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Post by Mustang on Oct 1, 2023 18:04:06 GMT
Comment: I hope his crystal ball is wrong. This doesn't sound good at all.
Edit: I forgot to add the link.
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Post by anitya on Oct 1, 2023 18:42:10 GMT
Why is JPM paying 6% for six month CDs, granted it is for deposits of $5m or more? Any credible news articles on this?
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Post by yogibearbull on Oct 1, 2023 20:05:20 GMT
WFC News 1. WFC is unloading alternative-credit portfolio to Centerbridge Partners. This is because the new banking rules require banks to hold capital reserves for riskier loans. 2. A senior WFC executive responsible for internal controls jumped out of 14th floor conference room window of the HQ in Wilmington, DE. As for general banking, $600 billion or so unrealized losses in bank portfolios (HTM + AWS) haven't gone away. Funny accounting allows carrying HTM portfolios at purchase price or book value, i.e. it doesn't have to be market to market (MTM), but investors have gotten wiser; AWS is MTM. Twitter LINKpbs.twimg.com/media/F7YGue4XkAAjxGq?format=jpg&name=900x900
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mani
Lieutenant
Posts: 56
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Post by mani on Oct 1, 2023 20:29:10 GMT
2. A senior WFC executive responsible for internal controls jumped out of 14th floor conference room window of the HQ in Wilmington, DE. I never understood how one can be so invested in their job that it would lead to suicide. Unless he knew he was going to jail for something. |
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Post by FD1000 on Oct 1, 2023 20:34:30 GMT
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Post by fishingrod on Oct 1, 2023 20:44:03 GMT
Why is JPM paying 6% for six month CDs, granted it is for deposits of $5m or more? Any credible news articles on this? Because they want new money.
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Post by Mustang on Oct 1, 2023 21:52:52 GMT
2. A senior WFC executive responsible for internal controls jumped out of 14th floor conference room window of the HQ in Wilmington, DE.
Perhaps I'm reading too much into it but it would seem the banks internals controls were insufficient or ignored.
And, if things get worse this will affect far more than bankers and investors. Company payrolls are in jeopardy. From the link in the first post:
"So as these banks collapse or fail or merge or acquire, your payroll account is protected. I 100% endorse that idea," O’Leary said. "And everybody should, it should be a bipartisan issue because you don't want a regional bank failing because... many payroll accounts on Wednesday nights are way over $250,000. They have to pass that bill."
This sounds more like 1929 than the 1960s.
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Post by gman57 on Oct 1, 2023 22:22:12 GMT
2. A senior WFC executive responsible for internal controls jumped out of 14th floor conference room window of the HQ in Wilmington, DE. I never understood how one can be so invested in their job that it would lead to suicide. Unless he knew he was going to jail for something. PURE speculation -- who knows... his wife may have just told him she's in love with his sister for all we know or... he was working for the Russians and had an unfortunate accident of falling out of a window... as often happens in Russia. We have NO idea from what's known at this time. |
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Post by newtecher on Oct 1, 2023 23:25:03 GMT
WFC News 2. A senior WFC executive responsible for internal controls jumped out of 14th floor conference room window of the HQ in Wilmington, DE. If you read the article (https://www.wsj.com/business/greg-becketts-life-seemed-to-be-going-well-then-he-ended-it-at-work-e9417662), it says he jumped out of the window on January 19, 2023. This was just a historical example. Not recent news. |
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Post by retiredat48 on Oct 2, 2023 2:29:18 GMT
Most of the articles re banks and disaster coming are not balanced. Here's some positives re banks.
--No matter how you parse it, higher rates are on balance GOOD for banks; it is very low rates that are terrible for banks.
--Lot's of these "investment holdings losses" are in treasury bonds. Like a three year treasury bond bought by a bank two years ago has a mark-to-market current loss in value. But reality is, if the banks holds these assets to maturity, they get their full principal amount back. No loss. Ditto for mortgages. They have a mark-to-market decline, but if held to payback time , they are paid off with no discount...paid in full. No loss.
--Banks do great with inflation. they are one of the few businesses making money on money, as a product. So if you double overall money use, banks will double earnings...etc.
--When you drive into small towns in the Northeast (think Vermont), you see two things: church steeples, and Bank Buildings. While a consolidation is perhaps needed, the pros incl gvt are saying we should not become like some countries, with five major banks, and no small regional ones. Local banks likely remain a pillar in small town society and loan availability.
--
R48
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Post by yogibearbull on Oct 2, 2023 12:11:39 GMT
While higher rates are generally good for banks, the historic rapid rise in rates revealed related problems in 2022-23.
