No banks are safe (bail ins, FDIC limits, systemic risks)

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Anyone besides me, and some pundits, think this is a deliberate blowing-up of the banking world?

We SEE what they want. FedNow is on the shelf, waiting for launch.

And it's not going to be voluntary; and there are all kinds of tracking tools in the pipeline, I'm told. Learn your spending habits and develop a profile on each person who buys anything online or with a credit card.

All that's left is to set up Social Credit Scores.

And with the Xiden misAdministration's plan, LAUNCHED NOW, to give LOWER interest mortgages to people with POORER credit scores...we SEE they have a REAL interest in Social Engineering using your own money,

I think the banks are being scuttled. What's left will be, not bailed out by the FDIC, but absorbed into the Fed. Which will become the State People's Bank.

CBDC coming in three, two, one...
I know they are gonna bust me on the sex toys.
 
From the link:

If you have been following the banking crisis, you have likely read at least a dozen times that on March 12 federal banking regulators, with the consent of the U.S. Treasury Secretary Janet Yellen, invoked the “systemic risk exception” in order to protect both insured and uninsured depositors at the two banks that failed in March – Silicon Valley Bank and Signature Bank.

That’s why there were gasps of shock on Saturday evening at around 5:30 p.m. when the Wall Street Journal (paywall) published the stunning news that depositors in the Cayman Islands’ branch of Silicon Valley Bank had their deposits seized by the Federal Deposit Insurance Corporation (FDIC), which they are unlikely to ever see again.

As Wall Street On Parade has previously reported, under statute, the FDIC cannot insure deposits held on foreign soil by U.S. banks. What it can do, however, is to sell those deposits to the bank that acquires the collapsed bank. In the case of Silicon Valley Bank, the acquiring bank was First Citizens Bancshares which, apparently, declined to purchase the foreign deposits in the secrecy jurisdiction of the Cayman Islands, a jurisdiction most notable recently for housing Sam Bankman-Fried’s crypto house of frauds.

 
... on Friday ... U.S. Treasury Secretary Janet Yellen told bank chief executives that more mergers may be necessary following a series of bank failures.
...
The regional bank crisis has been partly blamed by some on aggressive interest rates by the U.S. Federal Reserve, which forced some lenders to seek new capital to make up for a fall in the value of assets linked to interest rates.

Fed Chairman Jerome Powell said on Friday the after-effect of recent banking sector troubles is expected to take some pressure off the U.S. central bank's interest rake hiking cycle.
...


Regional bank problems forcing the Fed to pause rate hikes. Regional banks are still under stress.

PacWest Bancorp’s stock jumped 9% Monday after the bank announced the sale of a portfolio of 74 real-estate-construction loans with a principal balance of about $2.6 billion as it moves to refocus on its core community-banking business.
...
PacWest said it is selling the loans to a unit of real-estate-investment company Kennedy Wilson Holdings.

“Kennedy Wilson or its designees will also assume all remaining future funding obligations under the acquired loans of approximately $2.7 billion,” PacWest said in a regulatory filing.

The bank has also agreed to sell an additional six real-estate-construction loans with a principal balance of about $363 million to Kennedy Wilson.

The sale of the loans is subject to Kennedy Wilson’s satisfactory due diligence. The company will place $20 million into a third-party escrow account that will be refundable.
...


PacWest found a patsy to take their CRE loans (I'm assuming they are commercial and not residential, but I could be wrong) and it's boosted regional banking stocks. lulz. What happens when Kennedy Wilson realizes the loans are high risk garbage and voids the deal?
 

Apple customers struggle to get money out of Goldman Sachs-operated savings accounts​

Apple launched a high-yield savings account with an APY of 4.15% in partnership with Goldman Sachs in April, but one month later some account holders are struggling to move their money out of the account.

Georgia resident Nathan Thacker told The Wall Street Journal that he has been trying to transfer $1,700 form his Apple account to JPMorgan Chase since May 15.

