2023 bank failures

[wildcat09 29338]

Bern always posts the best links. Every time I think I'm familiar with the kookiest of the kook websites, he digs up a new one.

[crash_davis 23094]

40 minutes ago, bernorange said:

You should read the first link I posted. 

 

Socialize the losses, privatize the profits? 

[StassneyHorn 6573]

“You won’t believe what this portfolio manager at xxxxxxx has to say!”

[bernorange 8359]

https://www.federalreserve.gov/financial-stability/bank-term-funding-program.htm

You are welcome to verify any statements of fact that you believe to have been misrepresented.

[StassneyHorn 6573]

Uh oh Chicken Little is link-bombing us 

[ryskey 447]

2 hours ago, bernorange said:

You should read the first link I posted. 

 

I did.  That's why I said this:

5 hours ago, ryskey said:

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.

Do you know?  Because all of the analysis I saw that happened earlier this year suggested there were enough long-dated maturities for some impairment to collateral coverage, and terms are generous, but there's no systemic risk.  Was that analysis wrong?  Maybe it was.  I wouldn't want to loan against a basket of treasuries at that valuation, and neither would any normal credit underwriter, but this isn't anything we didn't know 8 months ago.  This is exactly what the lender of last resort is supposed to be doing.

Confirmed the BTFP is loaned at prevailing rates (so the Fed, err... we are not losing money on the rate spread), and assets are marked to market.  So the impairment in coverage or loan to value only matters in 2 situations:

1.  The Fed sells the debt - this isn't going to happen

2.  A significant number of banks can't service or refinance the debt.  If that happens, equity of the banks go to zero, and assets are liquidated to pay back lenders.  Regarding the recent uptick in BTFP loans, if I were at a bank and I could borrow money at above-market terms, I would.

 

 

Ok, so let's see how regional banks are doing.  This issue is known and quantifiable, so it should be priced into regional bank stocks.  This is an ETF for regional banks, supposedly the most at-risk.  Correction back in March during the first of the bank runs, and flat since.  Looks like permanent re-rate of the group due to higher risk, which is probably fair.  But still plenty of equity value sitting behind the debt.  

 

[bernorange 8359]

1 hour ago, ryskey said:

... and assets are marked to market. ...

Where are you seeing that?  

[Neonmoon 38129]

OMG the Fed is a scam? Should I buy gold or bitcoin? 

 

[Hefeweizen 5308]

9 minutes ago, Neonmoon said:

OMG the Fed is a scam? Should I buy gold or bitcoin? 

 

[BamaATL 16593]

I've got the perfect hedge for all of you, the Iraqi Dinar.  

[bernorange 8359]

March 13, 2023:

Quote

The Federal Reserve on Sunday unveiled a new program to ensure banks can meet the needs of all their depositors amid escalating chances of bank runs following the abrupt collapse of two major banks in the space of 72 hours.

The Bank Term Funding Program (BTFP) will offer loans with maturities of up to a year to banks, savings associations, credit unions and other eligible depository institutions.

Here are some key elements of the Fed's program:
...
A key element of the program is acceptable loan collateral - including U.S. Treasuries and mortgage-backed securities among others - will be valued at "par," meaning open-market bond values that have been impaired by a year of Fed rate hikes will not reduce what a bank may borrow from the central bank.

The same collateral terms will also be available for loans drawn from the Fed's "discount window," its traditional lender-of-last-resort facility. Ordinarily, loan amounts were governed by the market value of the pledged collateral.

"This will allow banks to fund potential deposit outflows Without crystalizing losses on depreciated securities," Goldman Sachs wrote Sunday after the Fed announcement.
...

https://www.reuters.com/markets/us/key-elements-feds-new-us-bank-funding-program-2023-03-13/

also, the Federal Reserve's BTFP page which I linked previously clearly states (bold emphasis is mine):

Quote

... The BTFP offers loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging any collateral eligible for purchase by the Federal Reserve Banks in open market operations (see 12 CFR 201.108(b)), such as U.S. Treasuries, U.S. agency securities, and U.S. agency mortgage-backed securities. These assets will be valued at par. ...