1. Mid/large-size banks have become overdependent on expensive & unstable brokered CDs.
2. The HTM accounting fiction became widely known. When bank has a run, it has to sell or use HTM as collateral at the Fed or FHLB (at true values, although face values were accepted during the crisis), so it may not be held to maturity despite best of intentions.
Large underwater CRE portfolios are another problem for small/mid-size banks.
3. Bank regulators were focusing on bank capital & reserves. They learned of Internet-time liquidity runs in real-time.
So, regional banking crisis happened and some think that it isn't over. JPM'S Jamie Dimon is panicking - warning of a credit crisis, possible 7% for 10-yr and offering 6% for 6m CDs ($5 million min, $100 million max per customer). JPM is the largest US bank and among the biggest global banks.
Chartists may look at KBE and KRE (I established a small position near early-2023 lows and watch closely).
It is still true that basic banking is good and sound business. Community banks and credit unions stick to basics. But the problem is with mid/large-size banks that have larger ambitions beyond basic banking.
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Deleted
Deleted Member
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Post by Deleted on Oct 2, 2023 13:51:51 GMT
JPM stayed stingy with depositors savings rates for far too long. It doesn't surprise me depositors sought greener pastures elsewhere (I certainly did) and now they have balance sheet issues. Chase savings accounts still only pay 0.01% interest. That's unbelievable.
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Post by retiredat48 on Oct 2, 2023 15:58:15 GMT
JPM stayed stingy with depositors savings rates for far too long. It doesn't surprise me depositors sought greener pastures elsewhere (I certainly did) and now they have balance sheet issues. Chase savings accounts still only pay 0.01% interest. That's unbelievable. ,@django,...yes Yogi you' re citing the negatives. But note in a couple years may be resolved. So, take commercial lending to buy NYC skyscraper buildings. As low rate loans mature by owners over next couple years, we may see defaults (expect it). But on a plus side these low rate loans will be rolled over (refinanced) at double digit rates, helping the banks bottom line. And yes, while banks are scrambling to keep depositors, offering high yields on cds etc, they still have billions and billions paying depositors zero interest. Mortgages now issued at 7+% will likely be profitable...very profitable. The fast departure of bank depositors is new for the fed, and they have to develop ways to stop runs on banks. Use bank holidays?? Been done often before. R48 |
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Post by yogibearbull on Oct 2, 2023 16:22:18 GMT
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Post by catdog on Oct 2, 2023 20:21:38 GMT
I think depositors in all size banks are becoming more sofisticated. We had a million dollars in a small bank in northern New Hampshire. We had done business with them for over forty years. After watching rates rise in SPAXX in our brokerage account we eventually made a move. It was not small feat to get my wife to move her money to SPAXX, but we did it. My wife is a conservative investor and the sound of the word Brokerage Account made her nervous. We begged the small bank (7 branches) to give us a better rate, but the good old boys were in the back room smoking cigars so the money went to Fidelity. SPAXX was only paying 3% then.
The other thing that bothers me is banks offer brokered CD's, but don't offer them to their loyal depositors.
Catdog
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Post by anitya on Oct 2, 2023 21:24:03 GMT
catdog, If it makes your wife feel better, you can try moving the money to FSIXX (Treasury Only class I MM fund) and get state tax exemption. Currently yielding 5.2%. A
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Post by catdog on Oct 2, 2023 22:27:47 GMT
Thanks Anitya,
I will give it a try. She may want to go to burying pickle jars in the backyard!!!
Catdog
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Post by Chahta on Oct 3, 2023 1:51:57 GMT
2. A senior WFC executive responsible for internal controls jumped out of 14th floor conference room window of the HQ in Wilmington, DE. I never understood how one can be so invested in their job that it would lead to suicide. Unless he knew he was going to jail for something. There is a lot of mental illness in this country. Can't rule that out. |
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Post by yakers on Oct 3, 2023 16:20:40 GMT
As I understand things, the small banks have issues but no significant market impact and the very large banks are closely watched and backed by US Govt-too big to fail, its the mid size and espically the near very large banks that are a problem, they many not have enough reserves and could have a bank run and they may hold low rate treasuries (and these may be 30 year not 3 year holdings) have to be sold before maturity.
Now time may help, each year low rate reserves are reduced helps and a few years may do it but I expect the FDIC may backstop the low rate treasuries by buying them at maturity value and holding them, shifting the rick to us.
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Post by uncleharley on Oct 3, 2023 19:03:25 GMT
Today the finance sector ETF is celebrating its 3rd consecutive day down on its daily price chart. Technically it has dropped thru 4 significant lines of support to a 3.5 month low. Momentum indicators have turned negative leaving all indications that the finance sector is in a serious correction. My question is, can the broader market advance without the finance sector??? I think not.
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