The Institutional Risk Analyst

The good news is that Webster is not a bad bank and SAN is not overpaying, although the low level of capital and reserves may represent be a significant expense for SAN in the near term. We kind of liked the fact that SAN’s management team had avoided another bank acquisition and instead focused on consumer finance...

Even a small decrease in prepayments due to higher LT interest rates could significantly impact the fair value of the Bank of America mortgage portfolio, forcing unrealized losses higher. If LT rates continue to rise, one veteran banker told The IRA yesterday, then BAC and several other large banks are going to start to literally shake apart from unrealized losses on COVID era assets.

Last week our comrade at Zero Hedge astutely noted that, in the October 2012 FOMC minutes, Fed governor and soon to be Chairman Jerome Powell opined that the Fed has a “short” position in volatility. Powell said: “[W]hen it is time for us to sell, or even to stop buying, the response could be quite strong; there is every reason to expect a strong response. So there are a couple of ways to look at it. It is about $1.2 trillion in sales; you take 60 months, you get about $