3 ms·

Why would rates need to come down again? The mark-to-market of those securities will go back to par regardless. Or are you saying they are financed via floating

Why would rates need to come down again? The mark-to-market of those securities will go back to par regardless. Or are you saying they are financed via floating rates and negative carry will start to hurt them?

HDThoreaun 3y ago
BoA deposits are down 8.5% yoy. This is forcing them to take out expensive loans from other banks that cost more than the loans they made early pandemic. Not a crippling issue, but they are losing money everyday rates stay high.
- supportengineer 3y ago
  I received an offer from BofA for a 4.00% savings rate if I brought X amount of new money into the bank. Anyone else get an offer like this?
  - hiatus 3y ago
    Ally bank offers over 4% for any amount, and has a no-penalty CD (you can close the account at any time, they use a trust behind the scenes) offering 4.5% iirc.
  - ganoushoreilly 3y ago
    A few banks have been offering 4.00 or higher for the past 9 months or more. The apple card with Goldman Savings is currently at 4.15% and has been since it launched. It was mostly smaller banks that I saw offers in this range, but It looks like the bigger banks have to play along now, lest they lose more inflow.
  - lotsofpulp 3y ago
    You can get 5.02% if you bring $100k to them anytime. They only make it available in a Merrill CMA (cash management account) though (see preferred deposit in pdf below). You can also reduce that $100k to $1 after you make the initial deposit and still maintain access to that savings rate. https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMOL/ICCRateSheet.pdf https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMO... The preferred deposit account has always paid very competitive savings rates amongst all FDIC insured accounts.
  - userinanother 3y ago
    Short term treasury bonds yield 5-5.5% near zero risk some minor duration risk but very minor
  - FooBarBizBazz 3y ago
    I don't see the point. If you want an FDIC-insured savings account from a large institution, Marcus offers 4.4%, and it isn't even the highest -- Synchrony isn't as big a name but it offers 4.75%. And while I can see keeping an intermediate buffer in such an account (since you can ACH directly from it), it's not much more hassle to use a money market fund (details do matter a little), e.g. FZFXX, VUSXX, or SNSXX (those are Treasury funds; prime funds typically give a slightly higher rate), for around 5%. Even there you're giving up a little vs. laddering T-bills, but it's so easy and it's completely liquid. The only reason not everybody does this has to be that they're just not used to brokerage accounts, or that they don't have enough money to bother. Probably most people who want to hold cash should just open an account at Fidelity, and put any money that can afford a couple day's lead time into FZFXX.
- RandomLensman 3y ago
  How much of their funding is deposits and how expensive is longer term unsecured funding for them?

HDThoreaun 3y ago

BoA deposits are down 8.5% yoy. This is forcing them to take out expensive loans from other banks that cost more than the loans they made early pandemic. Not a crippling issue, but they are losing money everyday rates stay high.

supportengineer 3y ago
I received an offer from BofA for a 4.00% savings rate if I brought X amount of new money into the bank. Anyone else get an offer like this?
- hiatus 3y ago
  Ally bank offers over 4% for any amount, and has a no-penalty CD (you can close the account at any time, they use a trust behind the scenes) offering 4.5% iirc.
- ganoushoreilly 3y ago
  A few banks have been offering 4.00 or higher for the past 9 months or more. The apple card with Goldman Savings is currently at 4.15% and has been since it launched. It was mostly smaller banks that I saw offers in this range, but It looks like the bigger banks have to play along now, lest they lose more inflow.
- lotsofpulp 3y ago
  You can get 5.02% if you bring $100k to them anytime. They only make it available in a Merrill CMA (cash management account) though (see preferred deposit in pdf below). You can also reduce that $100k to $1 after you make the initial deposit and still maintain access to that savings rate. https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMOL/ICCRateSheet.pdf https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMO... The preferred deposit account has always paid very competitive savings rates amongst all FDIC insured accounts.
- userinanother 3y ago
  Short term treasury bonds yield 5-5.5% near zero risk some minor duration risk but very minor
- FooBarBizBazz 3y ago
  I don't see the point. If you want an FDIC-insured savings account from a large institution, Marcus offers 4.4%, and it isn't even the highest -- Synchrony isn't as big a name but it offers 4.75%. And while I can see keeping an intermediate buffer in such an account (since you can ACH directly from it), it's not much more hassle to use a money market fund (details do matter a little), e.g. FZFXX, VUSXX, or SNSXX (those are Treasury funds; prime funds typically give a slightly higher rate), for around 5%. Even there you're giving up a little vs. laddering T-bills, but it's so easy and it's completely liquid. The only reason not everybody does this has to be that they're just not used to brokerage accounts, or that they don't have enough money to bother. Probably most people who want to hold cash should just open an account at Fidelity, and put any money that can afford a couple day's lead time into FZFXX.
RandomLensman 3y ago
How much of their funding is deposits and how expensive is longer term unsecured funding for them?