Is the stock market going to tank?

[MCS5280]

$148 billion more than usual through the discount window this week.
Fed balance sheet up by $300 billion, wiping out 4 months of QT in a single week.

Let the hyperinflation games begin.

[4matic]

The option expiration for signature has been extended. No one is sure what price to assign as it may trade again.

[Brock Landers]

$148 billion more than usual through the discount window this week.
Fed balance sheet up by $300 billion, wiping out 4 months of QT in a single week.

Let the hyperinflation games begin.

You think 300B through the discount window is leading to hyperinflation? 300B doesn’t even register.

Remember when banks had free money for over a decade and it led to ~1.5% inflation over that time? Need a mechanism for the deposits to work through the economy.

[LeeLau]

How the hell does a dividend cut even register after an 80% share drop, let alone for that much value?

I know right.? Hate afterhours trading but couldn't resist and bought some FRC

[JimmyCarter]

I know right.? Hate afterhours trading but couldn't resist and bought some FRC

LOL

[sirbumpsalot]

Special treatment for those with friends at the top:

Over the weekend:

In an extraordinary action to restore confidence in America’s banking system, the Biden administration on Sunday guaranteed that customers of the failed Silicon Valley Bank will have access to all their money starting Monday.

In a related action, the government shut down Signature Bank, a regional bank that was teetering on the brink of collapse in recent days. Signature’s customers will receive a similar deal, ensuring that even uninsured deposits will be returned to them Monday.

AND NOW:

…“I’m concerned about the precedent of guaranteeing all deposits and the market expectation moving forward,” Sen. Mike o, R-Idaho, the committee’s ranking member, said in his opening remarks.

Republican Sen. James Lankford of Oklahoma pressed Yellen about how widely the uninsured deposit backstops will apply across the banking industry.

“Will the deposits in every community bank in Oklahoma, regardless of their size, be fully insured now?” asked Lankford. “Will they get the same treatment that SVB just got, or Signature Bank just got?”

Yellen acknowledged they would not.

…Uninsured deposits, she said, would only be covered in the event that a “failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences.”

Lankford said the impact of this standard would be that small banks would be less appealing to depositors with more than $250,000, the current FDIC insurance threshold.

“I’m concerned you’re … encouraging anyone who has a large deposit at a community bank to say, ‘we’re not going to make you whole, but if you go to one of our preferred banks, we will make you whole.’”

“That’s certainty not something that we’re encouraging,” Yellen replied.

[MultiVerse]

…“I’m concerned about the precedent of guaranteeing all deposits and the market expectation moving forward,” Sen. Mike o, R-Idaho, the committee’s ranking member, said in his opening remarks.

There needs to be an independent investigation into what happened with SVB. Mike o is the wrong person for the job however, let alone "express concern" since he pushed through legislation that probably contributed to this mess.

[sirbumpsalot]

There needs to be an independent investigation into what happened with SVB. Mike o is the wrong person for the job however, let alone "express concern" since he pushed through legislation that probably contributed to this mess.

Ummm ok....

[dunfree]

Ummm ok....

hey dumbfuck, what are the politics of the VC cunts publicly bitching for a bailout? Just slink away to your suburban shithole, dumbfuck

[LeeLau]

More on FRC -from their latest 8k. Last 2 bullets probably raises concerns.

- if they're so healthy why do they need that 30B?
- What happened to the 70b from BTFP (haven't dug but probably held on books to meet cap reserve requirements)
- What are terms of the last borrowings from the last 2 bullets. IIRC they are payback at any time short term loans

Concern is probably FRC firesale and/or cascading loss of confidence.

https://ir.firstrepublic.com/static-...0-b066d56e1f54
• As of March 15, 2023, the Bank had a cash position of approximately $34 billion, not including
the $30 billion of uninsured deposits from Bank of America, Citigroup, JPMorgan Chase, Wells
Fargo, Goldman Sachs, Morgan Stanley, Bank of New York Mellon, PNC Bank, State Street,
Truist, and U.S. Bank with an initial term of 120 days at market rates.
• From March 10 to March 15, 2023, Bank borrowings from the Federal Reserve varied from $20
billion to $109 billion at an overnight rate of 4.75%.
• Since close of business on March 9, 2023, the Bank has also increased short-term borrowings
from the Federal Home Loan Bank by $10 billion at a rate of 5.09%.

[Cono Este]

What about svb’s credit book? Probably a smoldering pile of poo. More bad news to come.

These guys made too many mistakes to list. Including trying to raise Capitol weeks before this was publically revealed. They also omitted crucial data from their last filing. Total mismanagement, not to mention buying long term treasuries out of pure greed and stupidity.

I can only imagine that because of who many of these clients were, they probably had direct, instant contact with the people/person who bailed them out.

Total bullshit. They could have left it alone and people would have gotten most of their money back anyway.

[Mustonen]

More on FRC -from their latest 8k. Last 2 bullets probably raises concerns.

- if they're so healthy why do they need that 30B?
- What happened to the 70b from BTFP (haven't dug but probably held on books to meet cap reserve requirements)
- What are terms of the last borrowings from the last 2 bullets. IIRC they are payback at any time short term loans

Concern is probably FRC firesale and/or cascading loss of confidence.

Quibble: the $30b and/or holding BTFP borrowings in cash won’t do anything vis-a-vis capital requirements. If anything they grow the balance sheet and increase capital requirements. Both just shore up liquidity. Probably feels like a nice cool drink of water.

