True, I’ve been using Treasury Direct… whatever you get there, multiply by 1.1 since there is no state tax
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More dirty linens. Probably why CRO resigns. Is what we would expect from an ex-Lehman Brother CEO.
Buffet is right. It’s just politically implausible to have depositors lose money in a bank run. Congress may as well codify it in law.
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He slammed lenders for taking unnecessary risks and disguising their losses…
Banks 
Banks are essentially leveraged bond funds
"I don’t like it when people get too focused on the earnings number…
Notice that about US banks from the GFC. They don’t behave like banks… more like aggressive risk taking bond traders.
First Republic down 49% today. How much longer will it last?
Didn’t bother to check if it had been updated for the most recent earnings but MarketWatch had the P/E of FR at 1.08
Glad I took my money out. It’s a shame. Great bank great service.
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Speaking of bad Banks. I just bought a house in foreclosure. The bank was PHH… total scum. The house had insurance money paid to PHH that belonged to the homeowner. They had to sell basically lost the house because they couldn’t make the loan payments and get the needed repairs for damages from the Caldor fire, covered by insurance done. The bank started foreclosure. I made an offer and have been in escrow for two months waiting for the bank to release the insurance money at close. Meanwhile they kept accruing interest and penalties. They did not feel they had to release the insurance money due the owners but paid in trust to PHH. We called them several times with a run around from their call center. Finally I advised the seller to let PHH know they were engaged in insurance fraud and could be subject to criminal and civil penalties. 24 hours later they released the funds and we closed the deal.
The worst mortgage company in America
They are a criminal New Jersey mafia run organization
In November 2014, an Administrative law judge decided that PHH had paid illegal kickbacks in violation of the Real Estate Settlement Procedures Act by referring consumers to mortgage insurers who would pay a reinsurance premium to a PHH subsidiary, fining the company $6.5 million.[5] PHH appealed to Consumer Financial Protection Bureau Director Richard Cordray, who on June 4, 2015, adopted a new reinterpretation broadening RESPA, made a new finding that the statute of limitationsdid not apply to the CFPB, and ordered PHH to disgorge $109 million
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It is very unlikely to survive this pressure now ! It is not about meeting the expected results, but what is its future…
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Banks survive or earn money through net interest margin(NIM). Net interest margin was 1.77%, compared to 2.45% for the prior quarter.
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During SVB bank issue, FRC took almost 100B cash pledging securities with FED and other banks and all 100B were withdrawn by depositors (net deposit loss 104B). Now, FRC may be earning negative NIM for the collateral 100B cash (FRC needs to pay 4.75% while the HTM values may earn 0.5%-1%range).
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To avoid this deposit loss net interest margin, they need to sell 100B assets to pay back FED and get out of NIM loss accumulating in future.
If they sell successfully, they need to take one time loss booking, but can survive. If not, it leads to bankruptcy stage.
It is all about future income and income growth that decides!
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First Republic down another 30% today, after 50% drop yesterday. Market cap at 1B now and PE is 0.61. May not last past this weekend.
Yellen and JPow’s “wink wink we will guarantee all deposits just don’t say it out loud” is clearly not working. May as well come out and say those magic words explicitly to stop the bank run. Zero reason for big accounts to still bank with FRC given the uncertainty.
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May 1st, FED vice chair come up with rules about banking operations, mainly restrictive on moving money bank (FRC) to bank (BAC, JPM…etc) on mass scale. If FED is not blocking/restricting such a mass transfer of assets over night, any bank can be bankrupt overnight.
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On FRC case, if they are able to get a buyer for 100B assets sale, they will come back way high.
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If they comeback, 30% shorter are in deep trouble and fun to watch!
In this market, anything is possible, either shorters bankrupt or company bankrupt!!
The only thing is whoever has excess cash, they can speculatively buy FRC. It is 50:50 win or lose!
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The NIM for all banks is going to be under pressure. Most ARM loans were refinanced in the 2020-2021 refi boom. Many were 15 year loans. (expect many zero mortgaged homes in 2025-2030 window, further reducing rate income to banks) HELOC’s are always a big cash cow but with an 8 plus handle, not many are willing to draw at that price. FRC might issue credit cards (22%+ rates BAYBEE!!) but what use is a credit card to a high net worth individual - their primary clientele? Spreads are going to sink across the banking industry and FRC is merely the 1st canary to take it’s last deep breath IMHO…
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My banker at Wells Fargo recommended putting my money in bonds in August. I put my money in Fidelity money market. Bonds were the worst investment ever last summer… and yet most banks bought treasury bonds at 1% interest. Long bonds have lost significant value.
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This issue is common to all banks and the issue creator is FED.
When the had FFR at 0.25%, the Long term treasury bonds were at 1.5%.
When the moved FFR at 4.75%, the Long term treasury bonds are at 3.5%.
Banks can not keep the depositors billion dollars without making any money out of it and they need to invest it in safe assets. They need to make money to run the banking operations, pay the staff and resources etc.
Among all the investments, such as stocks, etfs, real estate, gold, cryptos, bonds, the safest and liquid investment is long term bonds. When they get 100 Billion as deposits, during growing period, they have to invest in safest asset to earn money.
When depositors are transfering money that results 40% drawdown over night, no bank can withstand.
When 2008 real estate mass forclosures happened many big banks went into bankruptcy (Similar issue, 100000s of homes at their books all defaulted). It was multi-trillion payments.
Major investor countries - China & Japan - threatened US congress to pull down their 2 Trillion from USA! If they do, entire USA will bankrupt over night. Then congress went into rescue mode.
This is exactly Senator Warren was telling the source of inflation is somewhere and FED is forcing rate hikes to topple the economy for which almost 4 million US workers are scapegoat to share the load!
Any way, the creator of the issue is USG,Congress and FED, they need to resolve it with all divided interest.
Let us see how it goes (this is what we can do!), watch the fun.
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You’re pretty much always bearish and a doomer. History would say 80% of years will be positive returns. Is it exhausting being a doomer?
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This is anecdotal but few people in my rural enclave or those of my acquaintances are taking their money out of local regional banks. Rightly or wrongly the perception, based on the same political divisions which underlay everything else, is that NY and CA banks failed because of speculative or “woke” investing and that doesn’t affect regional banks in red areas.
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Regional banks are irrelevant in today’s age of online banking and FinTech (ironically, many of them work with regional banks). Should reduce the number of banks to less than 50 ie about one bank per State on average. Now there are 4844 FDIC insured commercial banks and 70k+ branches.
Reducing competition is never in the consumer’s interest.
Look what it’s done to health care.
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Healthcare is physical 