Posted on 03/10/2023 10:03:37 AM PST by EBH
Small things can lead to big reactions, and that seems to be the case with bank stocks on Thursday, as a huge loss at SVB SIVB 0.00% Financial has caused stocks like JPMorgan JPM +2.48% Chase, Bank of America BAC +0.29% , and Wells Fargo WFC +1.50% to get pummeled.
Here’s what happened. Silicon Valley Bank’s parent, SVB Financial (ticker: SIVB), said Wednesday night that it had sold securities from its portfolio for a $1.8 billion loss, while also announcing plans to raise capital via an offering of common and preferred stock. SVB Financial stock tumbled 60% to $106.04 on Thursday, its largest drop ever, and was down 42% Friday at $61.41.
The selling didn’t stop there. The entire banking sector got hammered with the SPDR S&P Bank ETFKBE –4.97% (KBE) finishing off 7.3% and the SPDR S&P Regional Banking ETF (KRE) closing down 8.2%.
No one has been immune. JPMorgan stock (JPM) fell 5.4%, while Bank of America (BAC) dropped 6.2%, and Wells Fargo (WFC) declined 6.2%. “There is a run on banks today with some of the majors getting hit hard,” writes NatAlliance Securities’ Andrew Brenner.
(Excerpt) Read more at barrons.com ...
Don’t worry, Banksters, the right to make a profit remains. The people who are punished by this policy will bail you guys out, again.
By design?
History of the Bush days: the Savings and Loan Crisis Bailout
How much money did taxpayers lose in the S&L crisis?
The problem began during the era’s volatile interest rate climate, stagflation, and slow growth of the 1970s and ended with a total cost of $160 billion; $132 billion of which was borne by taxpayers.
Source: Investopedia
Most of this is because of Interest rates going up and the value of their bind portfolios going down. Another crisis of Mark to Market. My guess is Powell is going to have to ease off the rate hikes or problems will only worsen.
To Big To Fail is still the prevailing strategy. If Citicorp goes down to $0.25 a share again I will buy all I can which is where it went in 2008 and I curse myself for not buying then.
CBDC is due out in July. Powell isn’t going to back off, he is playing his part of the plan marching to a new world currency
There isn’t going to be a new world currency.
JPM was a super buy yesterday, down about $7.50ish, up about $4 earlier today.
This “regional bank” issue is unquestionably bigger than is being stated. I don’t think it’s systemic like 2007-2009. The ZeroHedge article is tough, but important to read.
“What’s more, customers are lured out of bank deposits seeking higher-yields in safe assets such as short-term Treasuries.”
The inverted yield curve ain’t helping.
Thank Jao BiXiden, McConnell, Schmuckie and Nanzi for the Inflation.
So you park a lot of cash at the bank. The bank can’t sit on that much cash so they buy Treasuries with yields at 1%. Yields stay low for years so the bank don’t bother marking the value of those bonds on their books to the market price. It moves very little.
Then a few years go by and suddenly you realize you can take your cash from the bank and buy a 6 month, 1 year or 2 year T-Bill and get around 5% return for it. So you withdraw your money. The bank has to sell that 1% Treasury to get you the cash... but who is going to buy a 1% Treasury when the rates today are so much higher? So the bank has to sell the Treasury at a loss to get you your cash. Now the bank has to mark the value to market, and they are looking at a big loss they have to book.
I don’t think they do mark them to market. Or at least it hasn’t been an issue because rates moved so little the last decade. Now the rates are much higher. They either have to mark their old low-yield bonds at the new market price (big loss because nobody wants to buy a 1% Yield in a 5% Yield environment without paying a big discount for the difference in ROI), or they are being forced to sell them at a big loss when bank customers ask for their cash. Either way, banks are looking at large losses to book on their balance sheets. Probably a bad year for banks’ quarterly/annual reporting.
I figure the bigger banks can handle it but one never knows.
They’re creating another crisis which will require another bailout. Like clockwork. Every 3 or 4 years, we gotta have a bailout.
JPM and WFC closed up today
Crap journalists all over the place
Wells Fargo and Bank of America don’t that good of a record of handling some peoples large accounts.
Did oops thingy and said oh we found it.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.