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Post by fishingrod on Mar 16, 2023 22:43:37 GMT
Bloomberg is reporting that Schwab's prime money market funds had outflows of more than 8.8 Billion in three days. Fear has hit the market.
Let us hope it doesn't ripple through and cause more trouble.
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Post by johnsmith on Mar 16, 2023 23:43:54 GMT
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Post by fishingrod on Mar 16, 2023 23:50:46 GMT
I believe it is because they are concerned that money markets may " break the buck" again.
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Post by fishingrod on Mar 17, 2023 0:11:20 GMT
I wonder what is being discussed behind closed doors at all of the top banking institutions and at the FED right now.
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Post by johnsmith on Mar 17, 2023 0:37:08 GMT
I wonder what is being discussed behind closed doors at all of the top banking institutions and at the FED right now. my guess - how to fix the bond market.
bank customers already have 100% backing for their deposits.
I have been thinking about how FDIC insurance was only charged for the "insured deposits" now they will simply charge a surcharge.
Won't this surcharge basically get passed on to the customers? Why not increase the tax on profitable banks to 75%? That should equalise the market for small, medium and large banks.
basically really large GSIB (globally systemic banks) get a subsidy because all the customers know that if the bank fails, they won't lose money, as the Govt/Fed will be forced to bailout. So very large clients with tons of money will automatically park their money at no interest rate/pay fees ; basically the GSIB banks get a default subsidy from that "fed bailout", which small/regional banks usually don't.
To equalise this; simply tax away the really large banks super profits.
What do you think?
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Post by bobfl on Mar 17, 2023 2:41:33 GMT
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Post by johnsmith on Mar 17, 2023 2:43:49 GMT
Prime funds hit with biggest outflows in at least six months - 8.8 B The firm’s government and Treasury funds had inflows - 14 B
flight to safety.
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Post by Norbert on Mar 17, 2023 8:59:00 GMT
I wonder what is being discussed behind closed doors at all of the top banking institutions and at the FED right now. my guess - how to fix the bond market.
bank customers already have 100% backing for their deposits.
I have been thinking about how FDIC insurance was only charged for the "insured deposits" now they will simply charge a surcharge.
Won't this surcharge basically get passed on to the customers? Why not increase the tax on profitable banks to 75%? That should equalise the market for small, medium and large banks.
basically really large GSIB (globally systemic banks) get a subsidy because all the customers know that if the bank fails, they won't lose money, as the Govt/Fed will be forced to bailout. So very large clients with tons of money will automatically park their money at no interest rate/pay fees ; basically the GSIB banks get a default subsidy from that "fed bailout", which small/regional banks usually don't.
To equalise this; simply tax away the really large banks super profits.
What do you think?
I'm surprised you're not suggesting that the banks be nationalized.
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Post by fishingrod on Mar 17, 2023 10:08:00 GMT
I was only able to see the headline which didn't include anymore info. That is why I posted so people could expand on the topic.
I was still only able to see the headline with your link. But thanks.
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Post by fishingrod on Mar 17, 2023 10:10:02 GMT
my guess - how to fix the bond market.
bank customers already have 100% backing for their deposits.
I have been thinking about how FDIC insurance was only charged for the "insured deposits" now they will simply charge a surcharge.
Won't this surcharge basically get passed on to the customers? Why not increase the tax on profitable banks to 75%? That should equalise the market for small, medium and large banks.
basically really large GSIB (globally systemic banks) get a subsidy because all the customers know that if the bank fails, they won't lose money, as the Govt/Fed will be forced to bailout. So very large clients with tons of money will automatically park their money at no interest rate/pay fees ; basically the GSIB banks get a default subsidy from that "fed bailout", which small/regional banks usually don't.
To equalise this; simply tax away the really large banks super profits.
What do you think?
I'm surprised you're not suggesting that the banks be nationalized.
Not that I am for nationalizing the banks, but what about more regulation and oversight, so these banks don't implode again and again. Is that an option?
Or should people and businesses be more careful where they put their money and let the customer beware?
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Post by fishingrod on Mar 17, 2023 10:27:49 GMT
I notice it is the prime money market of Schwab's that has the redemptions. Is it mainly corporate short term debt money markets that are subject to trouble? Or as with SVB, which wasn't their money market but a bad bet on long term treasuries, Are federal and treasury money markets safe?
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Post by bobfl on Mar 17, 2023 11:32:53 GMT
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Post by johnsmith on Mar 17, 2023 11:50:56 GMT
my guess - how to fix the bond market.
bank customers already have 100% backing for their deposits.
I have been thinking about how FDIC insurance was only charged for the "insured deposits" now they will simply charge a surcharge.
