SVB: One of Silicon Valley’s top banks fails; assets are seized

[devil21]

The bailout of First Republic Bank is an admission of which banks will be saved. While I don't particularly wish to advocate for supporting TBTF banks (or any bank for that matter), there's no denying what is being telegraphed, since the bank collapses so far are "elite" banks and the responses follow accordingly, which of course get the attention of elite accounts.

https://www.zerohedge.com/markets/fi...ategic-options

Bank of America, Citigroup,. JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, BNY-Mellon, PNC Bank, State Street, Truist and U.S. Bank to make uninsured deposits totaling $30 billion into First Republic Bank

Consolidation of the banking sector ahead of digital currency implementation.

[nobody's_hero]

The bailout of First Republic Bank is an admission of which banks will be saved. While I don't particularly wish to advocate for supporting TBTF banks (or any bank for that matter), there's no denying what is being telegraphed, since the bank collapses so far are "elite" banks and the responses follow accordingly, which of course get the attention of elite accounts.

https://www.zerohedge.com/markets/fi...ategic-options



Consolidation of the banking sector ahead of digital currency implementation.

My mother has an account with Truist. I've been trying to get her to close her accounts and join a credit union for ages.

When their predecessor Suntrust got a bailout in the '08 fiasco, that was when I joined a credit union. I told the associate at Suntrust (not that she had anything to do with it) that if they could get a bailout, then they obviously didn't need my deposits.

[devil21]

My mother has an account with Truist. I've been trying to get her to close her accounts and join a credit union for ages.

When their predecessor Suntrust got a bailout in the '08 fiasco, that was when I joined a credit union. I told the associate at Suntrust (not that she had anything to do with it) that if they could get a bailout, then they obviously didn't need my deposits.

If I recall correctly, TARP and Fed backdoor bailouts were pushed onto a lot of banks who claimed they didn't even need a bailout, as their exposure to the melting down assets at the time was limited. I don't know if SunTrust was one of them who didn't really need a bailout, though.

Truist recently completed a big new HQ tower here in Charlotte (quietly a big banking city) and it sits right next to BOA's HQ (where the notorious murals hang) in the city skyline. In hindsight, the merger of SunTrust and BB&T (which took about 3 years to complete) was a sign that it would be hanging around.

[Mach]

The guys that ran it knew it was coming.

[acptulsa]

Damned right it did. $#@! this "you can't just make stuff and sell it" parasite class and their "economy" that "can't operate without them" because they're "too big to fail" voodoo bull$#@!. There are plenty of casinos where they can get their kicks without affecting us.

[acptulsa]

[acptulsa]

And more than a few allegedly conservative bankers too.

[Occam's Banana]

Well, they say there is no such thing as a sure thing in investing, but this seems pretty solid.

The Jim Cramer Inverse Tracker ETF.

Anything Cramer says, they do the opposite.

https://twitter.com/gurgavin/status/1635481834497753090

[... tweet ...]

Lol.

That will be a hard fund to manage. Looks like the current expense ratio is 1.2%. May not be worth it to them after the novelty wears off.

"Anything Cramer says, they do the opposite."

So does Cramer ...

[... pics ...]

LOL. Even harder than I thought!

[Brian4Liberty]

Ah, someone with experience in bond funds. Why would a money market fund have some short term debt at far below market rates? In this case, a fund that only invests in Treasuries?

a money market fund should have a short duration (<3 mo) whereas a treasury portfolio could consist of 30 year bonds. it's been a long time and someone can refine this point, but the longer the duration of an asset, the greater the value swings. ex: a 10 year duration portfolio will see its value decline something like 10% w/a 1% rise in interest rates. when rates rise 2%, it's 20%. if the duration is 1/4 year a 100 bp rise means you'll be able to pay 100 bp higher in 3 months or so.

Sounds about right. But my question is why would a money market fund buy a 1 month Treasury at .2%, when the going rate is 4%?

no one would and even if you did you could reinvest at the end of the month at the higher rate. i may not have understood the question.

the thing i didn't mention was the duration of the liabilities which tend to be about 1 month on most deposits. if these guys had any historical perspective and any desire to minimize interest rate risk, they'd have secured long term deposits (CDs) at the lower rates and then they wouldn't have found themselves in dire straits when interest rates rose as little as they have.

this all ignores the credit risk associated with start-ups (though you'd have thought the start of this millennium would have provided need perspective)

edit: i came here to check out if this made the BFF (bank failure friday) list

I have a hypothesis for my original question. A money market fund that has ultra short bonds should have everything right around the current market rate. A fund like that holding something at a rate that would have been common 1-6 years ago, sounds a bit fishy, but explainable.

Analogous to someone paying $7k for a used car worth $6k. The seller made an extra $1k over market price. That could easily happen in a standard marketplace transaction, but how about in a highly liquid and easily tracked commodity/bond market?

So who benefits? Is it a backroom deal with the Fed, Treasury or other banks? Maybe. But consider self-interest...

Lets say XYZ Corp, a combination fund family, brokerage and bank, needs to raise some quick cash. They can take a 5 year bond that is underwater (at current market price), but matures in two months, and sell it today at full maturity value (par) into it’s own money market fund portfolio. It is now paying a below market rate for two months (in the money market fund), but it’s deeply buried in a huge variety of short term holdings. Thus, the dividend/interest payments are slightly lower, and the cost has been passed on to customers that hold the money market fund.

Many financial players are trying to raise cash right now...

[oyarde]

There has never in history been as much cash out there as now