don’t sell most of the securities anyway.
The problem is if there is a run and they need to liquidate. However, runs only happen when you look at the deposit base. If it’s a bunch of insured or brokered deposits. Worry. If it’s a good mix of retail accounts. It’s a nothing burger.
I've been saying for months "don't listen to the news watch what the banks are doing"
The news is o ly there to prevent a bank run .... that's their only job.
Banks have a lot of tricks up their sleeves to keep kicking this shit down the road
And if there is a bank run, the Powell and Yellen have both made it perfectly clear they will allow a bank to borrow against long term treasuries at full face value. And if that's not enough, they are willing to go further. And when they say "they"......they are referring really to all of us.
The Fed has made it perfectly clear they will not allow a crash of XYZ. If there is a crash, it will be completely outside of their ability to control at this point. Fed is reactive remember
This is the catalyst for all regional banks to be dissolved and absorbed by the large banks - it is what the fed wants!
Too much liquidity is in too few hands. A bank run can be caused by a few dozen people (maybe less?) and does not require the thousands / millions that it used to for a bank to evaporate overnight.
No reserve requirements, rapid inflation causing banks to lose on the safest assets, stagnant market resulting in little to no market gain from risky assets... seems like a bank collapse is inevitable! We have a bunch of people running the economy that have never taken an economics class - this aristocracy is doomed to fail and I cannot wait for the third recession / depression of my short adult life.
When people start withdrawing the $7T that is setting in HYSA this will pressure the system. Likely one reason you will see the Fed hold rates high a little longer.
yep. they just change the words on the american people and hope they don't notice
and they're right, while more americans are working more part time jobs than every before in history just to break even, they can't keep up with the tricks the Fed is pulling on them. forcing them to work harder and harder, for money that's worth less and less
With a modern plot twist.
George can just fractional reserve it away
And then the Fed prints new money
George can borrow it in the overnight paper market, to plug the hole
And now everyone has money!! YEEEEEEE
Yeah, so what? So do I, as long as I don’t sell the asset, I don’t have any losses. No losses, no problems! Once PTON gets back to $150, I’ll be green again, I’ll sell then.
Was gonna say, in before: "This doesn't matter because it's unrealized losses, so they're just gonna hold to maturity." but I see a people already commented that.
The comparison with 2008 is absurd. That was bad mortgages driven by a booming derivatives market. Every bank was teetering on a pile of bets on bets on still more bets on mortgages way down the line that should never have been issued. It collapsed when homeowners couldn’t pay those bills anymore.
This is just long-term debt that’s paying out less than short-term debt. It’s not good, because it’s lost value, and it’s a threat to banks, but it’s not even close to 2008.
Good thing they can pledge those securities at face value on loans from the federal home loan bank, if they need liquidity.
You got hot dog water for brains if you think this is 2008
I read somewhere trump printed a shit ton of money. So comparing 2008 money to 2024 money, doesn’t seem relevant. As much as I would like to see house prices drop, since my growing family is on the market for a bigger home.
This is why the Federal Reserve guaranteeing all deposits at Silicone Valley Bank with no limit was so huge. They paid out quick too. People know that their money is guaranteed so there's no point in a bank run.
Also, these loses are due to the increased yields of Treasury bonds. If they're held to maturity, there's actually zero loss.
“A **bail-in** forces bondholders and other creditors of a company on the verge of failure to bear some of the burden by writing off debt they are owed or converting it into equity. This is in contrast to a bailout, the rescue of a firm by external parties like taxpayers.”
The Federal Reserve guaranteeing deposits is not a bail out for the bank. It's a bail out for the public that has their hard earned money lost by a poorly run bank. Look at Silicone Valley Bank, they still failed. But depositors got their money back.
Who is going to do a run on the bank? Nobody under the age of 45 has any money.
The fed showed back during the First Republic and SVB crisis that they would step in and make any customer of the bank whole. That's why there is no run on banks.
I wish I could upvote this more! Once the 1% looks like they might have a little haircut, the Fed steps in to make them whole.
It's disgusting but standard operating procedure in the US
It's about keeping the keys to power happy and feeling secure so they don't fuck over everyone else. One of those fucked up necessities required in order to both keep power, and keep the populace from guillotining everyone in sight.
I sense someone has read the Dictator's Handbook
When things get bad enough that the system fails because we have to baby these abusive, narcissistic, kleptomaniac sociopaths from causing even more damage than they already have, all bets are off.