Won't this surcharge basically get passed on to the customers? Why not increase the tax on profitable banks to 75%? That should equalise the market for small, medium and large banks.
basically really large GSIB (globally systemic banks) get a subsidy because all the customers know that if the bank fails, they won't lose money, as the Govt/Fed will be forced to bailout. So very large clients with tons of money will automatically park their money at no interest rate/pay fees ; basically the GSIB banks get a default subsidy from that "fed bailout", which small/regional banks usually don't.
To equalise this; simply tax away the really large banks super profits.
What do you think?
I'm surprised you're not suggesting that the banks be nationalized.
and why would I do that? |
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Post by richardsok on Mar 17, 2023 13:09:55 GMT
I have a big wad wallowing right there in Schwab MM.
I'll reconsider when we start talking about 75% tax confiscation of bank profits. Great idea. What could POSSIBLY go wrong?
Look, John. I am VERY sympathetic to your call for higher taxes on the uber-wealthy, and YES, I also deplore "corporate welfare" in all its semi-corrupt oligarchical manifestations. All true, true, true.
What offends me is a certain party focuses on these injustices with the massively dishonest implication that we might solve our budgetary and entitlement problems merely by taxing the rich. Entitlement fever is like a sociological drug. "Hey! We can just tax THEM and vote ourselves MORE! Deficits? Whazzat?"
So in San Fransicko they're RIGHT NOW weighing $5million handouts to the Chosen Few (people who have never owned slaves in a state that never had slavery giving to others who have never been slaves in restitution for the slavery that never existed) while in France masses of perfectly nice people are striking against the iron laws of arithmetic.
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Post by johnsmith on Mar 17, 2023 13:17:04 GMT
I have a big wad wallowing right there in Schwab MM. I'll reconsider when we start talking about 75% tax confiscation of bank profits. Great idea. What could POSSIBLY go wrong? I don't know how the two things are connected? Maybe after my morning coffee, I'll be able to connect the dots.  |
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Post by bobfl on Mar 17, 2023 13:38:35 GMT
Just spoke to Schwab. The problem is in MM accounts that are only insured to $500,000 by SIPC.
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Post by bobfl on Mar 17, 2023 13:44:12 GMT
I have a big wad wallowing right there in Schwab MM. Richard, that MM account is ONLY insured to $500,000. Looks like you will have to split your big wad up among 20+ other accounts. :-) |
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Post by FD1000 on Mar 17, 2023 14:25:00 GMT
I have a big wad wallowing right there in Schwab MM. Richard, that MM account is ONLY insured to $500,000. Looks like you will have to split your big wad up among 20+ other accounts. :-) I have a nice amount in Schwab, but right now not in MM, I'm all in. Next time I sell, I will buy Schwab U.S. Treasury Money Fund – Ultra Shares ( SUTXX) that pays 4.46% instead of SNAXX that pays 4.64%, it's less than 0.2% per year.  See below SUTXX. Attachments:
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Post by Capital on Mar 17, 2023 14:29:45 GMT
I am not seeing this as an issue with Schwab. From my reading the 8.8B went from Prime MM Funds to Government MM Funds at Schwab. Investors were just moving away from the possible liquidity issues with these funds. This is probably a part of the equation causing short term Treasury rates to drop as they did when Government MM Funds had to buy with the new funds from the Prime Funds. I have some IRA funds at Fidelity currently in a Prime MM Fund and plan to keep them there for now.
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Post by johnsmith on Mar 17, 2023 14:51:20 GMT
I have a nice amount in Schwab, but right now not in MM, I'm all in. Next time I sell, I will buy Schwab U.S. Treasury Money Fund – Ultra Shares ( SUTXX) that pays 4.46% instead of SNAXX that pays 4.64%, it's less than 0.2% per year. See below SUTXX.
That is useful info. Thanks!
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Post by bobfl on Mar 17, 2023 14:53:36 GMT
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Post by habsui on Mar 17, 2023 17:02:35 GMT
It's the whole account that is insured/protected up to 500K, not a single fund. Thus, one has to split the $ between 16 brokerages.. |
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Post by catdog on Mar 17, 2023 19:21:57 GMT
I just got off the phone with Fidelity and was referred to the website security and protection section. Fidelity has an excess of SIPC insurance policy at Lloyd's of London that is a second layer of protection up to 1.9 million dollars. The man said it and showed me where it was on fidelity's website so I believe it.
What does anyone else think?
catdog
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Post by steadyeddy on Mar 17, 2023 21:17:06 GMT
I think most major brokerages have secondary insurance.
