The Institutional Risk Analyst

What can SYF tell us about the bleeding edge of unsecured consumer credit?

If it’s artificial, then it’s not intelligent.

How much of book value do banks lose as the Fed adjusts interest rates to fight inflation?

If we assume that asset returns will continue to rise, but that bank funding costs will rise 5x asset returns, then US banks have a problem

If you believe that the Fed is going to keep interest rates at or above current levels through to 2024, then we have a problem....

Persistent talk about a 5.5% 30-year mortgage rate later this year is badly wrong as TBAs flip from 5.5% to 6% coupons for delivery in June

To survive long-term, both WAL and PACW need to get that beta back down below 2 and closer to 1, but the hawks on the FOMC may not cooperate

We think that further Fed tightening, plus sales of MBS from FDIC and banks generally, may force mortgage rates higher into the 7% range

The Fed's 5.5% increase in short-term interest rates has thrown the pricing for trillions of dollars in real estate into disarray.

The price volatility injected into markets by the Fed is a primary reason why the FDIC cannot easily find buyers for smaller banks.

When interest rates eventually fall those late vintage mortgage loans with 6% coupons will evaporate like spring snow in the sunshine

Q: What happens to net-interest margin for banks when the rate of change in funding costs doubles or more in a single quarter?

Imagine how President Joe Biden will react if Chair Powell needs to announce formal limits on access to US bank deposits.

Until Chairman Powell comes clean with the Congress and the American people, more banks will inevitably fail.

Both PFSI and COOP are navigating the current market well, but we have questions about where the former is headed.

The Treasury and Fed cannot admit fault for fear of bringing the whole house of cards crashing down.

Banks that do not aggressively reprice liabilities and assets as OZK did in Q1 2023 may be left behind.

The funding crisis affecting US banks is not over and very definitely not limited to smaller banks.

The issue is not whether your bank is getting smaller, but whether credit expenses are being managed as funding costs inevitably rise.

Given that the US Treasury is paying 4% for 90-day T-bills, you can see how far banks have to go to become competitive on rates