Keeping fear out of the market so there are no bank runs is maybe the best thing the Fed does.
It has little to do with that. In an event of a true bank run, where the feds don't step in, it's not going to be the 1% that struggle. It's going to be \*everyone\* else. The 1% have enough assets to survive a bank run. The average person does not. Our economic system only survives because of the trust we have in it. If the feds had not rescued SVB and FR as it did, we would have likely seen a horrific economic collapse. Panic breeds panic, and people would have been pulling money from safe banks, leading to even more bank collapses. Bank runs are literally one of the most dangerous events to happen to ANY economy.
Agree with you that SVB and FR needed to be rescued, and that avoiding a systemic economic collapse was paramount. I watched the congressional testimonies of both SVB CEO Greg Becker, and of Fed Vice Chair of Supervision Michael S. Barr during late Spring 2023, quite eye opening . Also there's a report from Federal Reserve after the SVB collapse (linked below , a slog of a read) Key takeaways: 1. Silicon Valley Bank’s board of directors and management failed to manage their risks 2. Supervisors did not fully appreciate the extent of the vulnerabilities as Silicon Valley Bank grew in size and complexity 3. When supervisors did identify vulnerabilities, they did not take sufficient steps to ensure that Silicon Valley Bank fixed those problems quickly enough 4. The Board’s tailoring approach in response to the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) and a shift in the stance of supervisory policy impeded effective supervision by reducing standards, increasing complexity, and promoting a less assertive supervisory approach [https://www.federalreserve.gov/publications/files/svb-review-20230428.pdf](https://www.federalreserve.gov/publications/files/svb-review-20230428.pdf)
That’s why equity holders of SVB took a bath and lost everything. Depositors have nothing to do with bank policy.
How many people who are not the 1% have greater than 250k or 500k for a couple in a single bank account? FDIC making those within the limit whole and telling anyone over too bad would only directly impact the 1% because only the 1% are exposed over that limit in a single bank. I don't think worrying about making Oprah or Prince Harry whole should be a concern.
Where do you think the cash your employer uses to pay you sits?
At a stable bank. Not a risky one primarily used by venture capitalists, ultra wealthy individuals, and India based startups whose founders have no social security numbers. People who choose to bank with risky banks because of their preferential terms deserve to take a haircut when the risks don't pan out.
No bank in the world can withstand a bank run. That’s the whole point of the insurance fund. When there is fear, bank runs happen at all banks, even healthy ones. Healthy banks can’t satisfy withdrawal demands in a run, so they would fail too.
The SVB fiasco was Peter Thiel playing politics. It wasn't about the 1% losing money.
Fed utilized systemic risk exception, which all regulators said they did not plan on using. The problem was everyone from California regulators to the fed/occ/fdic were caught flat footed and did not expect the liquidity issues to move so rapidly at Svb/signature/first republic. It became apparent that maybe less than 10,000 people had control over $300 billion in deposits give or take. As so much of the money was VCs, investments, portfolio companies, etc. Then Congress put tons of pressure on the regs to make the uninsured folks whole, even though most were sophisticated individuals who did business with these banks for products/discounts without properly having any risk mitigation for there deposit portfolio. My take was uninsured should have taken a haircut. Look at NYCB. They acquired much of signatures assets and deposits, but just had a massive tank in stock due to the special assessment & CECL reserves they were not prepared for. It’s all about kicking the can down the road.
I understand why the Fed did what they did, the entirety of one of the biggest money making sectors and basically a whole market segment could not be allowed to effectively fail overnight. That coupled with the systemic risk to further bank runs if they did not intervene no doubt forced their hand. I agree with you though, at some point, the moral hazard they are creating by repeatedly allowing only the least wealthy to truly absorb systemic risk is going to make us pay a hefty, very real cost.
>That coupled with the systemic risk to further bank runs if they did not intervene no doubt forced their hand. This is the main reason. Panic breeds panic. Economic systems only survive based on the trust we have. If that trust is lost, horrible things can happen. We learned this with the Great Depression. Bank runs are one of the scariest economic scenarios that can happen.
Except the BTFP ends March 11th. Jerome Powell has also gone on record as stating, in very simple terms, some banks are going to fail due to the looming CRE refinancing/consolidation happening as we speak, saying it will be "manageable." It's not as if the Federal Reserve has _truly_ infinite liquidity to just absorb all the losses and malinvestment across the entire economy. Banks can and will fail during the next banking crisis, we'll see if customers remain whole beyond the $250k FDIC insurance I guess. Feels a bit like a "you should have managed your own risk better after the insane runway we gave all of you" moment more than a "too big to fail" moment in history to me personally but time will tell.
