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Stock Market is ROCKING
- Thread starter Pepi
- Start date
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Do you really believe that “Our banks operate almost entirely on a self-centered capitalist agenda. They are, for the most part, completely independent entities. They must follow government regulations but are otherwise free to operate as they wish.”?
They are far from free. Maybe it should have been purple to denote sarcasm…
I did acknowledge that there ARE rules and regulations. I do NOT dispute that. There were rules in the Code of Hammurabi. There were rules in Ancient Persian, Greece, Rome. The Hittites had rules regarding money lending and protecting assets dating back 3,700 years ago. See the Code of Nesilim dating back to 1,670 BC. If you're implying that banks have at sometime been "purely free" of regulation which of us is not living in the real world?
So long as there has been money lenders, debtors, and places to store money the government has had laws.
OUR banks are free from being legally forced to do something. In Europe most of the governments directly own a portion of their banks can and do compel them to make loans that American banks would balk at. Not so here. It is my understanding that in China the government basically runs the whole show, so they are most definitely not free.
Here are banks are owned by stockholders, run by elected boards, and generally serve their own financial interests while providing a service to the community. Very few other governments around the world allow such autonomy. To whom, exactly, are you comparing our banks with as not "being free?" I suggest there is no system more free than ours. Prove me wrong. Please! I would love to learn more.
Regards,
Doug
Bank of America looks to be in trouble.
Down more than 20.28%
They have problems other than US Treasury holdings. AT-1 bonds. They had billions in them last December(202 billion according to an EU report in December). Given no one thought they were at risk they likely still had them during the UBS deal. They also have a very large commercial realestate problem,with many loans currently failing(late,flat defaults,and no buyers of commercial spaces they actually own,even poor lease performances). Expect full blown media support though,as they are ESG,LGBTQ+, and CRT approved.
about.bankofamerica.com
about.bankofamerica.com
www.foxbusiness.com
BoFA stock was falling before SVB's failure...pretty steadily since the 7th. It is the second largest US bank. I doubt they would let it fail,even if they needed to pump 1 trillion into it to keep it alive,but who knows.
HSBC had loads of them(At-1) as well.
www.bloomberg.com
https://www.barrons.com/articles/bank-of-america-stock-price-bond-losses-5a203a66 (this article is about US Treasury bonds).
Who know what will happen though. Back room deals are certainly being done(JPMorgan and First Republic for example).
The ECB and Bank of England are doing everything they can at this point to calm AT-1 markets, going as far as claiming the Swiss government was wrong. The Swiss are already being sued by AT-1 bond holders(including companies like Pimco). It has not worked so far judging by yesterday and Asian trading this morning. Some are still buying them,but rates are all over the place. Some AT-1 bank bonds have jumped from 8% to 19% in two days(Deutsche bank).
www.reuters.com
uk.finance.yahoo.com
I am not sure that will have the effect they intended.
Down more than 20.28%
They have problems other than US Treasury holdings. AT-1 bonds. They had billions in them last December(202 billion according to an EU report in December). Given no one thought they were at risk they likely still had them during the UBS deal. They also have a very large commercial realestate problem,with many loans currently failing(late,flat defaults,and no buyers of commercial spaces they actually own,even poor lease performances). Expect full blown media support though,as they are ESG,LGBTQ+, and CRT approved.
ESG Reports - Bank of America
We provide environmental, social and governance (ESG) reports because of our commitment to transparency. View reports to understand how we manage ESG issues.
Bank of America Stands for LGBTQ+ Equality in the Workplace
We support our LGBTQ+ colleagues and families to help them thrive at work and at home. Learn more about how Bank of America is committed to building a more inclusive world for everyone.
Bank of America, Lowe's sponsored CRT training urging Whites to 'cede power to people of color'
Bank of America, Lowe's, Truist Financial, and more sponsored a United Way critical race theory challenge claiming that America is institutionally racist and urging people to get "woke at work" and "cede power to people of color."
BoFA stock was falling before SVB's failure...pretty steadily since the 7th. It is the second largest US bank. I doubt they would let it fail,even if they needed to pump 1 trillion into it to keep it alive,but who knows.
HSBC had loads of them(At-1) as well.