Read the rest here:


Sal's take:

PANIC At HUGE Bank As Customers Can't Access Funds!​

Jun 6, 2023


13:55
 

Apple customers struggle to get money out of Goldman Sachs-operated savings accounts​

Apple launched a high-yield savings account with an APY of 4.15% in partnership with Goldman Sachs in April, but one month later some account holders are struggling to move their money out of the account.

Georgia resident Nathan Thacker told The Wall Street Journal that he has been trying to transfer $1,700 form his Apple account to JPMorgan Chase since May 15.

Read the rest here:


Sal's take:

PANIC At HUGE Bank As Customers Can't Access Funds!​

Jun 6, 2023


13:55


Serves you right for giving Apple even more of your money. But still, time for this.

 
Show-Me-The-Money.gif
 
Kennedy-Wilson (NYSE:KW), a real estate investment firm, and certain affiliates of Fairfax Financial Holdings (OTCPK:FRFHF) have closed on the purchase of an initial tranche of loans as part of a $5.7B loan portfolio acquisition from Pacific Western Bank (NASDAQ:pACW).

The first part of the transaction, totaling $3.25B in total commitments and $1.8B in current principal balance, was acquired for $1.6B. An additional 12 loans, totaling $800M in commitments, are expected to close on a rolling basis by no later than July 31, 2023.
...


Pacific Western Bank found a taker for another billion in construction loans as it attempts to survive its deposit outflows.

Cain International acquired more than $1.2 billion in construction loan commitments from PacWest, the Commercial Observer reported. The London-based firm’s acquisition is focused in New York, with the majority of the undisclosed properties in New York City.

The loan portfolio includes 10 construction loans for multifamily and student housing projects with an aggregate balance of approximately $500 million. ...
...
Following the failures of Silicon Valley Bank and First Republic Bank, PacWest has been acting aggressively to stay afloat. Last week, Fairfax Financial moved in as the majority buyer of a construction loan portfolio from the bank, replacing Kennedy Wilson, which is retaining a minority stake in the debt.

Fairfax is paying $2 billion for 63 loans, which is about 95 percent of the portfolio in question. Last month, Kennedy Wilson had agreed to purchase 74 loans for $2.4 billion, discounted from the $2.6 billion principal balance of the selected loans.


Crisis averted?
 

Senate panel to consider bill targeting executive pay at failed banks​

WASHINGTON, June 16 (Reuters) - The U.S. Senate Banking Committee will consider a bill Wednesday that would allow regulators to claw back compensation for executives at failed banks.

The measure, backed by committee Chairman Sherrod Brown and Senator Tim Scott, the panel's top Republican, would give regulators the ability to reclaim two years' worth of compensation paid out to executives after a bank failure, as well as strengthen their ability to assess civil penalties on executives who fail to adequately manage their banks.

More:

 
I guess it's not enough that the banksters are Woked up.

The hardcore old-school Left, of which Sherrod Brown is one...still thinks of anyone who has money from any source other than a Treasury check, the Enemy.

Good. Let them turn on their own...it always happens in tyrannical movements. I have no love for banksters.
 
WASHINGTON, June 22 (Reuters) - U.S. banks are pushing to soften a major regulatory proposal to hike bank capital requirements, worried it could prove too onerous, especially for lenders still reeling from the March banking crisis, according to six people briefed on the matter.

Bank regulators led by the U.S. Federal Reserve are finalizing the proposal which would implement international capital standards agreed by the Basel Committee on Banking Supervision in the aftermath of the 2007-2009 financial crisis.

 
BIS says central banks need to raise rates to tame inflation even if it means financial stress and bank failures:
The Bank for International Settlements (BIS), a bank for central banks, is warning of further financial stress as central banks continue to hike rates to battle the growing risk of "inflationary psychology" settling in.

Despite an already aggressive hiking cycle, central banks must do more, with many countries still struggling to bring inflation under control, the BIS said in its Annual Economic Report 2023 released Sunday.

"The key policy challenge today remains fully taming inflation, and the last mile is typically the hardest," said BIS general manager Agustin Carstens. "The burden is falling on many shoulders, but the risks from not acting promptly will be greater in the long term."