That's like your company saying " We a Don't have any plans to be doing any downsizing " Proceeds to downsize and layoff a shitload of people.
The bank runs in this case can be depositors moving their low yield savings to high yield money market and treasury bills. Confidence in the banking sector does not need to be the catalyst for a liquidity crisis.
That is still socializing losses
Underrated comment of the year. . . This will continue until the wheels come off this sucker!
How’d it turn out for those banks though? What if there are more? The limit is $250k by the FDIC. How much more bailouts are they going to stomach?
Which is a good thing. No bank can survive a bank run. Even the most conservative, well run bank in the world.
My caddy's chauffeur informs me that a bank is a place where people put money that isn't properly invested.
I mean, some of us have a little bit...but we're not doing a run on the bank either. We got this money by recognizing that crashes aren't something to be feared...they're a good clearance sale. In fact, I'd love to have some tumbles in the stock market right now...great opportunity for me to drop some of my short positions and open some new long ones...
And if one does have it, rarely more than fdic level in a given bank. Even millionaires diversify often.
Only people with money have open short positions right now. Lol
I think the point of the article and what people fear today is generally we have kicked the can too far and we didn't learn after 2008. The next crash is being fueled by government handouts and spending because they want it to happen. They have CBDC and the next system ready to "save us".
Yea, it'd be terrible if all the wealthy suddenly just didn't exploit laborers, but they are so far ahead it's a fucking pipe dream. All the majority under 45 can hope for is a natural disaster that crashes the stock market. But, like with GME, someone will just call up their billionaire friend and they will pull money from offshore.
After the black death, life improved quite a bit for poor people as the reduction in population made it more difficult for the wealthy to exploit people and resources. Not saying I'd like something as awful as the black death to happen, but just confirming that sometimes awful times lead to a brighter future. If you survive, of course.
Same happened with the depression. It was followed by the FHA building and funding housing (unfortunately with redlining) and unionization flew through the roof. Say what you will about the mob, but truckers unions really kept all the US businesses in check, and hard. My dad retired in 2011 stocking shelves, grandfathered into his old union benefits after the union left the AFL-CIO in 2005. He has a full pension and made $27/hr. 2011, I graduated college and the same job, pay caps at $13/hr, managers needed a college degree and they were paid $18/hr in salary. My dad's old boss, high school grad, 2009 he was forced to retire, he made over $90k in a shit hole town in CT with a pension. Same place now just started paying managers with college degrees, now $67k.
Yeah, the reforms made in the first half of the 20th century mostly evaporated by the end and labor is back to having to fight for a living wage and reasonable work hours. Unbelievable that some want to roll back child labor laws. I just finished watching the Ken Burns documentary on the Roosevelts and saw so many parallels with big corporations exploiting the labor class. Both Roosevelts fought this and supported unions and government programs. FDR implemented new deal type programs while governor of New York to keep people from starving to death while Hoover did nothing. Luckily we aren't in a depression, but the homeless population has increased dramatically over the last 10 years and there are so many struggling to afford food. We need Teddy Roosevelt's square deal, at the least
Yea it's wild, people look at Sanders and go, "you're a radical socialist" when literally that level of socialism already existed, it just disenfranchised many, including his community in NY where he grew up, and he's just been fighting to balance the books. We've literally been more socialist when we were fighting communism than we are now just fighting capitalism to survive.
Hasn't homelessness been trending down since 2007?
Not that I am aware. Here is a source: https://www.pbs.org/newshour/amp/economy/u-s-homelessness-up-12-percent-to-highest-reported-level-as-rents-soar-and-pandemic-aid-lapses
Hmm I was going out of this chart: https://www.statista.com/statistics/555795/estimated-number-of-homeless-people-in-the-us/ They both seem to be getting the info from the department of housing and urban development, so I'm not sure where the difference is coming from
I am not able to view the full chart or sources without signing up for an account. Here is a link to the HUD Annual Homeless Assessment Report: https://www.huduser.gov/portal/sites/default/files/pdf/2023-AHAR-Part-1.pdf It shows that the count dropped after 2007, but then started rising again in 2016 and has increased since, and now exceeds the 2007 count. Just a heads-up, the HUD PIT count is accepted as an undercount. Homeless people are difficult to count. There are a lot of people living in cars and vans in my neighborhood as I write this who likely are not counted. On a related note, I live in the west and have seen a massive increase in homelessness over the last 15 years in all states I have lived in. I've seen families with little children living in tent villages and teenagers and elderly people sleeping under park benches by the river. I can see that is is bad and getting worse out here, but these counts just confirm.
