Will My Bank Fail?

[+ augustus]

1 hour ago, ThroatCummer said:

That's the crux of the problem.  They tied up assets in really long, illiquid bets (which were completely safe, by the way) and people came running for their money. There is a social media aspect here that could be listed as a contributing factor in all of this. Something banks never had to deal with in centuries and decades past. 

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. 

[Luv2play]

6 hours ago, augustus said:

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. 

As I understand it the Fed has made their discount window available to all banks in the US with looser rules since last weekend. Now they can borrow funds in exchange for the security of the bonds they hold at face value and not the depreciated values as a result of the rise in interest rates. 

The NYT is reporting this evening that banks are making great use of this and tens of billions have been borrowed from the Fed this week to increase banks' liquidity to meet any demand on their deposits by customers withdrawing their money.  

[+ tassojunior]

several of the big banks have exposure to credit card debt. i don't remember where I pulled this from a few weeks ago for a story on cc defaults but credit card defaults have soared to Great Recession levels as people deplete their lockdown savings. I'm not sure how the few homeowners who still have adjustable-rate mortgages or home equities are doing either. and then there's Europe and China contagion even with us propping up Europe. granted, it's not the scale of 2009 with the residential mortgage collapse, but it's not nothing. and commercial real estate is shaky like residential was in early 2008 and it has loans. 

Edited March 18, 2023 by tassojunior

[pubic_assistance]

On 3/18/2023 at 2:41 PM, tassojunior said:

credit card defaults have soared to Great Recession levels

Inevitable.

Forced Covid shut downs for six months + another six months of heavy restrictions + another year of limitations on businesses as well as shortages and problems with shipments left most of the country in debt.

Banks rejoiced in 2022 with record profits on the books from credit spending, but once the various pandemic related financial support systems  sponsored by the Federal Government were shut down it was a given that thousands of defaults would follow. 

Edited March 20, 2023 by pubic_assistance
grammar

[Rudynate]

Scary things afoot at First Republic.  I tried to pay a massage provider from a Paypal account linked to my checking account.  The are delaying disbursement until 3/31.  I guess I need to pull my money. 

 

 

[+ augustus]

2 hours ago, Rudynate said:

Scary things afoot at First Republic.  I tried to pay a massage provider from a Paypal account linked to my checking account.  The are delaying disbursement until 3/31.  I guess I need to pull my money. 

 

 

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

[pubic_assistance]

6 hours ago, Rudynate said:

Scary things afoot at First Republic.  I tried to pay a massage provider from a Paypal account linked to my checking account.  The are delaying disbursement until 3/31. 

 

 

 They appear to be putting delays on all transactions that will make it look like their cash is low.

I transfered money out and it took 10 days when it normally would have cleared in 24 hours.

[+ Lucky]

Well, my bank did fail and is now operated by Chase. On day one, my direct deposit pension check went right through. My balance is correct, so it seems the switch went off well.

[pubic_assistance]

It was a sad day to day goodbye to First Republic.

Really the last "gentleman's bank".

I will miss the cozy office setting when I sit down in a comfortable  chair at a desk with a well groomed service agent. Now Chase will institute their usual formula of cold gray tile and bullet proof glass where you wait in line while some random ESL tries to induce you to "use the machine" 
(so they can further reduce their staff).

Very sad how all customer service is being eliminated. Even for people who have some degree of wealth. You need to be a multi-billionaire now to afford a degree of dignity.

Edited May 3, 2023 by pubic_assistance
spelling

[rvwnsd]

13 hours ago, Lucky said:

Well, my bank did fail and is now operated by Chase. On day one, my direct deposit pension check went right through. My balance is correct, so it seems the switch went off well.

Glad to hear you didn't experience any hitches. At this point, the FRB business is still using the same systems it used prior to the sale and the same routing number. My guess is the system migration will occur in late 2023, probably over Columbus Day weekend, or early 2024 over President's Day weekend. 

