Lol I'm sure the banks got rid of that article.Originally Posted by jp71291
Lol I'm sure the banks got rid of that article.
We went from, "there's gonna be nationwide run on the banks" to gap down, several banks halted, to green on the day. It wouldn't surprise me if Bill Ackman was closing shorts and buying stocks this morning. I did plenty of buying this morning. We might get a good bull run if inflation data cooperates.
Thanos was the hero
It is just an insane market right now
Yep I noticed it today. I also wondered if Morningstar took it down so as not to fuel any runs on the banks listed.
I can't imagine what happens if CPI is hot.
Thanos was the hero
The Fed is in a quanundrum. Even if CPI is hot I could make a case that they pause.
The stress tests that the big banks have been subjected to don't address duration risk, so it is possible that those banks have the same issue with treasury securities under water. That in itself isn't a problem as long as net flows are positive. If something flips it could get very ugly. It would surprise me if all banks don't have losses on the paper they hold. Again net flows are the key to solvency.
On the other hand the 2% inflation target is not achievable without more rate hikes. Does the Fed continue to fight inflation or do they worry more about the banking sector and the impact on society of a bigger run on the banks? What happens when corporations scale back on office space due to a shift to remote workers, potentially causing a crash in the commercial real estate market and that impact on the lenders?
It was foolish for anyone to think that zero interest rates and quantitative easing would continue forever. These banks should have been focused on contingency planning instead of hiring diversity and inclusion managers.
2006 Triton TR196 w/ 200 Optimax \ 2021 AlumaRyder 1860 w/ 200 Rotax
Trying to decide what to do with the FRC I bought yesterday. Up 70% but feels like there is still a lot of upside. Don’t have a ton invested in it.
Be careful. I bought some bank stocks yesterday, but I expect to add to those positions at lower prices.
2006 Triton TR196 w/ 200 Optimax \ 2021 AlumaRyder 1860 w/ 200 Rotax
Is there a solid reason it's bouncing so hard today?
It was touted as a bank to buy on TV this morning.
2006 Triton TR196 w/ 200 Optimax \ 2021 AlumaRyder 1860 w/ 200 Rotax
After doing some research on the difference between banks and brokerages I am convinced it is much safer to have money in a brokerage and excess cash in a treasury money market CDs, treasuries etc. They had the Charles Schwab CEO on CNBC today and he really explained the differences pretty well with respect to no commingling of customer accounts with the banks assets, the custodial relationship and SIPC.
as always depends on what you read and believe. Seeing a lot saying the huge drop was a large over reaction to SVB. Took my profits on part of it and holding the balance for now.
It's important to note that SIPC insures up to $500k in securities. Any cash you have in a brokerage is still covered by the same $250k from the FDIC.
The big difference is that when you hold securities like stocks, bonds, cds, cash etc. at a brokerage it is not a liability on their balance sheet like a a cash deposit at a bank. The bank can lend out your cash for a residential mortgage, commercial mortgage, auto loan etc.. The other big difference is the excess insurance brokerages carry. Schwab has excess insurance through Lloyds of London that insures each customer up to 150 million dollars and an aggregate 600 million dollars for all of their accounts. Also your accounts are segregated and the brokerage is just a custodian. Your holdings in your account are your own and they are not commingled with the assets of the brokerage. I am beginning to wonder if we will even need regional banks anymore. They lack the investment options, pay crap for interest and you can perform anything you need to do through a brokerage account. What just happened may be the end for most regional and smaller banks. They really do not serve a purpose anymore.
You are overlooking the role that regional banks play in specialized lending. That can be due to local needs (think farming) or industry specific. As a general consumer you don’t need them but others do.
2006 Triton TR196 w/ 200 Optimax \ 2021 AlumaRyder 1860 w/ 200 Rotax
I totally get what you are saying. I know there is a need for them but if depositors vote with their feet then it will be tough for them to compete with other institutions that pay more for their cash. Money goes where it is treated best and where it is most protected.
There may be a need, but is there enough of a need. Are there enough farmers needing new tractors every year in a specific region to warrant their own bank? A bank won't stay open for a couple clients.
Thanos was the hero
I used farmers as an example of a specialized lending application. Even so I would be surprised if tractors amounts to more than 2% of their loan portfolio. Things like fertilizer, fuel, and seed would be much larger and recurring. If you went to JPM, BAC, or WFC with that you wouldn't even get an appointment.
Another area of specialization would be commercial re lending. Signature Bank is a big player in the NYC market.
I can also give you an example from experience. Back in 1999 I was the treasurer for my son's baseball association. We used fields that were on school district property, but all upkeep and improvements were the responsibility of the association. The brick clubhouse had been built in 1963 on a very poor foundation and it was falling apart. If reported it probably would have been condemned. In order to replace it I went to a local (regional) bank and they gave us an unsecured loan of $50,000 and a very low interest rate. The only assets of the association were used equipment and gear. There was no recourse for the bank if we didn't pay it back. No big bank would ever have considered that.
2006 Triton TR196 w/ 200 Optimax \ 2021 AlumaRyder 1860 w/ 200 Rotax
S&P Global Ratings downgraded the bank’s rating by four notches to BB+ on Wednesday. The change gave the bank’s speculative grade, or “junk” status. Before the move, First Republic was deemed an A- credit, or solidly investment-grade.
The ratings agency said First Republic faces elevated risk of deposit outflows and faces pressure to its profitability if it needs to use more costly funding options than deposits, such as wholesale borrowing.
Moody’s Investors Service placed the bank under review for a possible downgrade on Monday. Moody’s rates First Republic Baa1, which is investment-grade status.
2006 Triton TR196 w/ 200 Optimax \ 2021 AlumaRyder 1860 w/ 200 Rotax
From twitter, a bunch of private jets, more than 20, flew from the headquarters of regional banks and landed in Omaha. Sounds like Buffett might be fishing
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