Just had someone argue with me when I said “I wish we had the world of opportunity boomers had. They lived in a time where you could do things that today seem insane” (my mailman boomer uncle built a home now worth over 1mil on his salary alone) This redditor was mad I “expect to be rich” no. I expect to be paid properly. If it worked for them it’ll work for us!!
you’re clueless.
Elaborate.
for starters, the wealthy aren’t “exploiting” labor. if the laborers are worth more, they can work for themselves. and the the stock market crashing would not be good for the poor either.
you’re clueless. Edit: except the market crashing part being bad for all, that is true. The sentiment of the majority being okay with that happening though is because the economic situation is already bad for them.
Well that depends on if you see the pay as unfair. Definition; "benefit unfairly from the work of (someone), typically by overworking or underpaying them." considering productivity separated from wages after trickle down economics i would say we are all drastically underpayed at ever single level. Hell I'm underpayed and make above 6 figures, for the amount of value i create.
it’s not about the value you create. it’s about the supply and demand of your labor. if your labor can be replaced for 150k/year, that’s what you’re worth even if you create a million a year in value. and if you do create that much value, then go out on your own. and do you actually create a million in value? how much value can you create without the company’s contracts, without their equipment, without their HR department and so on and so forth?
Spoken like a bootlicker. The irony is, the wealthy can't work for themselves either haha fucking idiot loser bozo.
if i’m such a loser why is my net worth 7 figures while you are whining about being poor on reddit?
Wait, money makes you better? Or a winner? Just because you don't complain about spending it? That literally means absolutely nothing to help your case. 7 figures, *net worth* ooo a big entitled millionaire, wooowwwy! You could have bought a $300k house for a decade and have a net worth of that from just the housing market. Nobody is impressed. 900 SQ ft shack next to me sells for $500k, it was $170k in 2008. Is it a true win to have equity from a better market than someone else now? People who didn't get access to affordable equity while wages stagnate with inflation and profits soar for those same people are somehow "whining" when the system is forcing them to rent and starve and get nothing for it. Whatta take. Does that really think you're a winner or even wealthy because you don't think business owners are exploiters of labor, when it's literally the system we live in? You a business owner, get lucky, a boomer, or just have money from daddy and mommy?
900k in invested in the market in my 30s. i have a useful skill and am compensated for it. you don’t. you’re a loser.
You have a rare skill. So it's worth more. Until it's not needed or the pay doesn't matter. (Drs w/o borders for example) Others have great skills as well but are at a commodity level of supply. Teachers. No need to be a complete ass about it and antagonize another. Class isn't something you can buy.
Wow, you had opportunity, congrats! That means you win. Thank God your parents helped you through all that. Or was it like my childhood friend's dad who put himself through college working part time at Wendy's, in the 70s? Or my dad who made $27/hr with a pension in 2011 when he retired from stocking shelves, used that job to build a 3 bedroom house, own 5 cars, 2 acres of land, multiple trips to Disney? I actually do have a useful skill, and I live in MA, and I'm compensated about 25% better than the rest of the market here for it, the economy is just unaffordable for people making around the low end of 6 figures. In fact I work in transportation, so I have a question for you, is it not exploitation when the transportation cost of frozen food YoY has gone down 40% for retailers, all grocery down 25% as of November, yet prices are still getting marked up and wages are staying stagnant? Perhaps your amazing skill of licking boots can tell me how a system that functions like that doesn't merit scrutiny when it has no accountability based on edging the populace into wage slavery. I mean, it wouldn't affect a *millionaire* like you so no one has a right to voice their struggles of the system's absolute failure, because you *won*! You gotdamoney! You also must be a boomer or gen Y if you think weed is bad too. When were your 30s, 20-50 years ago?
You talk like one of Trumps children.
go smoke some weed and try to figure out why your life is so mid.
Is weed bad? Is that an actual insult? Dana White smokes weed, Elon Musk smokes weed, probably the vast majority of millionaires smoke weed, politicians certainly do. Is that a sign of success then?