 

[YGIFS 19449]

Is it bad that much of the OCC leadership that helped with the BFTP has bailed for the private sector in the last 12 months?  

[bernorange 8359]

Quote

Unrealized Losses on Securities Increased From the Prior Quarter: Unrealized losses on securities totaled $683.9 billion in the third quarter, up $125.5 billion (22.5 percent) from the prior quarter.  Unrealized losses on held-to-maturity securities totaled $390.5 billion in the third quarter, while unrealized losses on available-for-sale securities totaled $293.5 billion.

https://content.govdelivery.com/accounts/USFDIC/bulletins/37d5a51

BTFP ends in March? 

[bernorange 8359]

From last Friday:

Quote

In a speech delivered Friday morning at a forum hosted by the European Central Bank in Frankfurt, Germany, Fed Vice Chair for Supervision Michael Barr said the failure of Silicon Valley Bank "changed everyone's perception of the possible speed of bank runs" and exposed weaknesses in emergency funding systems that are still being evaluated today.

"What occurred in two or three weeks or, in some cases, many months in previous episodes may, in the modern era, now occur in hours," Barr said. "These issues are top of mind as we review and consider future adjustments to the way in which we should supervise and regulate liquidity risk."

As a result, Barr said, the Fed is weighing whether adjustments are needed for the regulatory frameworks designed to help banks insure themselves against losses. These include the liquidity coverage and net stable funding ratios, which are designed to ensure banks can fund themselves through 30 days of deposit outflows.

"These requirements may not, on their own, be sufficient to stem a rapid run," Barr said. "The speed of bank runs and the impediments to rapidly raising liquidity in private markets that may be needed in hours rather than days suggest it may be necessary to re-examine our requirements, including with respect to self-insurance standards and to discount window preparedness."
...

More:

https://www.americanbanker.com/news/feds-barr-new-liquidity-requirements-might-be-needed-to-stem-bank-runs

 

[bernorange 8359]

Rickards:

Quote

...
In less than two months from early March to early May 2023, we saw the failures of Silvergate Bank, Silicon Valley Bank, Signature Bank, Credit Suisse and First Republic.

In response, the FDIC stepped in with the mother of all bailouts. Going forward, the issue is: Once you’ve guaranteed every deposit and agreed to finance every bond at par value, what’s left in your bag of tricks? What can you do in the next crisis that you haven’t already done — except nationalize the banks?

Investors are relaxed because they believe the banking crisis is over. That’s a huge mistake. History shows that major financial crises unfold in stages and have a quiet period between the initial stage and the critical stage.

My next forecast is that a bigger and more acute Stage 2 of the banking crisis is coming after the quiet period that has prevailed since June. This new crisis will be focused on about 20 banks with $200–900 billion in assets — the so-called midsized regional banks that are not too big to fail.
...

https://dailyreckoning.com/rickards-five-2024-forecasts/

[Neonmoon 38129]

Oh you posted something predicating another crash? NO WAY

Where do you find these weird fucking “News” sources? 

https://dailyreckoning.com/about/

[A letter from Daily Reckoning co-founder and Agora Financial executive publisher Addison Wiggin]

https://www.ftc.gov/news-events/news/press-releases/2021/02/publisher-will-pay-more-2-million-settle-ftc-charges-it-targeted-seniors-phony-diabetes-cure-money

A Baltimore-based company, Agora Financial, LLC, and several of its affiliates have agreed to pay more than $2 million to settle Federal Trade Commission charges that they tricked seniors into buying pamphlets, newsletters, and other publications that falsely promised a cure for type 2 diabetes or promoted a phony plan to help them cash in on a government-affiliated check program.

