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2023 bank failures

Parliament

By Parliament
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Mullet Free

Mullet Free 40

Posted
Posted
10 minutes ago, Wally Fairway said:

Western Alliance down "only" 20% today, and that is $3 off the daily low

{everything is fine gif - to be inserted here}

Yeah, as long as there are sustained runs on deposits, these banks are all fucked. And that’s without being upside down on USTs or CRE loans. 

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Nivek
Nivek

So we should bail out a bank and financial/business leaders of companies who stupidly put too much money in a single account because they were too lazy or too cheap to get a DIF insurance, open a CDAR

pantone159
pantone159

It is like nobody in the industry is over 40 and so has no memory of interest rates being other than zero. Interest rates now are not 'high'. They are about 'normal' now. The past 15 years have been t

washparkhorn
washparkhorn

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Guest

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Errrm. Have multiple brokerage accounts with TD Ameritrade, who is owned by Schwab. Wondering if I should move one over to Fidelity to diversify. All under the SIPC amounts, but obviously would be a pain in the ass if Schwab took a nosedive and took TD with it.

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Wally Fairway

Wally Fairway 5550

Posted
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17 minutes ago, FirstTimeCaller said:

'sErrrm. Have multiple brokerage accounts with TD Ameritrade, who is owned by Schwab. Wondering if I should move one over to Fidelity to diversify. All under the SIPC amounts, but obviously would be a pain in the ass if Schwab took a nosedive and took TD with it.

shit - haven't paid enough attention to this, my main account is at Schwab (has been since the 1980's), though I do have some 401k's not rolled over at Fidelity. I know that Chuck got a bank, but is it structured that it could tip the entire entity? Certainly they have some side rails that would keep a failure separate, right?

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Posted
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8 minutes ago, Wally Fairway said:

shit - haven't paid enough attention to this, my main account is at Schwab (has been since the 1980's), though I do have some 401k's not rolled over at Fidelity. I know that Chuck got a bank, but is it structured that it could tip the entire entity? Certainly they have some side rails that would keep a failure separate, right?

Yes, there should be. And there is also SIPC insurance. But I'd also prefer to be safe than sorry because both wife and I have TD as the brokerage for retirement and retail accounts.

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Skipper

Skipper 6135

Posted
Posted
1 hour ago, Mullet Free said:

Yeah, as long as there are sustained runs on deposits, these banks are all fucked. And that’s without being upside down on USTs or CRE loans. 

When the fed didn't signal all deposits were safe the weekend after SVB run started, this was inevitable.  Complete clusterfuck and terrible outcome for both the consumer and for small and medium sized businesses that relied on the regionals for lending.  

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Captainant

Captainant 27677

Posted
Posted (edited)
13 minutes ago, MonkeyDoughnut said:

Have regionals even begun to deal with the destruction in the commercial real estate market yet? I feel like the regional banks destruction is just starting, not ending.

Season 9 Smh GIF by The Office

Edited by Captainant
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Wally Fairway

Wally Fairway 5550

Posted
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12 hours ago, MonkeyDoughnut said:

Have regionals even begun to deal with the destruction in the commercial real estate market yet? I feel like the regional banks destruction is just starting, not ending.

The market indicates no they have not
Western Alliance: -$18 (62%) today - at $11, $87 is 52 week high
Zions: -$3 (13%) today - at $20, $60 is 52 week high
Comerica: -$5.5 (16%) today - at $30, $87 is 52 week high
PacWest Bancorp: -$3.65 (57%) today - at $2.77, $34 is the 52 week high

if you believe in betting against my life - look at PNC, down $3 (2.5%) - at $114, but they will soon be working with "The Cooler" if rumors I hear around the office are correct


 

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Mach 1

Mach 1 1677

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Apparently time really can be a flat circle.

My preferred regional bank/construction lender was seized by the FDIC in 2009, then sold to PacWest.   Without prior notice, they promptly sued me to enforce a 7 figure construction loan guarantee.

So ... fuck 'em.

However after some feisty litigation, they were reasonable during settlement negotiations.  So ... fuck 'em, but use lube.

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Shaggy3.0

Shaggy3.0 1695

Posted
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2 hours ago, Mach 1 said:

Apparently time really can be a flat circle.

My preferred regional bank/construction lender was seized by the FDIC in 2009, then sold to PacWest.   Without prior notice, they promptly sued me to enforce a 7 figure construction loan guarantee.

So ... fuck 'em.

However after some feisty litigation, they were reasonable during settlement negotiations.  So ... fuck 'em, but use lube.

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wackawacka

wackawacka 179

Posted
Posted
2 hours ago, MonkeyDoughnut said:

Just another arena where big banks screw the smaller guys... They control and lobby all the important government posts to insure they are protected and end up buying the little guys for pennies on the dollar. Rinse... repeat

The Big Guys pay all the insurance premiums tho.

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UT_OB1

UT_OB1 2223

Posted
Posted (edited)
21 hours ago, 40acredropout said:

“This is getting near the end of it, and hopefully this helps stabilize everything....The American banking system is extraordinarily sound.”