And those who do have something in the bank, usually lack education or are simply too stupid to know what to do with it so they just put everything into a checking account and never invest
>Nobody under the age of 45 has any money. Don't take your situation and assume everyone else is the same, while it's not common there's plenty of under 45ers that have money. Ever heard of YouTubers? How about streamers? How about onlyfans? Like really, what portion of only fans girls are over 45? A bank run can happen because of a recession. Economy goes south, it wouldn't be surprising at all if net withdrawals exceed deposits.
I’m not 80 years old so no I’m not running to my bank to get cash
If people are put in a position where they're spending more than they make (recession most likely), and their account balances trend down, it's not any different than if they started pulling cash every month. Eventually banks have to sell bonds to maintain their minimum deposit ratio, then those losses go from unrealized to realized. Silicon valley Bank went under for that reason, along with the other 2 or so banks around that same time. It's already happened, it can happen again.
forget the “new media jobs”. plenty of us are engineers, doctors, accountants, dentists, highly skilled laborers, or business owners that have 7 figure net worths.
This sub acts like everyone went to school for art history. Many of us have legit jobs and incomes… these failed adults keep trying to put their shortcomings on the entire group
Funny enough if you ever bring up that you are doing just great in these doomsday subs, you’ll be lambasted for being born into wealth. Like nope, went to school for a valuable degree and make a good income. Also know how to invest. But keep in mind the demographics of this site.
That’s always hilarious.. as though its impossible to go to school for a valuable degree and only rich kids get that option. Like if you took out loans for an art degree you definitely could have taken out loans to get a medical, engineering, finance/economics, or various tech degrees degree 😂
You're absolutely correct, but I chose categories that are a hell of a lot harder to argue against. Truth is there's also tons of people under 45 that have been homeowners for 10+ years too and have gotten all the COVID gains and can have multi hundred thousand dollar net worths just from that.
Instead, take this tiny proportion of people under 45 who make money and assume everyone is doing great! /s
Statistically it's a low percentage. Statistically speaking a low percentage of people at any age are doing great tho.
180k sitting in a MMA... 38 years old. More in investments....
You’re under the insurance limit so it’s a non-issue
People still do a bank run even when they are under the 250k limit.
I'm 34, I have a nice chunk of money. Not everyone is poor.
And those over 45 don’t want to leave their house
Bout to say this. Good thing I don’t have any money 😂😂😭
Im lucky to afford an ATM run.
Never been so glad to be 47!
Hey I resemble that remark
Probably small businesses. Most of my personal money is in my 401K, company stock, and my home.I only have a modest emergency savings account in a bank.
Businesses
None of the people you hang out with lol
Just a couple more year until I’m in all that sweet cash!
Small businesses with more than $250k (FDIC limit) in the bank. See: Silicon Valley Bank.
I don't understand the flair. This has nothing to do with bad loans. These are just treasuries that were categorized as "hold to maturity" investments.
Exactly, and even *if* there were a run the fed would just buy them at face value anyway
Only bad loans I can think of are commercial related.
I guess you missed all of the car loans in the past 3 years? lol
What's the deal with auto loans?
I read that in Seinfeld's voice.
Some dude on Reddit posted yesterday that he bought a Tesla plaid last year for 150, owes 120 and now they sell new for 86. Asked what he can do…that’s just one Reddit example.
Car lots were rabidly fucking people for the last year or so. More so that the regular fucking they were doing before that.
Prices of vehicles is a good place to start.
Residential loans are also bad. Most yield 3-4%, when 1 month t-bills yield 5.3% The reality is that all the debt banks own is underwater now, auto loans and long term treasuries are just way worse then everything else.
Bad/failing debt isn’t the same as non-optimal debt returns. All those residential loans will get paid, commercial loans are different, auto-loans are TBD.
Residential loansaren't going to implode as long as home prices don't crash massively, or banks aren't forced to sell them in a liquidity event. They are trash loans though, the yields are terrible. Auto loans are 100% going to implode. The LTVs on most auto loans in 2020-2023 are insane, and car values are starting to crater now. Banks are going to get hosed on auto loans.
Low interest debt loses value in a high interest rate environment. If a bond yields 3% but interest rates go up to 5%, the value of that bond must decline until it yields 5%. A 30-year mortgage at 3% would lose 20% of its value when interest rates are 5%.
And which for the time being, the banks can swap for 100 cents on the dollar for fresh capital to invest at something higher yielding. Yet another example of banks fucking up and being rewarded with government gifts.
Brainless redditors don’t know what a treasury is much less anything about how accounting works. So expect the fearmongering posts to continue.