Be glad Chase was the winning bidder and not PNC. I was a BBVA customer when PNC acquired them. The migration was a total disaster. In short, any customer who had both personal and business accounts linked to the same online banking profile couldn't see any accounts in online banking. This went on for more than six weeks. Most banks allow this, but PNC just couldn't get the data to convert correctly. The call center would send the customer to the branch and the branch had to fill out a paper form that was faxed to an ops center and processed in ten to fifteen business days.

I ended up at Bank of America because their customer service is better than PNC. That's saying something.

 

[+ nycman]

7 hours ago, pubic_assistance said:

You need to be a multi-billionaire now to afford a degree of dignity.

So true. I was recently in a NYC branch of Capital One. There was a woman, who’s only job seemed to be to scream at you to "stay in line 6 feet apart" and remind you every 2 minutes that "most of your banking needs can be accomplished online @ capitalone.com". I’m not sure how the hell I’m supposed to withdrawal $6,000 in hooker cash online…..but I sure as fuck wanted to ask her!

It’s inhumane…but it’s what we’ve asked for. 

Edited May 3, 2023 by nycman

[mike carey]

1 hour ago, nycman said:

So true. I was recently in a NYC branch of Capital One. There was a woman, who’s only job seemed to be to scream at you to "stay in line 6 feet apart" and remind you every 2 minutes that "most of your banking needs can be accomplished online @ capitalone.com". I’m not sure how the hell I’m supposed to withdrawal $6,000 in hooker cash online…..but I such as fuck wanted to ask her!

It’s inhumane…but it’s what we’ve asked for. 

I dearly wish that you had said that, and that I had been there to witness it.

That said, my most recent such withdrawal (of US cash) at the HSBC branch in town, I said was for travel to the US. I didn't say, nor did they ask, why I needed green cash. Nor did I volunteer that some of it was hooker money for a well-known gentleman visiting from the US. But then, the staff were delightful, so I saw no cause to add that particular element of colour about my intentions!

[marylander1940]

The stimulus package lifted the FDIC from 100,000 to 250,000 which is very useful for small businesses. Should it be increased? Would we pay higher fees in order to get more protection?

A "bank run" was avoided... 

[rvwnsd]

1 hour ago, marylander1940 said:

The stimulus package lifted the FDIC from 100,000 to 250,000 which is very useful for small businesses. Should it be increased? Would we pay higher fees in order to get more protection?

A "bank run" was avoided... 

The rate financial institutions pay for deposit insurance varies from institution to institution. I won't try to summarize this article from the FDIC's website, but suffice to say it is based on the institution's size and capitalization. 

Do I think banks would raise fees if the deposit insurance limit was increased? I think it depends on the institution. Some institutions are more fee-centered than others. What I find interesting is that small, community banks often have higher fees than regional, super-regional, and large banks and require higher balances to waive monthly fees.

Individuals (i.e. consumers) can increase their deposit insurance coverage at a single institution to above $250K by titling their accounts so that they have multiple ownership structures. It can be as simple as creating informal revocable trusts (a/k/a "Totten" trusts in some places) by opening multiple accounts each having different pay-on-death (POD) beneficiaries. This article from the FDIC website explains how deposit insurance works. The FDIC also has an insurance estimator. Lastly, Bankrate has a decent article on deposit insurance. I like it because it calls out establishing beneficiaries as a way to increase deposit insurance coverage.  Other articles reference revocable trusts (which is accurate) but do not mention POD beneficiaries as being a type of revocable trust.

It is unfortunate that FRB found itself in this situation. They served a niche and served it well. It bothers me that they are referred to as a "regional bank," when in fact they were a boutique or niche bank. I look at Fifth/Third, Old National (out of Evansville), and First Bank (out of Colorado) as being "regional" banks because they serve a broad customer base across a geographical portion of the country. I think calling FRB a "regional" bank diminishes what made it special. 

[marylander1940]

PacWest and Western Alliance Rush to Reassure Investors as Shares Plunge - The New York Times

WWW.NYTIMES.COM

---

PacWest said it had been approached by potential “partners and investors.” Western Alliance denied a report it was seeking a sale.

