All in Economics
The deposit insurer estimates the Deposit Insurance Fund will lose $54.2 million by having Dream First Bank, National Association, of Syracuse, Kansas assume all the deposits and enter into a commercial shared-loss agreement with the FDIC on the loans it purchased of the former Heartland Tri-State Bank.
it’s plausible that pickleball medical costs are driving 5-10 percent of the unexpected medical cost trend this year.”
“There were $152 million in nationwide sales for Saturday’s $829 million jackpot—a 25% decline from the $197 million in sales for another $825 million Powerball drawing on Oct. 29, 2022, according to Lottoreport.com, which tracks sales.”
Higher rates have already taken a toll on real estate investors and now hoteliers. Bloomberg reports “Ashford Hospitality Trust Inc. expects to return 19 hotels to lenders in cities including Las Vegas and Atlanta.” Hotels brands expected to be returned include Residence Inn, SpringHill Suites, and Marriott.
“This is the first inning. They [banks] are selling the assets that are their highest-quality assets and that are short-duration and floating rate.” Some quick math on the $2 billion sale looks to be a 3% hit to PacWest on their best loans.
What she knows is as the world has gone from paper to digits “bank runs clearly are speeding up. And the impact of that is it's revealing that the traditional banking system-- it's always been fundamentally unstable. But it's even more unstable than folks had realized. And banks in general, as a result of the fact that the liabilities can be withdrawn a lot faster, are going to need to hold more cash.”
The FDIC can decide what deposits live and which ones die. For now, the deposit insurer has told SVB’s Cayman depositors they can file unsecured claims in the bankruptcy by July 10. The receiver (FDIC) has up to 180 days to determine whether to allow the claims, according to a notice sent by one of SVB’s customers to its investors.
Banks can’t raise equity at this point given low valuations and tepid investor demand, so they must reduce their loan books and “find places to pull back on existing loans and future loan commitments.”
While we’ve all moved on from COVID, the government’s COVID largesse has a long tail. Kaplan’s been talking to mayors from around the country and they tell him “American Rescue Act (ARPA) money must be spent by states and municipalities between now and the end of 2024 or it’s lost.
It would take a Swifty to know Swifties and their individual demand curves.
A rose-colored glasses wearing Jamie Dimon said on May 11th as paraphrased by CNBC, “Regional banks are “quite strong” and will have good financial results, but managers are worried because of the bank runs that have taken down three firms, he said.”
Depositors are not listening to Mr. Dimon and neither are regional bank shareholders.
That last boldfaced item is “$50 loan from the FDIC.” The deposit insurer doesn’t have that kind of money. The FDIC borrowed it from the Fed (which doesn’t have it either but can conjure it up out of thin air) to lend to JP Morgan Chase. JPM then paid off the $30 billion it and the other 10 big banks placed on deposit as First Republic was circling the drain.
As Snider points out, “There is so much hubris attached to [CLOs] because they are basically made to be quantified by mathematical models.” So, the Fed can lower rates but that won’t save real estate. Real estate will continue to crash and THAT will bring down rates.
Yes, the taxpayers will be the unwitting holders of First Republic’s bad assets, while one of the FDIC’s favored bidders gets the good stuff at a discount. Jamie Dimon’s J.P. Morgan already has ten percent of the nation’s deposits making that bank ineligible to pick up First Republic but don’t be surprised if Jamie receives a “special government waiver” if he submits the winning bid.
“No. I think EV is going to be something you're going to go to a museum with my kids and be like, wow, that was an evolutionary dead.”
If you watched the Fed Chair Jerome Powell testify before the senate and the house early last week you heard over and over that banks are well capitalized. The non-sequitur inspiring the Shakespearean quote “Methinks you protest too much.”
Individual investors are fighting the Fed trading options that expire the same day they begin trading. “This week, volume for contracts that expire on the same day they’re traded hit a record 50% share of all the options transactions on the S&P 500, data from CBOE and Nomura show.”
CoStar News reports, “The loan defaults are another sign of struggle for office real estate owners in the nation's second-largest city as remote working policies enacted in the pandemic hamper demand. National office real estate demand has been curtailed since 2020, with vacancy at 12.8%, its highest since the Great Recession, according to CoStar data.”
Tech and other corporate layoffs are announced everyday, but closer to your local courthouse, law firms are feeling the pinch.
Many banks bought mortgage-backed securities during the zero-rate days to “juice income,” but now, on a mark-to-market basis those MBS are trading for a fraction of purchase prices, creating losses of 50 to 60 percent of capital. “Regulators are not pleased.”