- Jaime Dimon after JPM acquires FR 5/1/23

These are not inflation adjusted, right?  Possible it isn’t as bad as it looks?

Edited by UT_OB1
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Wally Fairway

Wally Fairway 5550

Posted
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23 hours ago, Wally Fairway said:

The market indicates no they have not
Western Alliance: -$18 (62%) today - at $11, $87 is 52 week high
Zions: -$3 (13%) today - at $20, $60 is 52 week high
Comerica: -$5.5 (16%) today - at $30, $87 is 52 week high
PacWest Bancorp: -$3.65 (57%) today - at $2.77, $34 is the 52 week high

if you believe in betting against my life - look at PNC, down $3 (2.5%) - at $114, but they will soon be working with "The Cooler" if rumors I hear around the office are correct
 

(Iraqi minister everything is alright gif)

Today
WAL - up $6, 33%
ZION - up $3.10, 15%
CMA - up $3.55, 11%
PACW - up $1.75, 56%

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  • blacklab changed the title to 2023 bank failures
bernorange

bernorange 8362

Posted
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Quote

...
Citizens Bank of Sac City, Iowa, has failed, and it appears that its exposure to commercial trucking is the cause.
...
Because Citizens Bank was a state-chartered bank and not a member of FDIC, the bank’s estimated losses of $14.8 million will be the responsibility of the Iowa Department of Insurance and Financial Services.

Bad trucking industry loans?

The superintendent of the Iowa Division of Banking (IDOB), which is part of the department, also issued a statement, according to the blog, saying that in the course of a joint FDIC/IDOB examination, “examiners identified significant loan losses that had not previously been identified by the bank.”

In addition, the superintendent’s statement included information that Citizens Bank’s loan portfolio was concentrated in “out-of-territory and out-of-state loans to one industry.” The blog noted that “some of those loans had incurred heavy losses.” In the statement, the industry in question was not identified.

However, prior to the failure of Citizens Bank, the FDIC and IDOB entered into a consent order with it in August, the blog reported.

As part of the consent order, according to Bank Reg Blog, Citizens Bank was required to engage an “independent third-party loan consultant” with “requisite knowledge, skills, ability and workout experience.”

Additionally, the consent order focused on one loan portfolio, the blog reported. The consultant had “full authority and discretion to administer and service the Bank’s commercial trucking loan portfolio.”

Sac City’s population is just over 2,000 people; the population of Iowa is only about 3.2 million people. Citizen Bank’s assets were only $66 million.

Prices for new Class 8 trucks in 2023 vary by brand, as well as by the number and type of features and equipment. However, they are expensive; prices range between $150,000 for basic models to over $220,000 for models with custom features.

How or why a small state-chartered bank in the very small town of Sac City, Iowa, was making loans on expensive trucks is unknown, but doing so seems highly speculative.
...

https://www.freightwaves.com/news/iowa-bank-failure-tied-to-bad-trucking-loans

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YGIFS

YGIFS 19450

Posted
Posted

That's pretty fucking crazy.  $66mm in assets, but hard telling what portion of that is lendable deposits and then in turn, what's the Tier I capital ratio?  Having just typed that, I'm guessing they don't know either, which is why in they're in this fucking mess. 

My last firm bought a federally chartered, but very small in deposits at the time, bank in the Chicago area.  I tried to throw them some business from a trucking company in the same area we used to have an interest in.  We'd start with some basic digital deposits, no-fee ATM network while they're going interstate (these guys like to engage in shit that doesn't take debit cards like poker and strip clubs), fin tech shit, mortgages, etc.  Even though the whole fleet is under a massive masterlease with Daimler and Volvo, the bank regulators (in this case, the OCC)...spent months verifying that no loans would be given out to employees for buying trucks even though it was all there in black & white, there are no owner/operators.  But apparently this happens frequently where some small town with one local bank and one inside the Wal-Mart has some freight yard on the outskirts that runs tractor/trailer loans through the local bank because Mr. Bank President/School Board Chairman/Church Deacon gets a cut of it.  Happens all the time in agricultural states where the farmers also own their own cabs so they can haul to market.  Big dark economy portion of that area of the country.  And beyond easy to get away with.  This is one tiny bank.  I promise this is happening at several hundred.  Enough to sink a farm town in a matter of hours.  

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YGIFS

YGIFS 19450

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Posted
Just now, Samson's Wig said:

I've got a family member who has an auto loan from Citizens.  They called asking if they could just stop paying it.  That sure would be nice, wouldn't it?  But no.

Tell your family member to tell Citizens Bank that the value of the car is either $100 or $100,000.  Either way; the lender is wrong and your cousin made a good faith effort.  No more payments.  Easy peezy

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Samson's Wig

Samson's Wig 3192

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lol, sorry I wasn't clear.  There are a ton of Citizens banks around the country.  Their loan is not from the bank in Iowa that closed.  I blame this on the failures of our federal trademark system.   Lots of confused people all over the country wondering if their bank closed today.  Nope.