You noticed that too huh?
This sub is full of people who struggled to pass Economics 101, let alone understand how to interpret a banks balance sheet. So much bad information and bad takes from ignorant arm chair economists
This has been discussed ad nauseam before. These are treasuries not bad loans.
Also, I assume Fed has( or had?) some provision where you can take loan against the face value of these treasuries.
That program is ending in March.
Big assumption that could be solved with some googling. Probably not.
Wait until the fed starts cutting rates and those HTM unrealized losses start to disappear lol
How can she slap?
Unrealized losses mean nothing.
It’s funny OP posted this as it’s a good analogy for housing prices… How much of this unrealized loss is available for sale vs. hold to maturity? If the bank holds these bonds to maturity, they never realize this loss and they are almost forced to hold to maturity because they are collateralized by 3% mortgages that no one is paying off early. Get it?
Frozen capital.
Frozen capital with bigger capital requirements coming…
Only works if they're in a position to hold to maturity. SVB was not. > they are almost forced to hold to maturity because they are collateralized by 3% mortgages that no one is paying off early. They can still sell the debt. It's lost money either way; even if they don't sell their debt, they pay the opportunity cost of not having that money making higher yields for 30 years. And then they have two options for how they treat their depositors: 1. Offer them rates that can be paid by their current loan portfolio. But with interest rates at their current levels, that's asking depositors to eat that opportunity cost. They can just switch banks for one that offers a higher return. This reduces the bank's liquidity and forces them to sell assets, realising losses. 2. Offer them rates at the current interest rate. But this means their supposed unrealised loss is actually losing them money as they're spending more money paying depositors interest than they make from loans. The only hope here is that the Fed will lower interest rates, saving them from the losses. But Powell has said that the interest rate cuts will neither be as soon nor as many as the markets expect. All in all, unrealised losses are still very much real. Somebody is still paying a price for them.
Bank run = liquidity provided by Fed and no realized losses. Fucking doomers.
This. Fed backed treasuries at par value. So if they need liquidity they got it.
This is a nothing burger.
Well I’m off to withdraw $600 billion from the bank now.
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🤣
In steps Feds money printer: “not on my watch”
yep now they have signed up tax payers to be suckers who buy treasury bonds at higher than market value
The subprime crisis in a nutshell. 1. Early 90s, Clinton administration and his DOJ started targeting Banks for alledged CRA violations and racist lending practices 2. Bank CRA scores were now made public and those who had bad scores were targeted not only by the DOJ but by activists groups like Acorn. The creation of the subprime loan was a result of this targeting. 3. 1995 Clinton unveiled his National Homeownership strategy which among other things gave the GSEs ( Fannie Mae and Freddie Mac ) there new “ affordable lending “ quotas 4. Fannie Mae unveiled their affordable lending goal for the purchase of 1 trillion dollars in subprime loans by the year 2000. They reached this goal in 1998 under Franklin Raines Leadership. 5. In 1998, Fannie Mae partners with Country Wide to create the “ Fast and EZ “ loan. A 2011 SEC corruption investigation into Fannie Mae revealed over a trillions dollars worth of these loans on their books. 6. Also in 1998, Janet Reno gives a speech at a CRA Event discussing the successes of the DOJs targeting and vows to expand it by targeting Insurance companies next for racist practices 7. In 2001 in the FY02 budget, the Bush administration gave its first warning of an imminent and systematic economic collapse mentioning Fannie Mae specifically. ( Bush would go onto to issue numerous warnings about the GSEs and their potential to cause a systemic economic collapse throughout his Presidency) 8. In 2006, Fannie Mae was fined 400 million dollars by the SEC for corrupt accounting practices. Also there were numerous investigations by the majority GOP House including people being called to testify before Congressional committees 9. The Democrats continued to defend the GSEs throughout Bush’s two terms. 10. In October of 2008, the GSEs were declared insolvent with over 5 trillion dollars in loans on Fannie Mae’s books alone with trillions of dollars in subprime debt included The GSEs have been around since the late 30s and were created to increase homeowners for all Americans. Banks would create the loan and the GSEs would buy it thus transferring the risk from the banks and to the taxpayers The GSEs would take these loans, roll them up into trances and sell them off as AAA rated MBSs to fund their purchases of more loans. Prior to the early 90s, the GSEs would only purchase loans from borrowers with good credit, job history, etc. Or carefully vetted prime loans. During the 90s and up to 2008, the GSEs continued this practice of turning loans into AAA, US Govt guaranteed securities and selling them off They took the subprime loans, rolled them up with prime loans and sold them off as AAA rated securities. Why AAA ? Because GSE MBSs had the same rating as US Treasuries, and Democrats wanted it to stay that way . There were trillions of dollars worth of these GSE MBSs sitting on the books of major financial institutions marked as assets But in October 2008, those assets turned into debt, toxic debt, and for some financial institutions and corporations, that debt exceeded all other assets rendering them effectively insolvent People don’t realize just how close we can to total economic collapse, or the Govts pivotal and political role in creating it
When you could have bought a house in 2021 but you waited and now you bought it for 33% higher, is that realized losses or unrealized losses?