HSBC Slumps in Hong Kong as AT1 Debt Selloff Weighs on Banks
Shares of European banks traded in Asia tumbled Monday, as investors weighed a collapse in the value of additional tier 1 bonds issued by lenders following the terms of the Credit Suisse Group AG’s rescue.
www.bloomberg.com
https://www.barrons.com/articles/bank-of-america-stock-price-bond-losses-5a203a66 (this article is about US Treasury bonds).
Who know what will happen though. Back room deals are certainly being done(JPMorgan and First Republic for example).
The ECB and Bank of England are doing everything they can at this point to calm AT-1 markets, going as far as claiming the Swiss government was wrong. The Swiss are already being sued by AT-1 bond holders(including companies like Pimco). It has not worked so far judging by yesterday and Asian trading this morning. Some are still buying them,but rates are all over the place. Some AT-1 bank bonds have jumped from 8% to 19% in two days(Deutsche bank).
European bank supervisors step in to stem rout in bonds
European supervisors tried to stop a rout in the market for convertible bank bonds on Monday, saying owners of this type of debt would only suffer losses after shareholders have been wiped out - unlike what happened at Credit Suisse .
Bank of England says shares should be wiped out ahead of bonds
The Bank of England joined other European regulators on Monday in saying that shareholders of failed banks should bear losses ahead of holders of Additional Tier 1 bonds after the structure of Credit Suisse's rescue in Switzerland angered bondholders. Some 16 billion Swiss francs ($17.24...
I am not sure that will have the effect they intended.
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Quick little primer for us mere mortals trying to follow along (maybe it's just me).
WHAT IS AN AT1 BOND?
AT1 bonds - a $275 billion sector also known as "contingent convertibles" or "CoCo" bonds - act as shock absorbers if a bank's capital levels fall below a certain threshold. They can be converted into equity or written off.They make up part of the capital cushion that regulators require banks to hold to provide support in times of market turmoil.
They are the riskiest type of bond a bank can issue and so carry a higher coupon.
If AT1s are converted into equity, this supports a bank's balance sheet and helps it to stay afloat. They also pave the way for a "bail-in", or a way for banks to transfer risks to investors and away from taxpayers if they get into trouble.
WHAT HAPPENED TO CREDIT SUISSE AT1S?
AT1s rank higher than shares in the capital structure of a bank. If a bank runs into trouble, bondholders will rank above shareholders in terms of getting their money back.In Switzerland, the bonds' terms state, however, that in a restructuring, the financial watchdog is under no obligation to adhere to the traditional capital structure, which is how bondholders lost out in the Credit Suisse situation.
-Reuters
ETA I assume AT1's or CoCo's would really only be in the portfolio of an aggressive investor, not your average retirement portfolio?
Just not so. A big part of the sub-prime loan mess was government forcing banks to make risky loans to the governments preferred people. This was forced by the uniparty, dems could say they got their voters homes and republicans got their money backers profits with a government backstop if it failed.
Did they force them too, or did they negotiate them to the position, with all their poor-judgment leadership in place?
If by force you mean is there a specific law that says make bad loans, there is not that I know of. If by negotiate you mean regs with penalties combined with carrots on the other side, yes, I call that force. My banker friends call that force. And when the leftists told the dems they wanted it they too called it force…
So “no laws” vs “laws”, which is what L01 was pointing out upthread, the difference between us and them.
It’s a fine line, no doubt, and I’m sure it feels like force.
We are just debating semantics. As a farmer you should know just how much the government forces its edicts.
Just so I understand, you position is the 2008 subprime crisis was caused/driven by over-regulation?
It was a big part, the other part is the big money banks knew they could make the profits from the sub-prime loans and the government would back stop the losses just as they did.
Do you believe it was something else?
I just wanted to see it actually written.
And this is the fast track path to hyperinflation. The thing that probably scares me more than anything else.
Sadly, I don't believe that most of those currently in our government either elected or the professional bureaucrat class realize that there are essentially no Nations whose governments have survived a hyperinflationary event intact. All too often what comes after is some of the darkest corners of humanities treatment of other humans.
"Like Several Rate Hikes In One Day": Yields On AT1 Debt Double Overnight After Shock Credit Suisse Wipeout | ZeroHedge
ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com
