One Political Plaza - Home of politics
Home Active Topics Newest Pictures Search Login Register
Main
Banking Risks - "Uninsured Deposits" & "High Level Of Hold To Maturity Securities"
Mar 16, 2023 10:15:59   #
ACP45 Loc: Rhode Island
 
Let's take a look at two factors that the two recent bank failures had in common - a high percentage of uninsured deposits, combined with a high level of Hold to Maturity Securities portfolio.

"Silicon Valley Bank and Signature Bank had some of the highest proportions of estimated uninsured domestic deposits across the entire industry," said S&P Global Market Intelligence's David Hayes in a report. ...

Silicon Valley Bank ranked second among banks with more than $50 billion in assets, with 93.9% of its total domestic deposits being uninsured, while Signature Bank ranked fourth, according to S&P Global Market Intelligence data as of year-end 2022," Hayes wrote.

Bank deposits in excess of $250,000 are much more volatile due to the fact that they are uninsured by the FDIC, and depositors are much more inclined to remove those deposits at the first sign of trouble. A large withdrawal of funds in a short period of time creates a liquidity problem.

Uninsured Deposits Are Only Half The Story

The high level of uninsured deposits is only half of the risk Silicon Valley Bank faced. The other factor was the bank's high level of securities being held all the way to maturity compared with total deposits. This reliance on long-term investments made it difficult for Silicon Valley Bank to sell securities and raise capital fast enough (without in-curing a portfolio loss) to meet the swelling withdrawals from depositors.

"When compared to Silicon Valley Bank and Signature Bank, the trio (of Bank of New York Mellon, State Street and Northern Trust) had much lower ratios of total loans plus held-to-maturity, or HTM, securities to total deposits," Hayes said.

For instance, Bank of New York Mellon's loans and hold-to-maturity securities are only 31.2% of total deposits. And that percentage is only 40.1% and 54.5% at State Street and Northern Trust, respectively. Compare that with the nosebleed levels of 94.4% and 93.3% at Silicon Valley Bank and Signature Bank, respectively.

MY COMMENT: These two very significant factors were apparently not f**gged by Audit giant KPMG who two weeks prior, gave the bank a clean bill of health.


https://finance.yahoo.com/m/426f90e9-4b8a-3275-9bec-4a9b0bc51279/report-10-banks-are-most.html

https://www.zerohedge.com/markets/top-audit-firm-defends-giving-clean-bill-health-svb-signature-bank-weeks-failure

Reply
Mar 16, 2023 10:32:22   #
Bruce123
 
ACP45 wrote:
Let's take a look at two factors that the two recent bank failures had in common - a high percentage of uninsured deposits, combined with a high level of Hold to Maturity Securities portfolio.

"Silicon Valley Bank and Signature Bank had some of the highest proportions of estimated uninsured domestic deposits across the entire industry," said S&P Global Market Intelligence's David Hayes in a report. ...

Silicon Valley Bank ranked second among banks with more than $50 billion in assets, with 93.9% of its total domestic deposits being uninsured, while Signature Bank ranked fourth, according to S&P Global Market Intelligence data as of year-end 2022," Hayes wrote.

Bank deposits in excess of $250,000 are much more volatile due to the fact that they are uninsured by the FDIC, and depositors are much more inclined to remove those deposits at the first sign of trouble. A large withdrawal of funds in a short period of time creates a liquidity problem.

Uninsured Deposits Are Only Half The Story

The high level of uninsured deposits is only half of the risk Silicon Valley Bank faced. The other factor was the bank's high level of securities being held all the way to maturity compared with total deposits. This reliance on long-term investments made it difficult for Silicon Valley Bank to sell securities and raise capital fast enough (without in-curing a portfolio loss) to meet the swelling withdrawals from depositors.

"When compared to Silicon Valley Bank and Signature Bank, the trio (of Bank of New York Mellon, State Street and Northern Trust) had much lower ratios of total loans plus held-to-maturity, or HTM, securities to total deposits," Hayes said.

For instance, Bank of New York Mellon's loans and hold-to-maturity securities are only 31.2% of total deposits. And that percentage is only 40.1% and 54.5% at State Street and Northern Trust, respectively. Compare that with the nosebleed levels of 94.4% and 93.3% at Silicon Valley Bank and Signature Bank, respectively.

MY COMMENT: These two very significant factors were apparently not f**gged by Audit giant KPMG who two weeks prior, gave the bank a clean bill of health.


https://finance.yahoo.com/m/426f90e9-4b8a-3275-9bec-4a9b0bc51279/report-10-banks-are-most.html

https://www.zerohedge.com/markets/top-audit-firm-defends-giving-clean-bill-health-svb-signature-bank-weeks-failure
Let's take a look at two factors that the two rece... (show quote)


The whole banking system is corrupt to to core. The money printing has come home to roost.
There really is no way out of this mess.
The math don't work anymore.

