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From the Article> Thankfully, loan books make up a much larger share of assets at most other institutions. I got a laugh on this one. Sure... other banks are s
by dmfdmf 4y ago
From the Article> Thankfully, loan books make up a much larger share of assets at most other institutions.
I got a laugh on this one. Sure... other banks are safe from loss of client deposits and a bad bet that interest rates won't rise. I'm not so sure that with rising interest rates and a shaky economy these institutions with large loan books won't see too many loan defaults. We are seeing a lot of commercial property defaults already in the big markets. Can't pay your mortgage if you can rent out your skyscapper.
- hedora 4y agoPeople holding large fixed rate loans are extremely unlikely to refinance, and are likely to weather inflation and rising interest rates pretty well. It’s almost as good as buying bonds! No one’s gone broke doing that, right?
- dmfdmf 4y agoPerhaps I wasn't clear. With the rising inflation and interest rates and deteriorating economy people lose their jobs and can't pay their mortgage. My point, and why I thought the line was funny in that article, is that the way SVB failed isn't the only way that banks can fail. Moreover, Tech is currently in a massive round of layoffs and if this spreads to the general economy (which I think it will) then holding large loan balances could become a problem for the banks.