Bank Run

[jpx2rk]

15 hours ago, btq96r said:

FDIC can borrow from the government, issue debt, and likely have money appropriated by Congress.  It's not easy to tap their cash reserves, but it became a conversation during the 2008 GFC.  That was one of the drivers behind the Fed and Treasury marrying the banks up making Too Big(ger) to Fail.  It saved the question of how far the FDIC could stretch from becoming an operational problem.

their borrowing limit is $100 billion from what a limited search found, which won't help much, if any, should one or more of the large banks fail.  The balance of the FDIC insurance fund at YE 2022 was $128 billion.  Simple math paints a bleak picture IMO.  The FDIC usually sells the failed bank to another bank but SVB apparently has way too much  in "toxic assets" and since the bank had NO asset liability/liquidity function for the past year, someone will have to cough very hard and pull the chain to flush.  Unless the FDIC has changed it's procedures about selling a failed bank where the acquiring bank can cherry pick the assets/liabilities they want to acquire and the related terms and has become a bit more hard nosed about it, something will hit the fan in the not too distant future.  

[analog_kidd]

So, if a bank I have DEPOSITS in goes under and the bank says, "sorry all your money is gone", what happens if I have a LOAN with that bank? Does that go away too and the house I have mortgaged is now mine free and clear?

[FUJIMO]

55 minutes ago, analog_kidd said:

So, if a bank I have DEPOSITS in goes under and the bank says, "sorry all your money is gone", what happens if I have a LOAN with that bank? Does that go away too and the house I have mortgaged is now mine free and clear?

Negative ghost rider. You still must pay your loan same as always with the possible added bonus of the confusion of who/where to pay. Traditionally some other bank or financial institution will assume your loan, mortage, etc. But IF that were to happen I'd hand deliver my payment until things got sorted out. No way would I trust the outbound bank to get the payment to the incoming bank.

[jpx2rk]

7 hours ago, analog_kidd said:

So, if a bank I have DEPOSITS in goes under and the bank says, "sorry all your money is gone", what happens if I have a LOAN with that bank? Does that go away too and the house I have mortgaged is now mine free and clear?

As long as you have your deposit accounts set up properly (see FDIC website for help) and under the max of $250K, yes all of your $$ will be there.  You may have to wait a day or so to have access due to the changeover, etc., but every penny will be there.

As for you loan(s), no the loan(s) will not just disappear.  You will/should continue to make the payments per the loan documents until another institution or the FDIC notifies you of where to make/mail your payments.

[A.J. Holst]

Great news, the Fed is only to raise rates .25 during this time of turmoil vs. the .50 - .75 they had planned.

 

[gregintenn]

10 hours ago, analog_kidd said:

So, if a bank I have DEPOSITS in goes under and the bank says, "sorry all your money is gone", what happens if I have a LOAN with that bank? Does that go away too and the house I have mortgaged is now mine free and clear?

You serious, Clark?

[btq96r]

Very commonly, we talk about if a homeowner is "underwater" with the value of their home against the mortgage they're in.  I think we're going to get more familiar with talking about the owner of that loan being underwater with the return on capital.

 

Quote

 

• Half of all mortgaged homes have first-lien interest rates at or below 3.5%, a full 3 percentage points below today’s market rate, while two-thirds are at 4% or lower

https://www.blackknightinc.com/black-knights-january-2023-mortgage-monitor/?

 

 

The banks and Fed have nobody to blame but themselves for this.  The ramifications from about a decade of free money orgy via ZIRP is long overdue.  It's going to be turbulent as we've seen over the last few weeks, but it's time to take the crap you can't avoid after a night out at the steakhouse.

[hipower]

On 3/16/2023 at 3:58 PM, Capbyrd said:

Guess I ain’t gonna make it.  

For once...I don't have a pithy, humorous comment. I am worried as heck!

If it all goes to hell in a handbasket, I think 50% or more of the population will explode and go absolutely stark raving mad within a month tops.

I/we, have a little ready cash on hand. Undecided if having a large(r) amount is really worthwhile. A 4-6 month supply of foodstuffs if electricity doesn't collapse. A bit less on canned and dry goods. The more I see, hear, and watch...I think we just might be in the top 10% even with this small amount.

[billmeek]

A staggering number of US households can't cover a $400 emergency expense.  I've seen polls that go from 30% to 67% can't.

It's always good to keep some cash on-hand for emergencies.  One piece of advise is to have smaller bills ($20's and smaller) available in your emergency funds.  There are a lot of places now that won't take a $50 or a $100.  if possible, I'd advise keeping enough cash to cover at least 3 months of your minimal living expenses.

 

[gregintenn]

1 hour ago, billmeek said:

A staggering number of US households can't cover a $400 emergency expense.  I've seen polls that go from 30% to 67% can't.

It's always good to keep some cash on-hand for emergencies.  One piece of advise is to have smaller bills ($20's and smaller) available in your emergency funds.  There are a lot of places now that won't take a $50 or a $100.  if possible, I'd advise keeping enough cash to cover at least 3 months of your minimal living expenses.

 

It used to be my gun/motorcycle trading stash, but any more, it’s just there in case we need it.