 

EDIt TO ADD: We even have a Citizens Bank in TX, with a few locations in the NE I think.

Edited by Samson's Wig
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bernorange

bernorange 8362

Posted
Posted

Some fun reading for your Monday morning...

Quote

Did anyone else notice the Chairman of the Federal Reserve casually admit recently that our central bank has no long-term strategy for handling the banking crisis? Jerome Powell was asked recently ... what would happen in March of 2024 when loans begin coming due from the Bank Term Funding Program (BTFP). He literally said that they hadn’t thought that far ahead.

Powell & Co. created a $100+ billion bailout facility with no exit strategy, and now they talk about it like it’s nothing. The attitude extends even to major banking houses like Bank of America, which has openly admitted that it has hundreds of billions of dollars of unrealized losses on its books but expects to realize none of them. In other words, everyone, the Fed included, is acting like the BTFP is a permanent facility.
...
... The BTFP is loaded with long-term securities that will likely pay below-market rates for 2 to 30 years.

This has created a rachet effect with the new facility, where banks dumps securities on the Fed but can never really pay off the loans before the collateralized assets mature. That has pushed the BTFP to $114 billion, and it’s poised to continue creeping higher each time banks need cash and can’t liquidate the rest of their depreciated assets, except at a loss.
...

https://www.fxhedgers.com/p/powell-says-the-quiet-part-out-loud

Quote

...
Total outstanding loans in the Federal Reserve’s bank bailout program jumped by just over $5 billion in November.

There was a sudden spike in banks tapping into the bailout program during the first week of the month with financial institutions borrowing $3.87 billion from the Bank Term Funding Program (BTFP). There was another surge in borrowing between Nov. 15 and Nov. 22, according to Fed data.

As of Nov. 22, there was $114.1 billion in outstanding loans in the BTFP bank bailout program.
...

As you can see from the chart, borrowing had leveled off in August before the sudden spike in November. ...

The fact that banks are still accessing the bailout program, and suddenly at a faster rate, would seem to indicate that the banking sector remains shaky.
...

https://schiffgold.com/key-gold-news/fed-bank-bailout-program-borrowing-surged-in-november/

 

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SydneyCarton

SydneyCarton 48108

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Posted (edited)

Clicked on a link above, and this definitely looks like a reputable, unbiased source of news on the financial system. 

image.thumb.png.b10891c89ab978e0028590e48c66e740.png

 

It's almost like this person really, really would benefit from an unstable economy and banking system and wants to sell you some gold. 
 

Edited by SydneyCarton
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ryskey

ryskey 447

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Posted

Doesn't the BTFP loan at prevailing rates?  So I don't think the Fed is losing money on the rate spread, depends on the accounting and if the collateral value is marked to market.  Maybe I'm wrong.  

Anyway, the whole thing was intended to mitigate panic and bank runs by injecting liquidity in the midst of unrealized paper MTM losses.  Every month that goes by, those paper losses fall as maturity approaches.  Banks with a bunch of 2% coupon treasuries with long-dated maturities are still in some trouble, but I'm not sure how prevalent those are. Or the treasuries reach maturity, which is a liquidity event - either buy more treasuries at prevailing rates with those proceeds, pay back BTFP, or keep as cash on the balance sheet.  

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bernorange

bernorange 8362

Posted
Posted
3 hours ago, ryskey said:

Doesn't the BTFP loan at prevailing rates?  So I don't think the Fed is losing money on the rate spread, depends on the accounting and if the collateral value is marked to market.  Maybe I'm wrong.  

Anyway, the whole thing was intended to mitigate panic and bank runs by injecting liquidity in the midst of unrealized paper MTM losses.  Every month that goes by, those paper losses fall as maturity approaches.  Banks with a bunch of 2% coupon treasuries ...

You should read the first link I posted. 

Quote

... The BTFP allows banks to effectively dump depreciated assets on the Fed because Powell & Co. will accept them at par as collateral on 1-year loans. ...
...
It would be one thing if all the depreciated assets handed over to the Fed as collateral were all Treasury bills, because their maximum term is 52 weeks. Since the reason for the BTFP was to alleviate interest rate risk and not default risk, that theoretically would solve the problem and the banks could walk away scot-free. When March 2024 comes around, the asset held by the Fed as collateral would have already turned into liquid cash and there’s no need to repay the principal. But that’s not the situation.

The last asset a bank would’ve given the Fed as collateral was a T-bill. For starters, because of their short terms, T-bills drop in price by less than Treasury notes or bonds when interest rates rise, so the mark-to-market losses are lower. T-bills would’ve been among the first depreciated assets sold in the leadup to the fiasco in March. Second, the soon-to-mature bills can easily be reallocated to new T-bills at higher interest rates upon maturity, alleviating the interest rate risk problem. The BTFP is loaded with long-term securities that will likely pay below-market rates for 2 to 30 years. ...

 

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