[bernorange 8359]

Quote

The Federal Reserve Board on Tuesday announced the execution of the enforcement action listed below:

Marblehead Bancorp, Marblehead, Ohio, and Marblehead Bank, Marblehead, Ohio
Written Agreement dated December 14, 2023
...

https://www.federalreserve.gov/newsevents/pressreleases/enforcement20231219a.htm

Skimming through the actual agreement:

https://www.federalreserve.gov/newsevents/pressreleases/files/enf20231219a1.pdf

That bank seems to be getting slapped for their incompetent management team as well as FUBAR finances.  Yikes.

[Jackson P. Neighbors 136]

On 12/19/2023 at 1:38 PM, bernorange said:

https://www.federalreserve.gov/newsevents/pressreleases/enforcement20231219a.htm

Skimming through the actual agreement:

https://www.federalreserve.gov/newsevents/pressreleases/files/enf20231219a1.pdf

That bank seems to be getting slapped for their incompetent management team as well as FUBAR finances.  Yikes.

Tiny $55M bond bank, 35% LTD, negative TE bcs of portfolio duration, weak NIM of course, sold securities in 3Q which resulted in their Q loss. Actual leverage capital $5.5M, 8.4%, not terrible, not great. "Well Capitalized" per PCA. Management paid themselves very healthy dividends at YE 2022 so this seems to be FRB telling them "Not this year." Unless there is something fraudulent going on, this is not a failure candidate. Probably great-grandaddy's heirs run it and just collect a decent paycheck.

Anecdotally, I hear that all regulators post-March now will issue public actions for repeat matters instead of the prior practice of keeping them non-public (MRA/MRBA) from exam cycle to cycle. This means you'll see more of these.

Also, I recommend signing up for the enforcement action email distribution lists from FRB/OCC/FDIC for a little laugh on occasion. You'd think that all little ol lady bank tellers 65+ are just defalcating left and right. 

[Brisketexan 105041]

4 hours ago, Jackson P. Neighbors said:

You'd think that all little ol lady bank tellers 65+ are just defalcating left and right. 

I read that as "defecating," and thought that you were into some weird German scat stuff.

I mean, you still might be.  I don't really know you.

[Jackson P. Neighbors 136]

47 minutes ago, Brisketexan said:

I read that as "defecating," and thought that you were into some weird German scat stuff.

I mean, you still might be.  I don't really know you.

You are not the first to confuse banking and defecation.

[wildcat09 29338]

On 12/17/2023 at 4:54 PM, Neonmoon said:

A Baltimore-based company, Agora Financial, LLC, and several of its affiliates have agreed to pay more than $2 million to settle Federal Trade Commission charges that they tricked seniors into buying pamphlets, newsletters, and other publications that falsely promised a cure for type 2 diabetes or promoted a phony plan to help them cash in on a government-affiliated check program.

Fucking incredible. Never change, Bern.

[StassneyHorn 6573]

We know you aren’t picking these at random, what site are you using to find this shit? 

[bernorange 8359]

First Republic has fallen.  FDIC press release:

Quote

Fulton Bank, N.A. of Lancaster, Pennsylvania Assumes Substantially All Deposits of Republic First Bank, Philadelphia

WASHINGTON — Philadelphia-based Republic First Bank (doing business as Republic Bank) was closed today by the Pennsylvania Department of Banking and Securities, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect depositors, the FDIC entered into an agreement with Fulton Bank, National Association of Lancaster, Pennsylvania to assume substantially all of the deposits and purchase substantially all of the assets of Republic Bank.

Republic Bank’s 32 branches in New Jersey, Pennsylvania and New York will reopen as branches of Fulton Bank on Saturday (for branches with normal Saturday hours) or on Monday during normal business hours. This evening and over the weekend, depositors of Republic Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on Republic Bank will continue to be processed and loan customers should continue to make their payments as usual.

Depositors of Republic Bank will become depositors of Fulton Bank so customers do not need to change their banking relationship in order to retain their deposit insurance coverage. Customers of Republic Bank should continue to use their existing branches until they receive notice from Fulton Bank that it has completed systems changes that will allow its branch offices to process their accounts as well.

