augustus

As a New Yorker that T-bill rate is actually equivalent to about a 5.30% - 5.40% yield from a bank CD.

That's not true.

I agree. The problem is when most of these people get into trouble they don't blame themselves, they blame others. Like the government or their spouses or family that won't bail them out, etc. Their own frivolous behavior is never the culprit.

I'm not surprised at all. Nearly 60% of the population lives paycheck to paycheck, but people still find the money for concerts, expensive clothes, cars and drugs. It is amazing. I believe it has been like this for a long time. With inflation stubbornly high, 58% of Americans are living paycheck to paycheck: CNBC survey WWW.CNBC.COM With inflation stubbornly high, more than half of all Americans are living paycheck to paycheck, according to a new report.

US 3-MO 5.117 +0.016 US 4-MO 5.19 -0.002 US 6-MO 5.057 -0.002 US 1-YR 4.784 +0.023 US 2-YR 4.179 +0.009 US 3-YR 3.884 +0.008 US 5-YR 3.661 +0.021 US 7-YR 3.614 +0.02 US 10-YR 3.568 +0.023 The above are the closing Treasury rates for Friday, April 21, 2023. The bond market is expecting lower inflation/recession and hence the inverted yield curve with long rates lower than the short-term rates.

Especially since, I'm pretty sure, there is no blanket deposit insurance at First Republic over the 250k limit as was granted to SVB.

Do not pay or negotiate with this pos at all!! You tell him that you have gone to your lawyer and the lawyer recommends going to the police/FBI with the evidence of blackmail. He will back off and move onto someone else. Do not show any fear.

There has always been a mismatch between assets and liabilities in the banking system. The banks since the 1930's have been able to borrow from the Fed and the FHLB when they needed cash in a hurry and would put their bonds up as collateral. But it's a bit deeper than that now because 1) their bond holdings have lost value because of the rise in interest rates the last year and 2) many of their loans are going bad.

The ultimate loss to the government will be how much is recoverable from these banks' assets (bonds, loans, etc.). I doubt the FDIC's reserves will cover it.

Yes it's happening. The wealthy and businesses are putting their many into the very large banks and money market funds that invest in Treasury paper. People are nervous and reacting accordingly.

The FDIC has set tomorrow 3/17/23 as a deadline for any offers to buy SVB or Signature Bank. If they don't find any buyers this situation does not look good. The assessments the government is talking about is the annual assessments that banks pay to fund the FDIC, which has about $100 billion in reserves. That could quickly evaporate. Many loans at SVB are crap and Signature Bank has a lot of commercial real estate loans that are quickly deteriorating.

FOOTNOTE: When interest rates rise, older bonds lose face value. If you hold them to maturity you will get face value assuming the issuer hasn't defaulted. If you sell older bonds in a market with rising interest rates because you need the cash, you take a haircut.

This 85 billion was actually not illiquid and could be sold (and many were in an attempt to satisfy withdrawals). The problem was that these older bonds had fallen below par value on the bond market because of the higher interest rates we have seen this past year. They could still be sold but NOT at face value. The $15 billion in lost face value of the bonds is about equal to the entire net worth, or total equity, of SVB. Which means they became insolvent. The banking system as a whole is sitting on $600 billion in "unrealized bond losses" because of the higher interest rates we have now. The FDIC would be swamped in no time. One reason Moodys said the US Banking Center is under greater stress than people realize. Moderator's note: politics redacted.

Agreed but this is just ONE bank. Many others may get into trouble. And they can value their loan book at $74 billion but these loans are to startups, solar energy companies, etc. and it is highly suspect that they are worth $74 billion face value. The government tried to get a buyer for SVB and no one wanted it.

The vast majority of these depositors at Silicon Valley Bank are sophisticated business people who knew their deposits were only insured for $250k. The ones that maintained higher balances did so for business reasons - they got credit from SVB on terms that they, as risky startups and growing tech companies, couldn't get at other banks. They took a business risk, and while I don't wish them any harm, this was always a possibility. Furthermore many of the loans on the books at SVB wouldn't even qualify for loans from the Fed's Discount Window, they are so weird.

That is true but there is a way around this that the Brokerage Houses and some banks use for their large depositors. It is to create a Cash Management Account and sweep those funds (from the large business accounts) every night into a money market account invested in Treasuries, highly rated commercial paper, etc.

Well actually it is out of the ordinary because the FDIC limit is 250k.

Assuming losses don't exceed the FDIC's reserves of about $100 billion.

I don't like blanket bailouts like this. SVB was comically mismanaged. 8 months without a risk officer! SVB intentionally decided not to hedge its interest-rate risk. The notion that its depositors, the most highly educated and compensated people in the US, were unaware of FDIC insurance limits is not believable.

I don't like the executives at SVB selling their shares of the bank en masse a week ago.

Yellen claims that assessments on banks will cover the cost of this unlimited guarantee. That simply passes the costs on to taxpayers through higher borrowing costs and lower interest on deposits.

Very little wait. Even in the past, people were able to access their money in a couple of days. The FDIC moves very fast.

Ask your doctor about taking a fibrate like Gemfibrozil. It lowers your triglycerides and raises your HDL. It lowers your LDL too, but not to the degree that a statin does. It's an alternative cholesterol medication for people who can't tolerate statins. It might be right for you since you said your levels are just a bit high.

I had another Aunt I was helping out before she passed away in 2020. Helping the very elderly is the hardest thing I've ever dealt with. It's no joke. Even one's own children don't want to get involved (unless there's an estate involved). It really is horrible.

They did imaging on her back. The only thing they found, as the doctor told me, was "an old sub-acute fracture" in her spine. But her pain is practically gone now. And my aunt was very confused on Saturday and now she says she is just tired. She was almost delirious before I called the ambulance. She was asking where she was (in her own house). I hope it was just the UTI. The only thing they gave her for the pain earlier was Advil.