The $30b deposit and the borrowings are both liabilities, and the other side of the transaction is cash. None of it is equity. Curious what the COF is on that $30b….

Fed reserve borrowings are probably discount window, which is literally overnight, probably to satisfy cash letter that then gets rolled into FHLB which will almost always be short term with the same kind of pledged collateral.

I think I mentioned upthread, BTFP is great but it’s only good for a year. The $30b doesn’t have an expiration date. Also, BTFP is likely similar or substantially the same as what they have going with FHLB, but slightly better terms. Same collateral types, so they don’t layer necessarily, but no haircuts and opened up.

[Mustonen]

Republican Sen. James Lankford of Oklahoma pressed Yellen about how widely the uninsured deposit backstops will apply across the banking industry.

“Will the deposits in every community bank in Oklahoma, regardless of their size, be fully insured now?” asked Lankford. “Will they get the same treatment that SVB just got, or Signature Bank just got?”

Yellen acknowledged they would not.

…Uninsured deposits, she said, would only be covered in the event that a “failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences.”

Lankford said the impact of this standard would be that small banks would be less appealing to depositors with more than $250,000, the current FDIC insurance threshold.

“I’m concerned you’re … encouraging anyone who has a large deposit at a community bank to say, ‘we’re not going to make you whole, but if you go to one of our preferred banks, we will make you whole.’”

“That’s certainty not something that we’re encouraging,” Yellen replied.

It’s an interesting quandary for sure. MA requires banks to carry excess deposit insurance, and it’s available to any bank, but if big banks get it for free and the smaller payers have to pay they further tip the already tipped scales. However, I’m a bit skeptical that it leads to that significant a competitive advantage with rational entities. Keeping my $10M in a “too big to fail” bank without excess deposit insurance based on a maybe does not a reasonable risk management strategy make.

That’s the same kind of thinking that killed SVB in the first place. Listening to tweets to manage risk instead of forming a cogent strategy.

And I guess here we are….

Requiring excess deposit insurance for the Entire System or unlimited FDIC feels like a massive undertaking and everybody would scream. It would become a tax on holding wealth since the cost to hold huge deposits would certainly get passed through to that depositor, and maybe that would make sense.

[schuss]

That feels fine, as either the depositor could eat the cost they have incurred or sign something that commits to not more than X% withdrawn in a week or month.
Market solutions to market problems.

[Mustonen]

Or a modernized reg D.

[4matic]

Part of the contagion is online “banks”offering much higher rates on deposits and consumers are moving money pressuring reserves at traditional banks.

JPMORGAN: “We expect more bank deposits to flow into Money Market Funds.. especially if the Fed raises its policy rate.. As a result,.. relief from the decline in the Fed’s reverse repo facility will likely prove temporary, potentially creating more strain in the banking system.”

[yeahman]

Part of the contagion is online “banks”offering much higher rates on deposits and consumers are moving money pressuring reserves at traditional banks.

Maybe traditional banks should stop building branches on every damn streetcorner then!

[Mustonen]

Maybe traditional banks should stop building branches on every damn streetcorner then!

But local brick and mortar is your only differentiator. It’s invest in local markets or resign yourself to everything eventually flowing to Chase. Small to medium traditional banks can’t compete with the big guys if all they’re pitching is a website.

[Cono Este]

Or, or, people could take responsibility for themselves. As discussed before, you can easily spread 250k around 50 banks with one button pushed. You can use treasury direct, you can actually put the bonds under your bed if you’d like.

The people at THIS bank would mostly qualify as sophisticated investors anyway. We’re not talking about average people, again we wouldn’t give a shit about them/us anyway.

[LeeLau]

Quibble: the $30b and/or holding BTFP borrowings in cash won’t do anything vis-a-vis capital requirements. If anything they grow the balance sheet and increase capital requirements. Both just shore up liquidity. Probably feels like a nice cool drink of water.

Got it. More a confidence signal then I'd imagine

The $30b deposit and the borrowings are both liabilities, and the other side of the transaction is cash. None of it is equity. Curious what the COF is on that $30b….

120 day term. Market rates per filing so probably 5%. Not cheap but again... confidence

Fed reserve borrowings are probably discount window, which is literally overnight, probably to satisfy cash letter that then gets rolled into FHLB which will almost always be short term with the same kind of pledged collateral.

I think I mentioned upthread, BTFP is great but it’s only good for a year. The $30b doesn’t have an expiration date. Also, BTFP is likely similar or substantially the same as what they have going with FHLB, but slightly better terms. Same collateral types, so they don’t layer necessarily, but no haircuts and opened up.

Aye. Gotta be discount window...which shows system works as it should but at eye popping numbers.

As for BTFP being for a year, I'd imagine that's enough time

[4matic]

JPM etc loaning the deposits that were transferred out back to FRC @5%! Genius.

[Cono Este]

I hope you frc trders took advantage of that pop yesterday and legged into vertical for cheap, or even on a ratio.

[4matic]

2yn chart looks like 3.50

[4matic]

As long as FRC doesn’t go bankrupt JPM will get its money back. It’s not a catalyst for a higher stock price

[MultiVerse]

On social media crypto degens and prominent VCs in the space are trying to create a panic among regular people that their deposits are in danger. Absolute bottom feeders.