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Post by catdog on Mar 17, 2023 21:44:57 GMT
Thanks Eddy, that makes me feel even better.
catdog
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Post by FD1000 on Mar 17, 2023 22:01:42 GMT
www.schwab.com/legal/account-protectionDoes Schwab have any additional protections for client securities beyond those provided by SIPC? Yes, in addition to SIPC, Schwab clients receive an extra level of coverage through "excess SIPC" insurance protection for securities and cash. This helps ensure claims will be covered in the event of a brokerage firm failure and funds covered by SIPC protections are exhausted. The combined total of our SIPC coverage and our "excess SIPC" coverage means Schwab provides protection up to a combined return of $149.5 million per customer, up to $1.15 million of which may be in cash. The Excess SIPC program has a $600M aggregate (meaning the most the program will pay for the Excess SIPC portion of the losses). Commodity interests and cash in futures accounts are not protected by SIPC. ================== I found the above by myself and then talked with a Schwab rep, and he verified the above. I'm fine with the blue part above. $600M(in red) for all Schwab brokerage accounts could be a problem. Most investors don't have more than $500K, but the ones above, can have more than 600 millions. I don't think Schwab MM, SNAXX, will have any problem, but I will use Schwab U.S. Treasury Money Fund – Ultra Shares (SUTXX) instead for several months just in case. It pays 4.46% which is more than Schwab Government Money Fund – Ultra Shares (SGUXX) at 4.38%(all numbers are for a 1 million minimum). SUTXX is all in treasuries, if they default, the whole world will be in flames. SGUXX had treasuries + Gov agencies and treasuries are safer, read ( www.investopedia.com/articles/bonds/07/agency_bonds.asp) So, why would I buy a fund with a slight higher risk with lower yield.? BTW, if Schwab goes down, the US will be in trouble( investingintheweb.com/brokers/largest-online-brokers-by-aum/). Schwab is number 3, See below. Attachments:
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Post by Chahta on Mar 17, 2023 22:31:30 GMT
I wonder what is being discussed behind closed doors at all of the top banking institutions and at the FED right now. I heard on Fox Business today that the Fed May actually pause because of this banking hiccup. The bond market seems to be thinking that. I wish I could lay claim to one of those $8.8b lost at Schwab.😀 |
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Post by Chahta on Mar 17, 2023 22:35:14 GMT
www.schwab.com/legal/account-protectionDoes Schwab have any additional protections for client securities beyond those provided by SIPC? Yes, in addition to SIPC, Schwab clients receive an extra level of coverage through "excess SIPC" insurance protection for securities and cash. This helps ensure claims will be covered in the event of a brokerage firm failure and funds covered by SIPC protections are exhausted. The combined total of our SIPC coverage and our "excess SIPC" coverage means Schwab provides protection up to a combined return of $149.5 million per customer, up to $1.15 million of which may be in cash. The Excess SIPC program has a $600M aggregate (meaning the most the program will pay for the Excess SIPC portion of the losses). Commodity interests and cash in futures accounts are not protected by SIPC. ================== I found the above by myself and then talked with a Schwab rep, and he verified the above. I'm fine with the blue part above. $600M(in red) for all Schwab brokerage accounts could be a problem. Most investors don't have more than $500K, but the ones above, can have more than 600 millions. I don't think Schwab MM, SNAXX, will have any problem, but I will use Schwab U.S. Treasury Money Fund – Ultra Shares (SUTXX) instead for several months just in case. It pays 4.46% which is more than Schwab Government Money Fund – Ultra Shares (SGUXX) at 4.38%(all numbers are for a 1 million minimum). SUTXX is all in treasuries, if they default, the whole world will be in flames. SGUXX had treasuries + Gov agencies and treasuries are safer, read ( www.investopedia.com/articles/bonds/07/agency_bonds.asp) So, why would I buy a fund with a slight higher risk with lower yield.? BTW, if Schwab goes down, the US will be in trouble( investingintheweb.com/brokers/largest-online-brokers-by-aum/). Schwab is number 3, See below. Beside this, Biden has already lead the way in “Trumping” the FDIC $250k safety net. Money is no object. |
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Post by bobfl on Mar 17, 2023 23:10:06 GMT
www.schwab.com/legal/account-protectionDoes Schwab have any additional protections for client securities beyond those provided by SIPC? ....... I found the above by myself and then talked with a Schwab rep, and he verified the above. ....... (shortened) Great post!!! Thanks! |
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bd1
Ensign
Posts: 20
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Post by bd1 on Mar 18, 2023 6:06:25 GMT
I wonder what is being discussed behind closed doors at all of the top banking institutions and at the FED right now. I heard on Fox Business today that the Fed May actually pause because of this banking hiccup. The bond market seems to be thinking that. I wish I could lay claim to one of those $8.8b list at Schwab.😀 |
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