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October 21, 2025 | In this edition of The Institutional Risk Analyst , we speak with Andrew Jarmolkiewicz , a portfolio manager based in Nassau, Bahamas. Jarmolkiewicz has spent 28 years as a trader, investor and hedge fund manager in structured credit, commodity futures and junior mining. In 2004 he co-founded a multibillion dollar hedge fund manager and created a highly active restructuring business that completed landmark transactions in the wake of the global financial crisis. Most recently, Jarmolkiewicz has spent the past decade focused on junior mining advisory and investment, working intensively with mining management teams and major institutional investors.   The IRA: Thank you for taking the time Andrew. It’s been very busy in the markets, especially with President Donald Trump poking Xi Jinping of China, and sending stocks and crypto lower in highly correlated unison.  We found that especially amusing. But how have you reacted to the move in gold and other metals, especially when you and other friends in the Bahamian metals community have predicted this sort of move a long time. Our X friend Adam Schiff is having a lot of fun playing old clips from CNBC where market people denigrated the positive view of gold.   Jarmołkiewicz: Yeah, it's shocking, but so are a lot of other things today. I’m speaking to you while I am back in the UK visiting family and the economy is a complete mess. It's everything I feared would happen. So watching the move in gold is not a surprise, but it is a shock even for people heavily involved in metals. It's never easy to time these things. It's a lot easier to predict them than to time them.  We as people get used to permanence, so it's hard as people to deal with and assimilate sudden change. We like to have stability, so when you suddenly realize that you gotta go live somewhere else, that's a big deal. That's something Americans have a great deal of trouble with when we start talking to them about gold. It threatens all of their assumptions. So they get very uncomfortable.   The IRA: Having worked in Mexico and Venezuela years ago, we appreciate what a currency devaluation does to a society. We worked with several Mexican banks in the Carlos Salinas years and always asked them to let us know if there was a line outside the bank in the morning. Tellers could count those large peso notes very slowly and carefully. We see the same scenario unfolding in Argentina, but across the border in Uruguay the country is largely dollarized. Americans are not used to thinking about inflation and currency devaluation. And then when you remind them that stocks and real estate are going down in gold terms, that doesn't really make them happy either.   Jarmolkiewicz: Absolutely. The problem is that we kind of grew up in a world where we didn't have to worry on a weekly or monthly basis about what was going on in the world.  There were periods when we did, but for the most part, we didn't. We've had basic stability from one year to the next.   The IRA: Pax Americana. That's right.   Jarmolkiewicz: We don't have that any longer. We've got to worry about stuff all the time, unless you really are a pretty detached person, or have no assets at all, and just live off government support. That's half the UK. If you're not in that half, you've got to worry all the time now. Same is true for Americans, particularly because we benefited so much from that little stability bubble for, you know, most of my lifetime. Well that’s over now.   The IRA: And you’ve had a very good view of the change, working at Bear, Merrill and hedge funds and working in the capital markets and structured finance. The folks who work in mortgages and structured finance, and insurance, are the smarties on Wall Street.  Anyway, so tell us, you obviously worked in the biz for a while. When did you first start to really focus on metals?     Jarmolkiewicz: As I began to realize how credit-driven everything had become, I wanted to get out of that. I left the structured finance business in 2010, which was pretty much the halfway point of my career. I wanted to only work with real assets going forwards, and, you know, in particular, gold and precious metals.   The IRA: That's interesting, because you were at Bear when restructuring was the rage, right? Everybody was dumping time and people and capital into that business, but you felt like there was a better direction. It's the bottom of gold, too. How was it like in 2010 to tell people you were starting to focus on precious metals? Kind of reminds us of the journey of Henry Smyth , who we interviewed previously (" Interview: Henry Smyth on the Return of Gold as Global Reserve Asset. ")   Jarmolkiewicz: Well, you know what it's like. No one buys into what you're doing, until you achieve something. So even though I'd had a great career, it didn't really satisfy me, because in the end, I'd kind of lost belief in a lot of the products that I've been working with during my career up until that point. I wanted to focus on commodities, and I managed commodities strategies and managed futures. But in terms of mining, I got to know mining executives who lived in the Bahamas, where a lot of them do live, and just became aware of the companies they were involved in, the challenges they had, they had, you know, the most fantastic assets.   The IRA: And in 2010, the market gave them almost no credit at all for those assets.  The shift of trading to Asia had not yet started to impact prices for gold or production assets fifteen years ago.   