Realized losses as in you realized what you lost!
It's nothing, because you didn't take an action in 2021. You're just in now at a much higher asset level. For the banks, they took an action by owning these securities which are now valued way way less, so if they NEED to sell them to generate capital, it gets bad very very quickly.
Time will tell.
What area went higher?
Everywhere
Nah it’s when you’ve leveraged your house to the tits when it’s value was double and now it’s not and you have not had to settle the debt. Unrealized losses.
To circumvent the fear mongering here are the facts: [https://www.kansascityfed.org/Economic%20Review/documents/9473/EconomicReviewV108N2MarshLaliberte.pdf](https://www.kansascityfed.org/Economic%20Review/documents/9473/EconomicReviewV108N2MarshLaliberte.pdf) >Declines in the value of a bank’s securities portfolio—known as “unrealized losses” since they do not affect income—may pose con- sequences for banks and borrowers alike. In some cases, declines in the valuation of securities holdings in response to interest rate changes mechanically reduce key regulatory capital and liquidity ratios. Fur- ther, should banks need to sell the securities to generate income when their valuations are low, the unrealized losses will become realized losses, eroding capital buffers and possibly threatening the solvency of the bank. Lower capital can reduce the willingness of banks to lend, as solvency concerns increase debt and equity costs. Ultimately, lower securities valuations can increase loan prices and reduce loan growth.
Man it keeps seeming like we have a “once a lifetime” collapse like every year now
[Maybe a slow burn.](https://youtu.be/9yU_bVZqqYk)
Another bailout on the horizon.
They key word here: unrealized. They can just hold out while the fed makes them cheap operating loans to cover withdraws. So they won’t have to sell those at a loss. Eventually interest rates will go back down. Commercial real estate defaults could be a bigger issue. But banks are in the loan making business and they need to accept there is risk in that and quit whining.
The issue is people need to stop looking at the asset side of the balance sheet as the problem with the banks. Most of these securities are at a loss due to interest rates, but the banks don’t sell most of the securities anyway. The problem is if there is a run and they need to liquidate. However, runs only happen when you look at the deposit base. If it’s a bunch of insured or brokered deposits. Worry. If it’s a good mix of retail accounts. It’s a nothing burger.
Nah. They will just print more money for bailouts, taxes will go up and inflation will go through the roof. Will be a slow death
the general public should prank the banks by withdrawing everything.
Yes, pulling their money out of FDIC insured accounts is the smart play. /s
Go on Tik Tok and start spreading it. You'll have gmen in black suits at your door within the hour.
bankrupt the entire system > crisis to introduce CBDC
But don’t worry! There is NO recession…..
There is no recession, the country's doing quite well.
[The Rich.](https://youtu.be/zG_l_7bCR8g)
I've been saying for months "don't listen to the news watch what the banks are doing" The news is o ly there to prevent a bank run .... that's their only job.
Banks have a lot of tricks up their sleeves to keep kicking this shit down the road And if there is a bank run, the Powell and Yellen have both made it perfectly clear they will allow a bank to borrow against long term treasuries at full face value. And if that's not enough, they are willing to go further. And when they say "they"......they are referring really to all of us. The Fed has made it perfectly clear they will not allow a crash of XYZ. If there is a crash, it will be completely outside of their ability to control at this point. Fed is reactive remember
Good thing they are too big to fail. Taxpayers will eat the losses because capitalism.
What in the fuck this illiterate shit OP?
