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A lot to unpack today.
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Posted 3/19/2023 10:15 (#10147593)
Subject: A lot to unpack today.

From my readings this morning there’s a lot to unpack.

where to start?

interesting testimony this week Yellen before Congress saying the full insurance for SVB depositors was a one off.. systemic risk decision..

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 certainly not something that we’re encouraging,” Yellen replied.

Members of Congress are currently weighing a number of legislative proposals intended to prevent the next Silicon Valley Bank-type failure.

One of these is an increase in the $250,000 FDIC insurance limit, which several senior Democratic lawmakers have called for in the wake of SVB’s collapse.

Following the 2008 financial crisis, Congress raised the FDIC limit from $100,000 to $250,000, and approved a plan under which big banks contribute more to the insurance fund than smaller lenders.“

so  there’s that..

Also some concern about China and Russia manipulating our markets.. I doubt they are gonna play nice but..??

ORLANDO, Fla., Feb 22 (Reuters) - Although China's selling of U.S. Treasury securities over the past year raises multiple geopolitical questions, it's merely switching to other dollar bonds - casting doubt about a more alarming strategic investment shift.
What China scaled back in exposure to Treasuries last year was more than compensated by a rise in purchases of U.S. agency debt, valuation-adjusted calculations from Federal Reserve economists Carol Bertaut and Ruth Judson show.

Thus there’s that concern.

A problem appears to be fiscal.. Biden’s “inflation reduction” act.. funding for green big ticket items.. dumping $$$ into SVBs deposits while systemic risk is introduced as the Fed raises rates.. putting bond losses to the tune of $600+ billion on bank books.

Some of whom came to the Fed discount window this week..

Most banks took the more traditional route, using the Fed’s discount window under terms slightly less favorable, with borrowing totaling nearly $153 billion. The discount window provides loans of up to just 90 days, while the BTFP term is for one year. However, the Fed eased conditions at the discount window to make it more attractive for borrowers in need of operating funds.

There also was a large uptick in offered bridge loans, also done over short terms, totaling $142.8 billion, made primarily to now-shuttered institutions so they could meet obligations regarding depositors and other expenses.

The data comes just days after regulators shut Silicon Valley Bank and Signature Bank, two institutions favored by the high-tech community.

With fears high that customers who exceeded the $250,000 Federal Deposit Insurance Corp. guarantee could lose their money, regulators stepped in to back all deposits.

The programs ramped up the totals on the Fed balance sheet, escalating the total by some $297 billion.

also Credit Suisse is possibly being acquired..

Which is probably a step in the right direction.

are we out of the woods?

 Again I'm not freaked out.. the times we live in.. but maybe the US made a mistake in not doing negative interest rates.  Afterall holders pay to store grain and keep it in condition why should deposits be treated differently?

Edited by JonSCKs 3/19/2023 10:24
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