The last inning of battling inflation and restoring price stability will be the hardest for central banks, according to the BIS report. But the more central banks hike, the higher the risk of financial stress and bank failures, the BIS report said.
...

 
...
Rising interest rates will deepen losses on securities held by banks and motivate savers to pull cash from accounts, squeezing the main way these companies make money. Losses on commercial real estate and other loans have just begun to register for banks, further shrinking their bottom lines. Regulators will turn their sights on midsized institutions after the collapse of Silicon Valley Bank exposed supervisory lapses.

What is coming will likely be the most significant shift in the American banking landscape since the 2008 financial crisis. Many of the country’s 4,672 lenders will be forced into the arms of stronger banks over the next few years, either by market forces or regulators, according to a dozen executives, advisors and investment bankers who spoke with CNBC.
...


Bank earnings due up shortly.
 
Don't expect anymore free toasters
 
Don't expect anymore free toasters
Shirley, you jest.

That was a different age; a different mission. Banks, back then, were to accept deposits, long; and lend, shorter. Attractive (relatively) interest rates on passbook savings deposits; lend out for real estate and residences; rake off the arbitrage.

And have toaster campaigns. Or maybe a desk lamp - I have one! Southwestern Savings & Loan (the southwest of Cleveland, that is) was giving away free desk lamps with new accounts. It just happened that there was some Christmas money coming from rich Uncle Hank (my mother's uncle; she was his favorite...his own daughter was a single alcoholic, so there was some of that I-wish-you-were-mine action going on there)...so us three kids got our own bank accounts, and three desk lamps.

One survived; and it's lighting up my computer desk right now.

But I digress...mind running off-topic is, I guess, either autism or the writer's gift. Don't know which. Banks today do NONE of that - today, a bank's private depositors are PESTS. A modern bank's job is to LAUNDER FEDERAL-RESERVE MONEY. Take the newly-created fiat as overnight ZIRP loans, plow them into house securities accounts; sell them a few days later, for higher money. Which is a given, because the handful of large banks are all doing this. They're making their own market; driving the price higher; churning to get transaction fees, buying and selling...AND, laundering the money-printing!

There's no room for you in that business model.
 
...
Banks fell broadly after Moody's downgraded the credit rating on several banks, including M&T Bank and Pinnacle Financial. The credit agency also placed Bank of N.Y. Mellon and State Street on review for a downgrade.
...


U.S. regulators on Tuesday announced a combined $549 million in penalties against Wells Fargo

and a raft of smaller or non-U.S. firms that failed to maintain electronic records of employee communications.

The Securities and Exchange Commission disclosed charges and $289 million in fines against 11 firms for "widespread and longstanding failures" in record-keeping, while the Commodity Futures Trading Commission also said it fined four banks a total of $260 million for failing to maintain records required by the agency.

It was regulators' latest effort to stamp out the pervasive use of secure messaging apps like Signal, WhatsApp or Apple's iMessage by Wall Street employees and managers. Starting in late 2021, the watchdogs secured settlements with bigger players including JPMorgan Chase, Goldman Sachs, Morgan Stanley and Citigroup. Fines related to the issue total more than $2 billion, according to the SEC and CFTC.

The firms admitted that from at least 2019, employees used side channels like WhatsApp to discuss company business and failed to preserve records "in violation of federal securities laws," the SEC said Tuesday.
...


tumblr_o0cv61q3Ws1r5cxuyo5_540.gif
 
I was wondering if last week on the DOW was a blowoff top? The runaway gains simply did not make sense to me.
 
From last week:
A Fitch Ratings analyst warned that the U.S. banking industry has inched closer to another source of turbulence — the risk of sweeping rating downgrades on dozens of U.S. banks that could even include the likes of JPMorgan Chase.

The ratings agency cut its assessment of the industry's health in June, a move that analyst Chris Wolfe said went largely unnoticed because it didn't trigger downgrades on banks.