Jarmolkiewicz: I invested and was happy to help them all I could, any way I could, and that's how we got involved in mining and running strategies focused on the sector. That soon overtook managing future strategies and commodities and became the main focus on my time.   The IRA: What is it about the Bahamas that attracts the mining executives? Is it just that they're in a global business?  And they have to be in a venue that's friendly to that?   Jarmolkiewicz: There are not many centers for financing mining around the world, and Canada is the best one. You've got Australia and, to a lesser degree, you know, London and South Africa, although they've really faded. You tend to find with the exploration sector, with junior mining, that the Bahamas is a welcoming warm place, especially in the winter for Canadians.  Many of them come down there, they don't have to pay any tax. They're not subject to worldwide taxation like Americans, and it's a popular place for successful Canadians to come.   The IRA: Now, have the Chinese started to spawn a mining community in terms of private companies, or does the government still control most of it?   Jarmolkiewicz: There is Zijin Mining Group (FJZB.F) , you know, who are a big mining company, and they're active, they're acquiring other companies. Other Chinese mining companies are less visible in the Americas, they're not as active as they are in Africa. In the Americas, it's basically Zijin.   The IRA: After a long period of relatively quiet pricing action, how is the mining sector going to recapitalize?    Jarmolkiewicz: Capital is now coming back into specialist mining funds as it hasn’t for years. And they are buying junior mining companies. Soon we may see a return of generalist investors who have had little if anything allocated to mining and that would be epic. We are in a situation where the entire mining investment ecosystem was damaged for decades and capital left the sector in that period. Major mining companies over-invested in the 2000s and early 2010s as China growth roared. An unexpected slowdown in Chinese economic growth then led to a commodity slump. Investor allocations to mining slumped. The junior mining sector basically missed out on inflows from passive investment vehicles such as ETFs. Persistent redemptions from mining funds led to capital withdrawal and severely depressed the valuations of the juniors. This greatly diminished the ability of these companies to raise capital and develop their projects. Major mining companies have chronically under-invested in new production for over a decade and must now invest in junior mining companies just to maintain production and replenish their somewhat high-cost and low-grade reserves   The IRA: But if you look across the metals sector, and you're looking at shortages, not just in gold and silver, but also copper. Are we about to see another manic surge in investment in the mining sector a la the early 2000s?   Jarmolkiewicz: It takes many years to locate and develop a mine. We are coming off a period where we've had no real investment in mining, where we've seen capital actually leave the industry. Now the majors are being bailed out with surging cash flow. Now you're at a point where the industry has to come up with new capacity, and the only way it's really going to do that is to acquire juniors. The junior miners are not really ripe for passive investment, they're not really included in the ETFs, because they're not big enough or liquid enough. But fundamentals will now completely change the equation and fast. There is a scarcity of new major mineral discoveries and a trend of smaller, deeper, lower grade, less accessible discoveries. So you better go shopping in the juniors!   The IRA:  Sounds like you are going to be busy. Thanks Andrew.       The Institutional Risk Analyst (ISSN 2692-1812) is published by Whalen Global Advisors LLC and is provided for general informational purposes only and is not intended for trading purposes or financial advice. By making use of The Institutional Risk Analyst web site and content, the recipient thereof acknowledges and agrees to our copyright and the matters set forth below in this disclaimer. Whalen Global Advisors LLC makes no representation or warranty (express or implied) regarding the adequacy, accuracy or completeness of any information in The Institutional Risk Analyst. Information contained herein is obtained from public and private sources deemed reliable. Any analysis or statements contained in The Institutional Risk Analyst are preliminary and are not intended to be complete, and such information is qualified in its entirety. Any opinions or estimates contained in The Institutional Risk Analyst represent the judgment of Whalen Global Advisors LLC at this time, and is subject to change without notice. The Institutional Risk Analyst is not an offer to sell, or a solicitation of an offer to buy, any securities or instruments named or described herein. The Institutional Risk Analyst is not intended to provide, and must not be relied on for, accounting, legal, regulatory, tax, business, financial or related advice or investment recommendations. Whalen Global Advisors LLC is not acting as fiduciary or advisor with respect to the information contained herein. You must consult with your own advisors as to the legal, regulatory, tax, business, financial, investment and other aspects of the subjects addressed in The Institutional Risk Analyst. Interested parties are advised to contact Whalen Global Advisors LLC for more information.