Fortunately it bounced back today but shares are still down compared to their value on Monday!

[+ glutes]

With tmy he Westfield Mall and several hotels in SF going belly up (turned backk to their creditors), I expect more bank failures ahead.

[+ tassojunior]

When the economy went south a couple years ago everyone was saying that at least we couldn't have the 2008 disaster residential real estate caused. But, as leases expire, business real estate is getting really bad. And banks dont have any insurance on those debts. Oops.

[+ Charlie]

I have had a small account for years with Union Bank of California, which has just been taken over by U.S. Bank. So far, everything in the changeover has gone smoothly for me.

[+ augustus]

Talk about screwed up!........Just read on the news that SVB had a foreign branch in the Cayman Islands with deposits of $13.9 billion when it failed, mainly money of Asians.  Those deposits were not covered by the FDIC and those people lost their savings.  But on top of that those foreign depositors who also had loans with SVB are being told they have to pay those loans back.   Deposits in foreign branches of U.S. banks aren’t considered deposits for purposes of the Federal Deposit Insurance Act.  

[edinbrooklyn]

1 hour ago, augustus said:

Talk about screwed up!........Just read on the news that SVB had a foreign branch in the Cayman Islands with deposits of $13.9 billion when it failed, mainly money of Asians.  Those deposits were not covered by the FDIC and those people lost their savings.  But on top of that those foreign depositors who also had loans with SVB are being told they have to pay those loans back.   Deposits in foreign branches of U.S. banks aren’t considered deposits for purposes of the Federal Deposit Insurance Act.  

Why would the US insure money stashed in a Cayman Island bank account, even at a branch or affiliate of a US bank?

[+ augustus]

19 minutes ago, edinbrooklyn said:

Why would the US insure money stashed in a Cayman Island bank account, even at a branch or affiliate of a US bank?

I'm not saying they should but depositors may be under the impression that a US bank with overseas branches may cover their deposits too.  First Citizens, which took over SVB, is saying these Cayman depositors need to repay their outstanding loans after they lost their savings.  That is screwed up.

Edited June 19, 2023 by augustus

[edinbrooklyn]

1 hour ago, augustus said:

I'm not saying they should but depositors may be under the impression that a US bank with overseas branches may cover their deposits too.  First Citizens, which took over SVB, is saying these Cayman depositors need to repay their outstanding loans after they lost their savings.  That is screwed up.

Loans are for the now insolvent bank (and the taxpayers who rescued it) an asset. But yes, it does feel wrong. 

Edited June 19, 2023 by edinbrooklyn
Typo

[handiacefailure]

8 hours ago, augustus said:

Talk about screwed up!........Just read on the news that SVB had a foreign branch in the Cayman Islands with deposits of $13.9 billion when it failed, mainly money of Asians.  Those deposits were not covered by the FDIC and those people lost their savings.  But on top of that those foreign depositors who also had loans with SVB are being told they have to pay those loans back.   Deposits in foreign branches of U.S. banks aren’t considered deposits for purposes of the Federal Deposit Insurance Act.  

Makes sense.   If the money is in out of US bank, why would the FDIC cover it?   AFAIK, if a country has out of country banks and you have money in the US branch, I don't even think you can access the funds.   Citizens bank has branches in London, and when I banked with Citizens I tried doing a withdrawl in London when the ATM wasn't working and was told I couldn't access my funds at the branch.

When any US bank fails you have to pay back your mortgage/loan, even if it's over $250K.   

[BuffaloKyle]

Philadelphia based Republic First Bank was shut down today by Pennsylvania state regulators. All customer accounts will become Fulton Bank accounts and all funds up to $250,000 are fully covered by the FDIC. All Republic First Bank branches will also become Fulton Bank branches immediately as well. This is the first bank failure since Nov. 2023.

FDIC says Republic First Bank is closed by Pennsylvania regulators | CNN Business

WWW.CNN.COM

---

The Federal Deposit Insurance Corporation on Friday said that Republic First Bank has been closed by Pennsylvania state regulators.