Behind The Scenes Of An American Bank Panic
In "Signs Of The Financial Apocalypse"+ (and yes, the title was mostly tongue-in-cheek) I talked briefly about record borrowing from the Fed's discount window over the last week. At almost $153 billion, the total eclipsed the previous record of $110.7 billion set a month after Lehman failed. "It appears that overall, US banks see little stigma in using Fed funding facilities," JPMorgan's Nikolaos Panigirtzoglou remarked, referencing the H.4.1 release, which the financial media was waiting for
12 thoughts on “Behind The Scenes Of An American Bank Panic”
When do insurance companies and their annuities start going teats up? Who bails them out?
This is my thought, also.
If the US government is willing to protect all depositors from any losses then the Fed/government will also want to protect other groups that might be harmed (such as pensioners, boomers, investors) from losing too much money that will be needed to live on during retirement, etc.
From a moral perspective, once one group becomes protected by the government, it seems like it won’t be a stretch for the government to want to protect more and more groups.
The US might look a lot more like Japan within the next few years than was thinkable even a month or two ago.
Off topic, but we both see immigration reform as absolutely critical going forward. Ron DeSantis trumpets that Florida represents the future of America. So this is not very encouraging:
Google Florida Senate Bill CS/SB 1718: Immigration. (you may need to specify 2023 in your search term).
My main source of day-to-day eating money is a large fixed annuity from TIAA. In spite of being a fixed annuity (now comprised of three parts after my wife’s passing), this year’s payment actually went up 6% over the previous year. This represents the fourth rise in 15 years of retirement. My two Voya annuities are also going nicely.
@ Mr. Lucky, how do issuers typically finance the annuities they issue? What is the potential impact of rate changes, inversions, rate volatility, etc (if any)?
Looks a bit like QE to me, if banks can post collateral and then get cash at par!
I was thinking that way myself. QE
yah, better than I can get at the pawn shop, fer shure
And here we go with the next bubble.
In this environment why would our central bank keep doing QT and take liquidity out of the system which is desperate for liquidity? Makes no sense. It would not surprise me to see the FOMC pause QT and perhaps raise rates a 1/4% with a dovish pivot dialogue by Powell in the press conference- leading market to conclude that a rate pause is on the table for future meetings.
I wonder if pausing or not pausing QT would make much difference. The monthly QT runoff is much smaller than the bank-related liquidity being provided.
Life is a simple exercise for complicated people. Banking as an industry is a chronic recidivist. Krugman sad many years ago if you lend long and borrow short, you need to be regulated. When somebody goe belly up in a financial company, we see many red flags along the way in hindsight. Incompetence and sketchy practices are tolerated far too much. Canada, with a very highly concentrated banking system, regulates more strictly. I like that. The financial community is very contemptuous
of regulators. I can fix this. Pay them more, maybe a lot more…Fire them when they don’t perform…Forbid lobbying and the revolving door. Form a panel with people like William K. Black, Sheila Baer, etc. Write some legislation that a 14 year old can understand…