Customers with questions about Fulton Bank’s acquisition of Republic Bank may call the FDIC toll-free at 1-877-467-0178. The FDIC’s Call Center will be open this evening until 9 p.m. Eastern Time (ET); on Saturday from 9:00 a.m. to 6:00 p.m. ET; on Sunday from noon to 6:00 p.m. ET; on Monday from 8:00 a.m. to 8:00 p.m. ET; and thereafter from 9:00 a.m. to 5:00 p.m. ET. Interested parties may also visit the FDIC’s website.

As of January 31, 2024, Republic Bank had approximately $6 billion in total assets and $4 billion in total deposits.  The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) related to the failure of Republic Bank will be $667 million. The FDIC determined that compared to other alternatives, Fulton Bank’s acquisition of Republic Bank is the least costly resolution for the DIF, an insurance fund created by Congress in 1933 and managed by the FDIC to protect the deposits at the nation’s banks.  Republic Bank is the first U.S. bank failure this year; the last failure was Citizens Bank, Sac City, Iowa on November 3, 2023.

https://content.govdelivery.com/accounts/USFDIC/bulletins/398f972

Quote

...
The bank attempted to raise $125 million in additional capital from investors last year — an effort that launched on the same day that Silicon Valley Bank failed — but the deal fell apart only months later.

A subsequent capital infusion came together last fall amid reports that the FDIC was seeking a buyer for the troubled bank. But that capital raise also ultimately fell apart.
...

https://www.americanbanker.com/news/republic-first-fails-fulton-bank-acquires-assets-branches

American Banker says the sale will result in a $667 million loss for the Deposit Insurance Fund.

[Nivek 16916]

Socialism!!!!!

[B00M 6413]

4 hours ago, Nivek said:

Socialism!!!!!

Huh?

Rapidly increasing interest rates put a lot of stress on banks. It feels like we’ve been lucky that the failures have been contained so far. For all I know bank failures will be what forces interest rates to reverse. 

[Nivek 16916]

1 hour ago, B00M said:

Huh?

Rapidly increasing interest rates put a lot of stress on banks. It feels like we’ve been lucky that the failures have been contained so far. For all I know bank failures will be what forces interest rates to reverse. 

I was having fun.   But seriously, if an organization is blindsided by zero interest rates going up then they should seriously consider exiting finance/investment banking and enter the world of making french fries.   Fucking morons.   Never considered that risk exposure?   

[bernorange 8359]

37 minutes ago, Nivek said:

...  Never considered that risk exposure?   

Or maybe that's the moral hazard that comes with FDIC/fedgov bailouts/bailins.  Privatized profits when risks pay off, socialized losses when they don't.

[Captainant 27619]

Lulz finally, a business case for Bitcoin!

https://www.nbcnews.com/business/business-news/cryptocurrency-pig-butchering-scam-wrecks-kansas-bank-sends-ex-ceo-pri-rcna167642

The former CEO of a small Kansas bank was sentenced to more than 24 years in prison for looting the bank of $47 million — which he sent to cryptocurrency wallets controlled by scammers who had duped him in a “pig butchering” scheme that appealed to his greed, federal prosecutors said.

The massive embezzlement by ex-CEO Shan Hanes in a series of wire transfers over just eight weeks last year led to the collapse and FDIC takeover of Heartland Tri-State Bank in Elkhart, one of only five U.S. banks that failed in 2023.

 

Hanes, 53, also swindled funds from a local church and investment club — and a daughter’s college savings account — to transfer money, purportedly to buy cryptocurrency as the scammers insisted they needed more funds to unlock the supposed returns on his investments, according to records from U.S. District Court in Wichita, Kansas.

But Hanes never realized any profit and lost all of the money he stole as a result of the scam.

Edited August 23 by Captainant

[Hefeweizen 5308]

2 minutes ago, Captainant said:

But Hanes never realized any profit and lost all of the money he stole as a result of the scam.

This is just too perfect.  Crypto idiot will crypto idiot.

[Doc Holliday 199]

On 11/27/2023 at 6:13 PM, Neonmoon said:

OMG the Fed is a scam? Should I buy gold or bitcoin? 

 

I'm all in on the Ameros, just saying.