Jimi Posted March 10 Report Share Posted March 10 6 minutes ago, DrStool said: It's not a perfect hedge. Most of these were purchased with repo. There's high leverage. There are definitely losses. The question is, how big. Some banks are probably well positioned, but if even a few are not, it's a problem. [Note: intentional understatement] I’m not convinced of the accuracy of the original claim. If you create in essence synthetic sale on assets sequestered as “held-to-maturity” on the balance sheet (through hedging operations), then aren’t those assets de facto “available for sale”? Doing so also provides an implicit - if not, explicit - “mark” on the market for those assets. I believe banks have to keep HTM assets of a kind unsold, to avoid marking the balance of the portfolio. but I’m not sure. 1 Link to comment Share on other sites More sharing options...
potatohead Posted March 10 Report Share Posted March 10 1 minute ago, Jimi said: I’m not convinced of the accuracy of the original claim. If you create in essence synthetic sale on assets sequestered as “held-to-maturity” on the balance sheet (through hedging operations), then aren’t those assets de facto “available for sale”? Doing so also provides an implicit - if not, explicit - “mark” on the market for those assets. I believe banks have to keep HTM assets of a kind unsold, to avoid marking the balance of the portfolio. but I’m not sure. maybe the treasuries H-T-M are not marked but the hedges are....interest rates rise and underlying value drops but hedges rise .....therefore Banks win both ways...... Link to comment Share on other sites More sharing options...
potatohead Posted March 10 Report Share Posted March 10 FDIC: SVB BANK IS THIS YEAR'S FIRST INSURED INSTITUTION TO FAIL. 1 Link to comment Share on other sites More sharing options...
Jimi Posted March 10 Report Share Posted March 10 2 minutes ago, WTF said: The losses don't magically disappear, they are real somewhere. Just like in 2008 it's all about counterparty risk. Can the entity on the other side of the trade actually make good on the deal? You can make a lot of money for a while taking the other side of a trade you are never going to pay off on. AIG ring a bell? Great point. Who the devil is of sufficiently large size to write the hedge for BofA’s HTM portfolio? JPM? So… let’s circle-jerk pretend zero losses on HTM, by JPM & BOA somehow writing hedges for one another? Still think the original claim is unreliable. 2 Link to comment Share on other sites More sharing options...
DrStool Posted March 10 Author Report Share Posted March 10 A failed bottom here and yesterday will look like a Sunday School picnic. Link to comment Share on other sites More sharing options...
Jimi Posted March 10 Report Share Posted March 10 5 minutes ago, potatohead said: FDIC: SVB BANK IS THIS YEAR'S FIRST INSURED INSTITUTION TO FAIL. CNBC & Bloomberg: Uninsured depositors may recoup as receiver orderly disposes. Going to be a mess: do rich individuals who held in excess of SIPC insurance get first claim, or do uninsured commercial accounts? Each gets some pro rata cut? Link to comment Share on other sites More sharing options...
itiswhatitis Posted March 10 Report Share Posted March 10 we are fucked. 2 Link to comment Share on other sites More sharing options...
itiswhatitis Posted March 10 Report Share Posted March 10 Just now, itiswhatitis said: we are fucked. I recall something about Bear Stearns being fine and strong. Link to comment Share on other sites More sharing options...
WTF Posted March 10 Report Share Posted March 10 JPMorgan, of course, Cramer would love them... Used bogus orders to manipulate gold prices. U.S. says the precious metals desk at JPMorgan was a racketeering operation for 8 years. JPMorgan and Deutsche Bank named in Money Laundering Report. Since 2000 have paid $36,129,286,132 in penalties on 223 records. Link to comment Share on other sites More sharing options...
fxfox Posted March 10 Report Share Posted March 10 Jamie Dimon and Epstein, ou la la… Link to comment Share on other sites More sharing options...
SiP Posted March 10 Report Share Posted March 10 https://www.fdic.gov/news/press-releases/2023/pr23016.html 1 Link to comment Share on other sites More sharing options...
SiP Posted March 10 Report Share Posted March 10 All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors. Link to comment Share on other sites More sharing options...
Jimi Posted March 10 Report Share Posted March 10 Quote The notion of hedging the interest rate risk in a security classified as held to maturity is inconsistent with the held-to-maturity classification under ASC 320, which requires the reporting entity to hold the security until maturity regardless of changes in market interest rates. For this reason, ASC 815-20-25-43(c)(2) indicates that interest rate risk may not be the hedged risk in a fair value hedge of held-to-maturity debt securities. However, hedging credit risk is permitted. It is not viewed as inconsistent with the held-to-maturity assertion since ASC 320 permits sales or transfers of a held-to-maturity security in response to significant deterioration in credit quality of the security. In addition, hedging foreign exchange risk or the fair value of embedded prepayment options in held-to-maturity securities is permitted, as discussed in DH 6.4.3.1. https://viewpoint.pwc.com/dt/us/en/pwc/accounting_guides/derivatives_and_hedg/derivatives_and_hedg_US/chapter_6_hedges_of__US/64_hedging_fixedrate_US.html 1 Link to comment Share on other sites More sharing options...
Jimi Posted March 10 Report Share Posted March 10 By the way, Happy Anniversary to the dot-com bubble top, for all who celebrate. 2 Link to comment Share on other sites More sharing options...
Jimi Posted March 10 Report Share Posted March 10 2 minutes ago, SiP said: All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors. "...may be made" doing some heavy lifting here. 1 Link to comment Share on other sites More sharing options...
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