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@sma3, unclear how one drags SIPC into a bank rescue.
Banks are the domain of the Treasury, Fed, FDIC, OCC, States. These are all government agencies/entities.
SIPC that insures brokerages is an industry-owned nonprofit, although federally charte…
Yes, one could LOSE money by selling T-Bills/Notes or CDs before MATURITY. But Treasuries being very liquid, loss may be minor (rate dependent only), but for brokered CDs without much secondary market, the haircut may be big (like a buzz-cut?).
Bot…
Retail-prime SWVXX may have gates or redemption fees without much notice. That may be a problem for check writing and other essential payments. SNSXX is a government/Treasury money-market fund with much lower probability for that.
The SIPC coverage is for account securities up to $500K (stocks, bonds, T-Bills, brokered CDs, m-mkt funds, etc) that can include brokerage cash up to $250K.
It looks to me that the brokerage cash coverage would vary as it can be crowded out by se…
The rate on the BTFP 1-yr collateralized loans (for PAR value, NOT current value) is "1-yr overnight swap rate + 10 bps". The sweetener is not the rate, but that banks can get PAR value for their underwater securities, but after 1 year, those underw…
Additional "backing" comes from the Exchange Stabilization Fund (ESF) that has been used in past crisis and/or dollar-interventions.
One interesting aspect of the new BTFP facility seems that banks can use securities as collateral and get advances …
I have searched the web on any news related to Silvergate Bank that also failed and is liquidating. NOTHING.
The Fed/Treasury/FDIC announcement mentions only the SVB Bank and Signature Bank.
What I find odd is that KRE, the regional bank ETF simply didn't move lower on Thursday and Friday. They were leaking oil beginning Monday, down over 16% for the week. Someone knew what was happening before the press and the public became aware.
KRE…
Many were puzzled late last year when Silvergate tapped the FHLB for multibillion dollar liquidity loan, and not the Fed Discount Window. Of course, The FHLB was easier then. But there was a lot of questioning of the FHLB's action because it is supp…
Everybody now knows about the arcane HTM vs AFS accounting.
Blame SVB Bank failure on HTM (hold-to-maturity) accounting. HTM portfolio isn't marked -to-market and that is legally allowed.
AFS (available-for-sale) portfolio is marked-to-market.
No…
In 2022, 34 banks were required to undergo the Fed stress-tests (pg 13). All passed. Top Category I has 8 banks. https://www.federalreserve.gov/publications/files/2022-dfast-results-20220623.pdf
2023 stress-tests are in progress.
One unintended c…
I read on Twitter that SVB Financial also offered a money-market fund, and I thought OMG, this is going to be the next huge problem - if the m-mkt fund is tied up in bankruptcy.
BUT SVB used other m-mkt funds for its own m-mkt program, so people wh…
For a small fee, IntraFi (old ICS/CEDARS) would auto-split your $stash into multiple FDIC insured banks, or you can do this yourself.
https://www.intrafi.com/solutions/depositors/
Money that one cannot afford to lose should be in 3-mo T-Bills, money-market funds, money-market accounts (at banks). NOTHING else, period. Look at Buffett - he keeps billions in T-Bills.
If you are covered by an employer plan, then income limits apply for full or partial deductibility of T-IRA contributions. There are no income limits for nondeductible T-IRA contribution (and that is why Backdoor Roth work).
Higher income limits ap…
Well, SVB took in deposits that were way more than its business lending and investing activities. It then parked that excess money into low-rate Treasuries.
It didn't have to do that. It could have stopped taking the deposits by offering very unatt…
@Old_Joe, imagine that YOU are deep pocket investor called for the rescue. Say, the SVB/FDIC want to unload $10 billion in 2% coupon 10-yr T-Notes. You will own this lousy-rate portfolio that will return you 2% guaranteed in 10 years, not before. So…
As I posted in the "SVB Thread", Schwab is the 8th largest US bank holding company. It is subjected to annual Fed stress-tests. Obviously, the brokerage side has SIPC (& additional) coverage, while the banking side has FDIC coverage.
As for th…
I do have linked Schwab Bank account with my Schwab Brokerage account. I don't know too much specifically about the Schwab Bank, but Charles Schwab is #8 bank holding company (it is also included in annual Fed stress tests). Schwab Bank is also an …
Bond volatility MOVE is fine. My complaints are that it is Treasury blend and I would prefer clean MOVE-10 (for 10-yr Treasuries), etc; and that it is not widely available (so at Yahoo Finance, but not at StockCharts). I include it in my weekly Barr…
Several tweeters at Twitter are noting that closing a bank during the market hours is a rare emergency. Typically, it is done Friday afternoon AFTER the market close to reopen on Monday.
Typical FDIC intervention - close the bank on Friday, reopen on Monday under new ownership.
Many confuse similar rescue for brokers (by SIPC) and insurance & annuity companies (by state regulators) - but those may take months or years to workou…
SVB Financial/SIVB had a masterfully BAD timing. Several of its filings at Edgar/SEC showed up yesterday (see the link below) - a huge AFS* portfolio for sale, a large capital raise by issuing stock, preferreds, etc, on the day after the shutdown an…
If the idea is to keep up with inflation (CPI), shorter-term (=< 5 yrs) TIPS held to maturity would do that approximately. Then, roll them over and over. Make a ladder. Chart below shows CPI vs 2 common TIPS funds, ST and IT/LT; default timeframe…
@msf comments made me look at other sources for the 72T-SEPP modification. Ed Slott's IRA Help has a slightly different take on it. It says that previously, the entire IRA under 72T-SEPP had to be rolled over (say, to a different IRA provider/sponso…
BTW, fed fund rate is the overnight rate for banks to borrow from each other. Discount rate is the rate at which troubled banks may borrow from the Fed Discount Window (looks like it was shut for crypto-friendly Silvergate/SI that is shutting down a…
@msf, I have put that text under quotes now (it was implied before). It is from the M* article by Denise Appleby (@ApplebyIRA at Twitter, LINK). I acknowledged on Twitter that her's was the first time that I saw this about 72T. It wasn't in any of t…
@bee, excellent points.
I have been tracking implications of the new Secure 2.0 for individuals and there are several. This about 72T came to my attention only recently.
The Rule of 55 is also good but, as you noted, it doesn't apply to old 401k/…
I am not sure that it was a big loss as far as dividend MAPIX is concerned. As its lead manager, he was responsible for its recent shift from dividend to growth. Now that he is gone, the team there may go back to the original dividend focus. After a…
@catch22, 360 CD deal looks OK to me (5% for 11-mo CD) - as can you see from the rate schedule, it is a promotional offer as the rate for 11-mo sticks out. I also looked at "Read Disclosures" at the bottom, and didn't see any catch. It may be hoping…
There are several ex-China ETFs - EMXC, KEMX, MEMX.
Mark Mobius story was all over Twitter over the weekend. Since then, there have been some denials of any new changes by the HSBC and Chinese state agencies. It is clear that something ticked off M…
This is my summary of the Cover Story; I didn't see it as an ESG story and searches on "ESG" and "sustain" produced zero results. It is a story on how technology has changed farming.
COVER STORY (ECONOMY) “The Boom Time for FARMERS Can Last. Who Wi…
VIX is a way to assess the short-term volatility of SP500. It is imperfect because its current and real-time measurements differ from the historically realized volatilities. VIX cannot be traded directly, but only through VIX futures. There are seve…
I don't know how much money the US Hindenburg Research could make on its short positions on Adani Group. Shorting is severely restricted in India. So, Hindenburg was only speculating with derivatives and some Adani-bonds ( < $10 billion outstandi…