Reply
Mar 16, 2023 11:16:46   #
MatthewlovesAyn Loc: Ohio
 
ACP45 wrote:
Let's take a look at two factors that the two recent bank failures had in common - a high percentage of uninsured deposits, combined with a high level of Hold to Maturity Securities portfolio.

"Silicon Valley Bank and Signature Bank had some of the highest proportions of estimated uninsured domestic deposits across the entire industry," said S&P Global Market Intelligence's David Hayes in a report. ...

Silicon Valley Bank ranked second among banks with more than $50 billion in assets, with 93.9% of its total domestic deposits being uninsured, while Signature Bank ranked fourth, according to S&P Global Market Intelligence data as of year-end 2022," Hayes wrote.

Bank deposits in excess of $250,000 are much more volatile due to the fact that they are uninsured by the FDIC, and depositors are much more inclined to remove those deposits at the first sign of trouble. A large withdrawal of funds in a short period of time creates a liquidity problem.

Uninsured Deposits Are Only Half The Story

The high level of uninsured deposits is only half of the risk Silicon Valley Bank faced. The other factor was the bank's high level of securities being held all the way to maturity compared with total deposits. This reliance on long-term investments made it difficult for Silicon Valley Bank to sell securities and raise capital fast enough (without in-curing a portfolio loss) to meet the swelling withdrawals from depositors.

"When compared to Silicon Valley Bank and Signature Bank, the trio (of Bank of New York Mellon, State Street and Northern Trust) had much lower ratios of total loans plus held-to-maturity, or HTM, securities to total deposits," Hayes said.

For instance, Bank of New York Mellon's loans and hold-to-maturity securities are only 31.2% of total deposits. And that percentage is only 40.1% and 54.5% at State Street and Northern Trust, respectively. Compare that with the nosebleed levels of 94.4% and 93.3% at Silicon Valley Bank and Signature Bank, respectively.

MY COMMENT: These two very significant factors were apparently not f**gged by Audit giant KPMG who two weeks prior, gave the bank a clean bill of health.


https://finance.yahoo.com/m/426f90e9-4b8a-3275-9bec-4a9b0bc51279/report-10-banks-are-most.html

https://www.zerohedge.com/markets/top-audit-firm-defends-giving-clean-bill-health-svb-signature-bank-weeks-failure
Let's take a look at two factors that the two rece... (show quote)


It is sickening that once again the government is stepping in to bail out depositors that knew FULL WELL their deposits were only insured to a quarter million. These aren't stupid people. They're people with liquidity OVER $250,000.

This same thing happened in 1920 (not 1929) when the stock market crashed over 50%. Almost twice as much as '29. Here's what new president Harding did: nothing. He let the bad debt go away instead of having the government bail it out. This led to the roaring 20's. For his trouble (he was wildly popular before his death [murder?]) he was framed for a scandal he may not have created, much the same as Trump is demonized today.

Contrast that with 1929, 1976, and 2008 when government's interference led to long term malaise. The war got us out of the great depression, Paul Volcker and Ron Reagan got us out of the second and Trump the third.

Harding has been ignored by history for his troubles, Reagan is still the philosophical whipping boy of the left, and we all know what they continue to do to Donald on both sides of the aisle. Meanwhile, FDR is hailed as the greatest president, Carter is excused as a "good man" out of his depth and the feckless Obama is seen as a game changer, incapable of being criticized by virtue of the color of his skin. One thing that never seems to be brought up is: Obama is also half white.

Reply
 
 
Mar 16, 2023 12:21:49   #
ACP45 Loc: Rhode Island
 
MatthewlovesAyn wrote:
It is sickening that once again the government is stepping in to bail out depositors that knew FULL WELL their deposits were only insured to a quarter million. These aren't stupid people. They're people with liquidity OVER $250,000.

This same thing happened in 1920 (not 1929) when the stock market crashed over 50%. Almost twice as much as '29. Here's what new president Harding did: nothing. He let the bad debt go away instead of having the government bail it out. This led to the roaring 20's. For his trouble (he was wildly popular before his death [murder?]) he was framed for a scandal he may not have created, much the same as Trump is demonized today.

Contrast that with 1929, 1976, and 2008 when government's interference led to long term malaise. The war got us out of the great depression, Paul Volcker and Ron Reagan got us out of the second and Trump the third.

Harding has been ignored by history for his troubles, Reagan is still the philosophical whipping boy of the left, and we all know what they continue to do to Donald on both sides of the aisle. Meanwhile, FDR is hailed as the greatest president, Carter is excused as a "good man" out of his depth and the feckless Obama is seen as a game changer, incapable of being criticized by virtue of the color of his skin. One thing that never seems to be brought up is: Obama is also half white.
It is sickening that once again the government is ... (show quote)


Keep in mind that there are a lot of businesses that need to cover payroll and A/P, and that $250,000 just isn't going to cut it. Large companies with a lot of employees mean large account balances.

Reply
If you want to reply, then register here. Registration is free and your account is created instantly, so you can post right away.
Main
OnePoliticalPlaza.com - Forum
Copyright 2012-2024 IDF International Technologies, Inc.