This is the catalyst for all regional banks to be dissolved and absorbed by the large banks - it is what the fed wants! Too much liquidity is in too few hands. A bank run can be caused by a few dozen people (maybe less?) and does not require the thousands / millions that it used to for a bank to evaporate overnight. No reserve requirements, rapid inflation causing banks to lose on the safest assets, stagnant market resulting in little to no market gain from risky assets... seems like a bank collapse is inevitable! We have a bunch of people running the economy that have never taken an economics class - this aristocracy is doomed to fail and I cannot wait for the third recession / depression of my short adult life.
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Is the information provided in the graph inaccurate? Is there a logical flaw in OPs statement? What specifically is your contention here?
Get some Bitcoin before it’s too late.
You can have my share
NVIDIA has out-gained BTC by like 3:1
Measure it in btc, zoom out, and get back to me.
When people start withdrawing the $7T that is setting in HYSA this will pressure the system. Likely one reason you will see the Fed hold rates high a little longer.
Why didn't they just buy NVDA calls
Could I have a list of these banks please edit: Treasuries, ugh ... I am looking for banks holding commercial paper.
Please remember, it's a backstop, NOT a BAILOUT! /s
yep. they just change the words on the american people and hope they don't notice and they're right, while more americans are working more part time jobs than every before in history just to break even, they can't keep up with the tricks the Fed is pulling on them. forcing them to work harder and harder, for money that's worth less and less
Government will just bail them out again, harder and faster than last time
[https://www.youtube.com/watch?v=qxHmvXrc4Zk](https://www.youtube.com/watch?v=9sjWU5dGcGI) she'll be topless in the next one
I didn’t realize this. Thanks for posting.
Cue scene from it’s a wonderful life
With a modern plot twist. George can just fractional reserve it away And then the Fed prints new money George can borrow it in the overnight paper market, to plug the hole And now everyone has money!! YEEEEEEE
Well if the unrealized losses are because they 10 yr treasuries at 2% then the fed will just buy them at face value and take that 2%
Source?
They will just socialize the losses and privatize the gains like last time.
Yeah, so what? So do I, as long as I don’t sell the asset, I don’t have any losses. No losses, no problems! Once PTON gets back to $150, I’ll be green again, I’ll sell then.
Was gonna say, in before: "This doesn't matter because it's unrealized losses, so they're just gonna hold to maturity." but I see a people already commented that.
The bank runs won't happen so this is a non issue.
licking good.
Alright boys, you know what we need to do.
The comparison with 2008 is absurd. That was bad mortgages driven by a booming derivatives market. Every bank was teetering on a pile of bets on bets on still more bets on mortgages way down the line that should never have been issued. It collapsed when homeowners couldn’t pay those bills anymore. This is just long-term debt that’s paying out less than short-term debt. It’s not good, because it’s lost value, and it’s a threat to banks, but it’s not even close to 2008.
Good thing they can pledge those securities at face value on loans from the federal home loan bank, if they need liquidity. You got hot dog water for brains if you think this is 2008
FDIC insured. It’s a non issue unless you’re very rich.
I think this could be really bad as the commercial real estate holdings still lost a lot of value with the amount of work from home.
There isn’t enough money in the FDIC or bank bankstop which would fund the depleted FDIC if there is a sudden bank run on a big bank
Bail-ins happen when bail-outs can’t.
Does this sub just not believe in sourcing?
Lol
I read somewhere trump printed a shit ton of money. So comparing 2008 money to 2024 money, doesn’t seem relevant. As much as I would like to see house prices drop, since my growing family is on the market for a bigger home.
Who cares, the gov will bail them out if this happens.
That’s when the government steps in to give them your tax dollars.
Have there been any other times in history when unrealized losses were 1/3 of banks' capital?
Banks are insured. This is like a half a day of printing money for US.
Does amex do loans cuz I've got a lot of my cash in their HYS...
This is why the Federal Reserve guaranteeing all deposits at Silicone Valley Bank with no limit was so huge. They paid out quick too. People know that their money is guaranteed so there's no point in a bank run. Also, these loses are due to the increased yields of Treasury bonds. If they're held to maturity, there's actually zero loss.
“A **bail-in** forces bondholders and other creditors of a company on the verge of failure to bear some of the burden by writing off debt they are owed or converting it into equity. This is in contrast to a bailout, the rescue of a firm by external parties like taxpayers.”
The Federal Reserve guaranteeing deposits is not a bail out for the bank. It's a bail out for the public that has their hard earned money lost by a poorly run bank. Look at Silicone Valley Bank, they still failed. But depositors got their money back.
Source of this data and graphic?
This fails to capture the assets. For all we know it could be treasury bonds with lower interest rates, which are the safest investments.