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> many depositors needed money at the same time because they were burning runway. Even without a bank panic this effect alone could cause losses on banks with l
by Scoundreller 4y ago
> many depositors needed money at the same time because they were burning runway. Even without a bank panic this effect alone could cause losses on banks with large HTM portfolios.
Seems like there should be a market for a bank that advertises “no long-duration HTMs unless we hold a duration and interest-matched CD” and “short-dated investments only on checking acct balances”.
If that doesn’t exist, it sounds like big depositors were ignorant or quite happy to get some extra interest (or fancier offices/marketing) in exchange for that risk.
- ericpauley 4y agoThis is what MMFs accomplish, and they yield higher than banks accounts.
- Scoundreller 4y agoSorta. The problem is big corps do a lot of transactions in their account and can't predict when that $850k (or $850m) transfer is on the way in as their bank is collapsing. And even debits can't always be predicted, but I doubt big payments are pre-authed like that. Not sure if a bank would be 100% protected if they had a script that checked their balance every minute and sent it to a MMF.