But another one-notch downgrade of the industry's score, to A+ from AA-, would force Fitch to reevaluate ratings on each of the more than 70 U.S. banks it covers, Wolfe told CNBC in an exclusive interview at the firm's New York headquarters.

"If we were to move it to A+, then that would recalibrate all our financial measures and would probably translate into negative rating actions," Wolfe said.
...

More:

 
This one is a bit different. It's a rant about banks in general. Thought it worth a listen.

MAJOR ALERT! Banks Are CLOSING Coin Shop Accounts! This Is HUGE!​

Aug 28, 2023

14:01

Banks are being more aggressive against some businesses and individuals. Coin shops as well. This is the second one recently that got their account shut down. Check out this video: • My Coin Shop Bank Accounts Were Close...
 
...
As of June 30, according to regulatory filings, Republic Bank held $6 billion in assets and had 35 branches in Pennsylvania and New Jersey. More than half of its deposits were uninsured. Its SEC filings are not up-to-date but in its 10-Q (quarterly report) for the period ending September 30, 2022, it had this to say about those uninsured deposits:
“As of September 30, 2022, our 100 largest bank depositors accounted for, in the aggregate, 16% of our total deposits. The majority of these deposits are not insured by the FDIC and could present a heightened risk of withdrawal, if such depositors materially decreased the volume of those deposits, it could reduce our liquidity. As a result, it could become necessary for us to replace those deposits with higher-cost deposits or FHLB borrowings, which would adversely affect our net interest income and, therefore, our results of operations.”

Republic First Bancorp’s stock price has declined by 96 percent in the past 12 months as of yesterday’s closing price. Its stock was delisted from Nasdaq last month and it closed at a stunning 27-1/2 cents in over-the-counter trading yesterday.

Republic First Bancorp is far from the only bank holding company that has suffered huge share price losses over the past 12 months. HomeStreet (ticker HMST) has lost almost 75 percent of its market value. It’s a West Coast bank with 60 branch offices in Washington state, Oregon, California and Hawaii. As of June 30, it had assets of $9.5 billion.

PacWest Bancorp, parent of Pacific Western Bank, has also suffered steep share price losses, losing over 70 percent in the past year. Pacific Western Bank has 77 branches and $38 billion in assets as of June 30.

A much smaller bank holding company, Carver Bancorp, is the parent of Carver Federal Savings Bank, which has 7 branch offices in New York and $713 million in assets as of June 30, according to the FDIC. Its stock has lost 56 percent of its value over the past 12 months.

This is just a tiny sampling of the ongoing wreckage to equity values in the banking sector – raising the very serious question as to how this is all going to shake out before year’s end.

 
He's trying to avoid getting SVB'd.

I don't think he can help it. If they want you gone...you're gone.
 
This one is a bit different. It's a rant about banks in general. Thought it worth a listen.

MAJOR ALERT! Banks Are CLOSING Coin Shop Accounts! This Is HUGE!​

Aug 28, 2023

14:01

Banks are being more aggressive against some businesses and individuals. Coin shops as well. This is the second one recently that got their account shut down. Check out this video: • My Coin Shop Bank Accounts Were Close...

UPDATE
 
  • Shares of Britain’s Metro Bank suspended trading Thursday after tanking more than 29%.
  • It comes amid reports that it was trying to raise £600 million ($727 million) in debt and equity.
  • The London Stock Exchange, which lists the stock, confirmed to CNBC that the brief suspensions were triggered by its circuit breaker mechanisms.
 
For anyone interested. Link to report at my link.

 
From the article:
...
Fed Vice Chair for Supervision Michael Barr’s speech at an American Bankers Association conference will mark his first on bank regulation since the central bank in July unveiled the complex “Basel Endgame” proposal overhauling how banks gauge the amount of capital they must hold against potential losses.

The proposal implements international capital standards agreed by the Basel Committee on Banking Supervision in the aftermath of the 2007-2009 financial crisis. ...
 
