Dogecoin etc

[Broccers]

Yes.

I await RichB and Sweatyjumper asking you your balance imminently.

I’m also curious as I haven’t looked at it since buying it.

Baller

[GG.]

GG, what is the underlying problem that caused the collapse of SVB? Is it exactly the same as Northern Rock? You’d have thought being obliged to hold higher cash reserves would prevent a similar run, but it’s never 100% safe until there’s enough cash to cover all of the deposits of course.

ETA: of course there’s already a comprehensive Wikipedia page so I’m reading that.

I understand they held a lot of their reserves in US Treasury Bonds.

Liquidity issues meant they had to sell them at a loss as interest rates have risen.

Hopefully isolated poor risk management.

T-bills and also MBS (mortgage backed securities which are predominantly fixed rate mortgage obligations).

The key bit (which I learned as well) was that they were holding the MBS assets as HTM (held to maturity) which means they didn’t need to account for them at market value as if you hold a loan to maturity you get paid in full (assuming no borrower defaults).

This then turned as they realised their depositors were running low on their current account balances as their tech businesses were having high ‘cash burn’ which basically means they had a negative cash flow and were burning through cash reserves.

This means the bank then has to liquidate some (a lot!) of these MBS held on a HTM basis. When you then go from HTM to AFS (available for sale) you have to fess up and hold them them at market value. As these were mortgages with 150bps fixed interest versus a central bank rate several multiples of that, they essentially had a big haircut to par value.

Basically they then needs to raise capital to meet the shortfall to what they had these assets rates at book value and then we had a good old fashioned bank run where everyone wanted to withdraw funds and couldn’t.

The interesting thing is that (counterintuitive as it may be) we really need a fallback regulatory scheme whereby in distress banks can behave like open ended funds (eg funding where the investors can withdraw capital on demand) which have timing gates when you can ask for your money back and caps as to the amount you can request. It would be odd to not be able to draw all your money out of a deposit account straight away but surely better than your bank going bust…

The amazing thing is that central bankers are culpable for all of this. They’ve pumped and dumped liquidity in the world economic system and some banks/investors/depositors are going to ‘catch it in the ass’ to use the parlance of the ‘yoof’.

[Broccers]

https://www.gov.uk/government/news/gove ... ey-bank-uk

[Broccers]

Do we buy the dip today lads?

15 percent rise in 3 days, 3 percent up since drop point. No I didn't buy but was talking about this on Friday afternoon in the pub as snow stopped play.

[Jobbo]

The interesting thing is that (counterintuitive as it may be) we really need a fallback regulatory scheme whereby in distress banks can behave like open ended funds (eg funding where the investors can withdraw capital on demand) which have timing gates when you can ask for your money back and caps as to the amount you can request. It would be odd to not be able to draw all your money out of a deposit account straight away but surely better than your bank going bust…

The thing is, at what point are they 'in distress'? I can imagine that banks might like to behave like OEICs rather than as actual banks, particularly if they can force investors/customers to accept that. As banks I don't think they ought to be allowed to behave that way, but then I don't think they are sufficiently prudent right now either.

[GG.]

The interesting thing is that (counterintuitive as it may be) we really need a fallback regulatory scheme whereby in distress banks can behave like open ended funds (eg funding where the investors can withdraw capital on demand) which have timing gates when you can ask for your money back and caps as to the amount you can request. It would be odd to not be able to draw all your money out of a deposit account straight away but surely better than your bank going bust…

The thing is, at what point are they 'in distress'? I can imagine that banks might like to behave like OEICs rather than as actual banks, particularly if they can force investors/customers to accept that. As banks I don't think they ought to be allowed to behave that way, but then I don't think they are sufficiently prudent right now either.

I would have it as a regulator remedy probably rather than exercisable by the bank themselves to remove the moral hazard. In any event its not a panacea as often it just stores up problems for the next time you are allowed to request a return of capital - essentially just prolonging the situation. Plus if depositors can't receive money to fund their own working capital / payroll requirements things are going to get ugly in any event and maybe you are better in that institution just going to receivership and sorting the mess out / have someone buy their deposits.

[Jobbo]

I can see those situations ending up like Neil Woodford's fund - taking years and still not getting everyone their money back.

[GG.]

Would be surpised if First Republic lasts the course of the day. Shares down 70% in pre-market trading.

Signature Bank also went under yesterday (constituting the third biggest bank insolvency in the US).

Scary times (again).

[IanF]

US gov guaranteeing all US deposits.. risky move playing off the damage caused to millions from a collapse vs zero risk for US banks in the future; just creating a bigger issue later on. Who trusts the government to run the banks? Why do we even need banks for that matter??

[Broccers]

US gov guaranteeing all US deposits.. risky move playing off the damage caused to millions from a collapse vs zero risk for US banks in the future; just creating a bigger issue later on. Who trusts the government to run the banks? Why do we even need banks for that matter??

Buy BITCOIN / ETH its the future

[Broccers]

Do we buy the dip today lads?

15 percent rise in 3 days, 3 percent up since drop point. No I didn't buy but was talking about this on Friday afternoon in the pub as snow stopped play.

22 now as everyone heads out of stocks

[IanF]

Credit Suisse.. ECB needs to come to the rescue (if it can), or the US actions will have been for nought! Looking like SVB should’ve just been let go..

Interesting that high (unplanned) interest rates are causing banking sector to collapse..

[Simon]

Unplanned? The central banks have been talking about what they'll do for ages and they were even late to do it.

What's killing the banks is their belief and actions that interest rates would never rise again. Shortsighted IMO.

[ZedLeg]

Apparently there's another sub prime loan collapse coming too, this time based on US car loans.

[Broccers]

Eth up 38 percent since I advised Sweatyjumpleads to buy some.

[Broccers]

Are Banks a massive liability? You think they're safe but they really aren't.

[ZedLeg]

It’s more reckless deregulation that’s the problem than banks. Aren’t we fan of completely deregulated investment anymore?

[Broccers]

It’s more reckless deregulation that’s the problem than banks. Aren’t we fan of completely deregulated investment anymore?

Aren't we fan? Is this Scottish?

[Jobbo]

It’s more reckless deregulation that’s the problem than banks. Aren’t we fan of completely deregulated investment anymore?

Aren't we fan? Is this Scottish?

Missing one letter, come on - that education didn't do much good for your comprehension did it?

[Broccers]

It’s more reckless deregulation that’s the problem than banks. Aren’t we fan of completely deregulated investment anymore?

Aren't we fan? Is this Scottish?

Missing one letter, come on - that education didn't do much good for your comprehension did it?

You're Matt Handcocks brief aren't you? Missing a not out, it's ok. Don't choose to be correct when it suits.