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I am not an investment or banking guy. And I’m not sure what category of activity this type of lending falls into. But wouldn’t it make more sense to write off

I am not an investment or banking guy. And I’m not sure what category of activity this type of lending falls into. But wouldn’t it make more sense to write off the investment losses rather than throw more bags of money on the burning pile?

Quarrel 4y ago
They're a bank. They have capital ratios to maintain. If the underlying assets (the assets backing the bank), move in value, then they need to provide extra capital from somewhere. This is them securing that capital base that they need due to the change in value of their current assets (largely US treasuries and mortgage back securities- this isn't really about the value of their tech portfolio).
- notch898a 4y ago
  What are those ratios? Can I find them somewhere?
  - hn_throwaway_99 4y ago
    https://www.federalreserve.gov/supervisionreg/large-bank-capital-requirements.htm https://www.federalreserve.gov/supervisionreg/large-bank-cap... https://www.statista.com/statistics/1097633/cet1-ratio-large-banks-usa/ https://www.statista.com/statistics/1097633/cet1-ratio-large...
    - notch898a 4y ago
      Thank you! I kept seeing the 0% reserve ratios and was wondering what they were actually going off of.
  - kasey_junk 4y ago
    Bank capital requirements are huge and cross many regulatory regimes. The simple ratios you’ll see online are reserve requirements which are orthogonal to capital requirements.
  - Quarrel 4y ago
    Others have given you some US specific answers, but they're broadly set for most of the global banking world by the Basel accords. The world is currently trying to meet the Basel III standard: https://en.wikipedia.org/wiki/Basel_III https://en.wikipedia.org/wiki/Basel_III The situation in any specific country can be bit different in the timelines and ways they meet the standard however.
- robmiller 4y ago
  As of March 15, 2020, bank cash reserve requirement was reduced to zero for all depository institutions.[0] 0 - https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm
  - JumpCrisscross 4y ago
    Reserve requirements != capital requirements, the latter having replaced the former in modern banking.
  - kasey_junk 4y ago
    That’s the reserve requirement and doesn’t have anything to do with their capital requirements. The fed, fdic and occ all regulate banks capital and have strict requirements around it. Not to mention their equity holders.

Quarrel 4y ago

They're a bank. They have capital ratios to maintain. If the underlying assets (the assets backing the bank), move in value, then they need to provide extra capital from somewhere. This is them securing that capital base that they need due to the change in value of their current assets (largely US treasuries and mortgage back securities- this isn't really about the value of their tech portfolio).

notch898a 4y ago
What are those ratios? Can I find them somewhere?
- hn_throwaway_99 4y ago
  https://www.federalreserve.gov/supervisionreg/large-bank-capital-requirements.htm https://www.federalreserve.gov/supervisionreg/large-bank-cap... https://www.statista.com/statistics/1097633/cet1-ratio-large-banks-usa/ https://www.statista.com/statistics/1097633/cet1-ratio-large...
  - notch898a 4y ago
    Thank you! I kept seeing the 0% reserve ratios and was wondering what they were actually going off of.
- kasey_junk 4y ago
  Bank capital requirements are huge and cross many regulatory regimes. The simple ratios you’ll see online are reserve requirements which are orthogonal to capital requirements.
- Quarrel 4y ago
  Others have given you some US specific answers, but they're broadly set for most of the global banking world by the Basel accords. The world is currently trying to meet the Basel III standard: https://en.wikipedia.org/wiki/Basel_III https://en.wikipedia.org/wiki/Basel_III The situation in any specific country can be bit different in the timelines and ways they meet the standard however.
robmiller 4y ago
As of March 15, 2020, bank cash reserve requirement was reduced to zero for all depository institutions.[0] 0 - https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm
- JumpCrisscross 4y ago
  Reserve requirements != capital requirements, the latter having replaced the former in modern banking.
- kasey_junk 4y ago
  That’s the reserve requirement and doesn’t have anything to do with their capital requirements. The fed, fdic and occ all regulate banks capital and have strict requirements around it. Not to mention their equity holders.