Regardless of countless guarantees from Washington DC that there would by no means be one other financial institution bailout, the Biden Administration bailed out Silicon Valley Financial institution (SVB) by eradicating the $250,000 cap on deposit insurance coverage. Then Treasury Secretary Janet Yellen added that sooner or later, solely banks that posed SYSTEMIC RISK to the economic system will probably be bailed out. Translation: solely the massive 4 Too Huge To Fail (TBTF) banks will probably be bailed out. That means that the Biden Administration prefers large banks to neighborhood banks. “Center-class Joe” loves BIG Pharma, BIG protection, BIG tech, BIG media and now BIG banks. He ought to rename himself “Huge Joe” Biden for the 2024 Presidential election.
In fact, we’re conscious of The Fed’s about face on shrinking their stability sheet (inexperienced line). Whereas Bankrate’s 30-year mortgage charge has now declined under 7% to six.97%, it has solely fallen -15 foundation factors because the current peak of seven.12% on 3/2/2023 when the 10-year Treasury yield was 4.056%. So, the 10-year Treasury yield has fallen -62.7 foundation factors since 3/2/2023 whereas the 30-year mortgage charge dropped solely -15 foundation factors.
On the European banking entrance, Credit score Suisse is kaput and each Swiss Financial institution and Deutsche Financial institution are contemplating shopping for the belongings of Credit score Suisse. In different phrases, MORE financial institution consolidation.
Here’s a chart of US financial institution consideration as of 2009 with 37 banks in 1990 shriveling to 4 mega, TBTF banks in 2009 that stay immediately. However will the now unprotected neighborhood and native banks be absorbed into the 4 superbanks? Time will inform, but when historical past is repeated, the reply is sure.
The KBW financial institution index continued to fall regardless of the bailouts of SVB and Signature Banks. However at the very least complete returns on Treasuries and MBS that banks maintain elevated with the return of QE!
Yellen and Biden compete for the Knucklehead Of The Century Award. Whereas not as sloppy because the sudden Afghanistan withdrawal, bailing out the Silicon Valley elites is not going to finish nicely.