FYI - that Michael Burry alarm is from March. Doesn't mean it's invalid, but the issue doesn't appear to be an imminent threat type of thing. The banking system definitely needs to work it out though. Good thing they are currently trying to lobby for more lax capital rules. :snidely:
 
...
High interest rates will put some borrowers in more precarious positions, the IMF warned in its Global Financial Stability Report. Around 5% of banks globally are vulnerable to stress if those rates remain higher for longer, it estimated, and a further 30% of banks — including some of the world's largest — would be vulnerable if the global economy enters a prolonged period of low growth and high inflation.
...


30%? That seems like a low number if you consider each bank in a vacuum. But they are connected like dominoes stacked on a table. Cascading failures - contagion - looks to be a very real risk (again).
 
The latest from Simon Black...

Silicon Valley Bank part II starts tomorrow at 6:45am
October 16, 2023

It’s been seven months now since Silicon Valley Bank went bust. And so much has happened in the world since then that SVB’s collapse almost feels like ancient history.

But something is going to happen tomorrow-- at precisely 6:45am Eastern time-- that could rekindle anxiety in the banking system once again.

And it’s not hard to understand why; the problems in the banking system… the problems that brought down Silicon Valley Bank and others… didn’t go away. In fact they got worse. And now several other large US banks are getting dangerously close to the edge.

This is not hyperbole. I’ll explain:

Remember that Silicon Valley Bank failed because they suffered sudden, massive investment losses… losses that were so large that the bank’s entire capital was wiped out.

And yet Silicon Valley Bank’s hyper-destructive investment wasn’t toxic subprime loans, or some exotic derivative. SVB went bankrupt because they loaded up on US government bonds.

US government bonds are supposed to be THE safest asset class in the world. Yet even supposedly ‘safe’ assets can lose money. And government bonds have suffered enormous losses over the past two years.

The reason is pretty simple: interest rates. Back in the summer of 2020, interest rates were at historic lows. And if you don’t know anything else about bonds, just understand that whenever interest rates rise, bond prices fall.

Banks like SVB bought tons of US government bonds back in 2020 and 2021 when interest rates were at historic lows. So, put another way, banks paid record high prices to buy government bonds.

But starting in 2022, the Federal Reserve started to raise interest rates. And with each successive Fed interest rate hike, bonds became worth less and less.

Silicon Valley Bank’s bonds eventually lost so much money that the bank was wiped out.

The $500 billion dollar problem in the US banking system, of course, is that Silicon Valley Bank wasn’t alone. In fact MOST banks bought government bonds… which means that MOST banks have racked up enormous losses over the past few years.

And the bank that has racked up the worst losses of all… is Bank of America, which reports its quarterly earnings tomorrow morning at 6:45am.

Now, Bank of America has done its best to hide its losses. And they use a completely legal accounting scam to do it.

In short, banks have a quirky option in the way that they classify their bonds; one way is to classify their bonds as what’s called “Available for Sale”, or AFS.

This classification means that if the bank ever needs to come up with some quick cash, they can sell AFS bonds at any time. AFS bonds are literally available for sale, as the name suggests.

The other classification is called “Hold to Maturity”, or HTM. Bonds designed as HTM cannot be sold. Instead, the bank must hold its HTM bonds for their full duration.

So if a bank buys, say, a 30-year Treasury bond and classifies it as HTM, the bank has to hold that bond for the full thirty years. They cannot sell it.

While such accounting vagaries might not be especially thrilling, I assure you that the distinction between HTM and AFS is critical in understanding the scam that’s taking place.

Banks traditionally used to classify the vast majority of their bonds as AFS. And this made sense; AFS is the most flexible classification. AFS gives banks the option to either sell the bonds, or hold them. HTM bonds, on the other hand, cannot be sold and MUST be held to maturity.

And that’s why, back in 2015 for example, Bank of America classified a whopping 83% of its bonds as AFS, and only 17% as HTM. And that ratio was pretty typical of most big banks.

But the nuance of AFS is that, if the bonds lose value, banks have to report those losses… and the bond losses negatively impact their earnings.

In the past, this never really happened. Bond prices were exceptionally stable. And aside from minor fluctuations, banks never really had to report big losses on their bond portfolios. Until now.

