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Every bank is insolvent today and people are just starting to realize this. They all were loaded with tons of liquidity that they couldn’t loan (due to demand)

Every bank is insolvent today and people are just starting to realize this. They all were loaded with tons of liquidity that they couldn’t loan (due to demand) so they had to do something and they all bought “safe” assets in the form of treasuries, etc. The Fed continued to guide on low interest until they suddenly decided to raise rates non-stop. All those deposit accounts paid 0% interest. Not there’s 4%+ interest available and everyone is pulling their money to put into those, or other things. The banks can’t actually do this much longer. If you mark to market the bonds these banks are carrying you can see they are insolvent. As more people realize and pull out this and/or move money to higher interest accounts, they are doomed. How is this fixed? Hope everyone chills? No it will only get worse. I sure it all? That will cause trillions in inflation overnight. Let all the banks collapse? That will spell anarchy and depositors will lose a lot. Quickly lower interest rates? Inflation continues and accelerates. We are in grave danger right now.

HWR_14 4y ago
The Fed already announced their solution. They are making loans available to those banks based on the acquisition cost, not mark-to-market value, of those treasuries.
- nemo44x 4y ago
  This will result in hyperinflation. Hence why Yellen did not commit to the vast majority of banks. Did you not see that?
  - HWR_14 4y ago
    I did not see that, but I've been busy and missed a lot this week. Do you have a link?
    - nemo44x 4y ago
      https://www.reuters.com/business/finance/yellen-tells-senators-us-banking-system-remains-sound-2023-03-16/ https://www.reuters.com/business/finance/yellen-tells-senato...
      - HWR_14 4y ago
        This seems to only talk about FDIC limits, not about the Fed loaning money to solvent banks.
        nemo44x 4y ago
        Here: https://finance.yahoo.com/news/study-finds-186-banks-vulnerable-011442518.html?ref=biztoc.com https://finance.yahoo.com/news/study-finds-186-banks-vulnera... This talks about the FDIC being insolvent as well. I don’t think you understand how much money would have to be loaned. They’d have to print many trillions overnight. This is a hyperinflation event.
gibybo 4y ago
>If you mark to market the bonds these banks are carrying you can see they are insolvent. Do you have any sources/data for this? I saw something for BofA that indicated a $110b mark to market unrealized loss, but they have roughly $200b in equity so that wouldn't make them insolvent. I don't know if that $110b included everything or just a subset of their hold-to-maturity assets and would love to see more complete data for all big the banks if you have a nicely consolidated source for it?
- nemo44x 4y ago
  https://finance.yahoo.com/news/study-finds-186-banks-vulnerable-011442518.html?ref=biztoc.com https://finance.yahoo.com/news/study-finds-186-banks-vulnera...
maxerickson 4y ago
Not every bank massively grew by taking in billions of dollars of deposits that they didn't know what to do with in just a couple years. Banks were only technically solvent before all of this, it isn't a big deal if they are now only technically solvent.
- nemo44x 4y ago
  https://finance.yahoo.com/news/study-finds-186-banks-vulnerable-011442518.html?ref=biztoc.com https://finance.yahoo.com/news/study-finds-186-banks-vulnera... The FDIC wound run out of money. It’s likely more than enough of these funds should be in higher interest accounts. Even if it’s loans these bangs wrote, those loans are under water right now.

HWR_14 4y ago

The Fed already announced their solution. They are making loans available to those banks based on the acquisition cost, not mark-to-market value, of those treasuries.

nemo44x 4y ago
This will result in hyperinflation. Hence why Yellen did not commit to the vast majority of banks. Did you not see that?
- HWR_14 4y ago
  I did not see that, but I've been busy and missed a lot this week. Do you have a link?
  - nemo44x 4y ago
    https://www.reuters.com/business/finance/yellen-tells-senators-us-banking-system-remains-sound-2023-03-16/ https://www.reuters.com/business/finance/yellen-tells-senato...
    - HWR_14 4y ago
      This seems to only talk about FDIC limits, not about the Fed loaning money to solvent banks.
      - nemo44x 4y ago
        Here: https://finance.yahoo.com/news/study-finds-186-banks-vulnerable-011442518.html?ref=biztoc.com https://finance.yahoo.com/news/study-finds-186-banks-vulnera... This talks about the FDIC being insolvent as well. I don’t think you understand how much money would have to be loaned. They’d have to print many trillions overnight. This is a hyperinflation event.

gibybo 4y ago

>If you mark to market the bonds these banks are carrying you can see they are insolvent. Do you have any sources/data for this? I saw something for BofA that indicated a $110b mark to market unrealized loss, but they have roughly $200b in equity so that wouldn't make them insolvent. I don't know if that $110b included everything or just a subset of their hold-to-maturity assets and would love to see more complete data for all big the banks if you have a nicely consolidated source for it?

nemo44x 4y ago
https://finance.yahoo.com/news/study-finds-186-banks-vulnerable-011442518.html?ref=biztoc.com https://finance.yahoo.com/news/study-finds-186-banks-vulnera...

maxerickson 4y ago

Not every bank massively grew by taking in billions of dollars of deposits that they didn't know what to do with in just a couple years. Banks were only technically solvent before all of this, it isn't a big deal if they are now only technically solvent.

nemo44x 4y ago
https://finance.yahoo.com/news/study-finds-186-banks-vulnerable-011442518.html?ref=biztoc.com https://finance.yahoo.com/news/study-finds-186-banks-vulnera... The FDIC wound run out of money. It’s likely more than enough of these funds should be in higher interest accounts. Even if it’s loans these bangs wrote, those loans are under water right now.