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Even if they go to the Fed to borrow reserves at par of their USTs they don’t have the capital to support the increase in reserve assets they borrow from the Fed…iow if they are sitting there in compliance with SLR of 0.10 …. A-L=C…. Use the SVB reported numbers…. 200-180=20… (A-L)/A = 0.10 ….. ok everything is fine.. somebody comes in and tries to withdraw 20… they don’t have any reserves as RRR is 0%… they pledge UST assets at par to borrow 20 reserves from Fed… now 220-200=20 … (A-L)/A = 20/220 = 0.09 …. ie SLR drops below threshold due to the Fed transaction and they have to be shut down and everybody there gets wiped out with all the chaos… 🤔Andy Vermaut shares:U.S. Banks are sitting on .7 trillion in unrealized losses, research says. That's not a problem—until it is: "As long
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Even if they go to the Fed to borrow reserves at par of their USTs they don’t have the capital to support the increase in reserve assets they borrow from the Fed…iow if they are sitting there in compliance with SLR of 0.10 …. A-L=C…. Use the SVB reported numbers…. 200-180=20… (A-L)/A = 0.10 ….. ok everything is fine.. somebody comes in and tries to withdraw 20… they don’t have any reserves as RRR is 0%… they pledge UST assets at par to borrow 20 reserves from Fed… now 220-200=20 … (A-L)/A = 20/220 = 0.09 …. ie SLR drops below threshold due to the Fed transaction and they have to be shut down and everybody there gets wiped out with all the chaos… 🤔Even if they go to the Fed to borrow reserves at par of their USTs they don’t have the capital to support the increase in reserve assets they borrow from the Fed…iow if they are sitting there in compliance with SLR of 0.10 …. A-L=C…. Use the SVB reported numbers…. 200-180=20… (A-L)/A = 0.10 ….. ok everything is fine.. somebody comes in and tries to withdraw 20… they don’t have any reserves as RRR is 0%… they pledge UST assets at par to borrow 20 reserves from Fed… now 220-200=20 … (A-L)/A = 20/220 = 0.09 …. ie SLR drops below threshold due to the Fed transaction and they have to be shut down and everybody there gets wiped out with all the chaos… 🤔Andy Vermaut shares:U.S. Banks are sitting on .7 trillion in unrealized losses, research says. That's not a problem—until it is: "As long
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
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Andy Vermaut shares:U.S. Banks are sitting on $1.7 trillion in unrealized losses, research says. That's not a problem—until it is: "As long as people aren't all coming in at the same time and demanding that their deposits back, you're okay,… https://t.co/6ZAbd2rwnf Thank you. pic.twitter.com/EXv2JFDE4r
— Andy Vermaut (@AndyVermaut) March 23, 2023