Government bonds have lost 23% of their value since 2020 due to the Fed’s interest rate hikes, creating hundreds of billions of dollars of losses for big banks.

A 23% loss for US government bonds is unprecedented, and it’s never happened in modern financial history.

If banks were holding most of their bonds as AFS, like they traditionally used to do, they would have to report these huge losses. And that would be devastating for their earnings, for their stock prices, and for their executive bonuses.

So instead of reporting those losses, the banks have magically reclassified their bonds from AFS to HTM.

Unlike the AFS classification, banks don’t have to record any losses on their HTM bonds. So reclassifying bonds from AFS to HTM is like pretending that hundreds of billions in losses don’t exist.

Bank of America, for example, has at least $100 billion in bond losses, potentially much more. But because they’ve reclassified most of their bonds as HTM, those losses haven’t adversely affected their capital, or their earnings.

Remember when I said that Bank of America used to classify a standard 17% of its bonds as HTM? Well, today, 83% of their bonds are now HTM. It’s a HUGE difference.

And the ONLY reason why they would do this is to avoid recording $100+ billion in losses.

Bear in mind that Bank of America only has around $200 billion in total capital. So if they were honest in their accounting, they’d have to write down roughly HALF of their capital. Maybe more.

This is becoming eerily close to another Silicon Valley Bank problem.

Granted, the market happily ignored Silicon Valley Bank’s financial woes until it was too late. And I’m guessing that, tomorrow morning, the market might also choose to ignore Bank of America’s growing bond losses. For now.

But this problem cannot be ignored forever. And it’s a pretty clear example of what’s known in finance as a “Gray Rhino”.

You’re probably familiar with the famous “Black Swan” metaphor, which refers to a highly improbable, difficult-to-predict event that has a major, negative impact.

The COVID-19 pandemic was an obvious Black Swan event.

The metaphorical opposite of a Black Swan is known as a Gray Rhino-- an event that is fairly likely and should be easy to predict.

Gray Rhinos don’t sneak up on you; visible evidence builds until the risk becomes completely obvious.

And yet, Gray Rhinos are almost always ignored… typically because people have confidence in flawed systems, illogical axioms, or historical legends.

The world is full of Gray Rhinos that very intelligent people choose to ignore. America’s national debt crisis is a Gray Rhino. Social Security’s looming insolvency is a Gray Rhino. The US dollar’s loss of reserve status is a Gray Rhino.

These are all obvious risks that hardly anyone acknowledges. Instead, people have rejected simple arithmetic and clung to an irrational belief system based on the historical legend of America.

Major banks in the US have suffered more than $500 billion in bond losses, wiping out a substantial portion of their capital. Despite some banks’ attempts to cleverly hide those losses with accounting tricks, the problem is obvious.

By the way, this same problem has affected the FDIC-- whose Deposit Insurance Fund is invested primarily in US government bonds… and has hence also suffered massive losses.

It’s also affected the Federal Reserve, which now has roughly $1 TRILLION in losses from its bond portfolio.

(Ironically, many smaller banks are now MUCH safer; smaller banks are typically much more responsible with their depositors’ savings, and so they haven’t suffered the same types of losses.)

This is a Gray Rhino. But unlike other Gray Rhinos like the national debt, the US dollar, and Social Security which may still be a few years from erupting, this banking Gray Rhino might rear its head much, much sooner.

To your freedom,
Simon Black, Founder
Sovereign Man
 
... Bank of America, which reports its quarterly earnings tomorrow morning at 6:45am.
...

...
Looking at the bank's charge offs, which will be a closely watched topic since Bank of America has one of the highest carried Held to Maturity losses of all banks, the bank reported net charge-offs of $931 million, below the estimate of $995.4 million while the provision for credit losses rose to $1.23 billion, but below the estimate $1.3 billion. Unlike JPM, BofA actually built reserves for future losses to the tune of $303 billion, "driven primarily by credit cards" which together with CRE is emerging as the biggest threat to the financial system. ...


Crisis averted?
 
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