October 20, 2025  | The MBA Annual meeting is being held October 19-22, 2025, at the Fontainebleau in Las Vegas.   The MBA Annual Convention and Expo  is the largest annual gathering of residential real estate finance professionals. Most mortgage bankers are looking forward to a better year in 2026 with lower interest rates in prospect and a Republican President in the White House. What could be more positive for the housing sector? The twist in the forward guidance for mortgages, however, is that in in a falling rate environment, credit in residential mortgages may follow the negative trend in other sectors like commercial real estate.  Think Tricolor and First Brands. The accumulation of delinquent loans in the mortgage complex since COVID has gotten to the point where residential loan defaults have no place to go but up. Higher delinquency levels will enable investors to pay less for mortgage loans in the secondary markets, adding to cash losses per loan that are already several points vs the loan balance.  It's not about "gain on sale" but rather cash received. Source: MBA, FDIC In many respects, the FOMC set a trap for the Trump Administration in housing back in 2020-21, creating a situation where even dramatically lower market interest rates may not change a deterioration in residential credit that is now years overdue. The QE purchases of mortgage securities starting in 2019 after the now famous pivot by Fed Chairman Jerome Powell pushed down the visible cost of credit in 1-4 family mortgages. But the decline in the cost of credit defaults is a mirage caused by high home prices. In   a speech to the National Association of Business Economists , Fed Chairman Powell admitted that the Fed added too much liquidity to the economy after 2020. “With the clarity of hindsight, we could have—and perhaps should have—stopped asset purchases sooner,” said Powell. “Our real-time decisions were intended to serve as insurance against downside risks.” Unfortunately one of the downside risks of injecting trillions of dollars of unneeded liquidity into the US economy is to push down the visible cost of credit. As Treasury Secretary Scott Bessent noted in an essay for The International Economy : " The Fed’s adoption of unconventional tools during the 2010s pushed the effective nominal interest rate to as low as -3 percent by May 2014... As a result, the housing market remained overheated even as interest rates rose, with over 70 percent of existing mortgages carrying rates more than three percentage points below the prevailing market rate." Fed researchers pretend that half of the 50% increase in home prices since 2020 is attributable to a shift to working at home, but does it matter to credit? Not really. The low levels of interest rates maintained by the FOMC starting in 2019 – a year before COVID began – are a more credible explanation for soaring home prices. The chart below shows loss given default (LGD) for $650 billion multifamily and $3 trillion 1-4 family mortgages owned by banks, showing net loss as a percentage of the loan amount. The chart shows that banks are losing nearly 100% of the loan amount of defaulted multifamily mortgages, but near zero on residential 1-4s. Source: FDIC While multifamily credit normalized even before the end of COVID, net losses on prime b ank-owned mortgages are still showing zero net defaults, a function of high home prices. Reported delinquency levels in the bottom quartile of the credit stack occupied by FHA loans are around 10%. But if we adjust the FHA default levels for COVID era forbearance and loan modifications, the actual delinquency levels are far higher, in the mid-teens. Source: Ginnie Mae   According to John Comiskey , who writes great stuff about mortgage finance on Substack , FHA underwater mortgages increased by 30% from May to June 2025. During this period, the percentage of FHA mortgages that were underwater rose from 2.05% to 2.675% of the 8 million FHA loans in the portfolio. This means that the Treasury, which owns the modified loan amount separate from the original mortgage note, faces a total loss as home prices fall. Comiskey also notes that FHA loans that have had a partial claim in the past have a delinquency rate 5 to 7 times higher than loans without a past partial claim. Keep in mind that the rules for dealing with residential loan delinquency were reset back to pre-COVID rules on October 1st, thus all of those FHA loans that are still in forbearance and have already used up their available loan modifications are now headed for foreclosure. When mortgage issuers are forced to buy out these delinquent FHA loans from Ginnie Mae MBS, the cash flow stress on the industry will start to build dramatically. Since COVID, government lenders would simply modify delinquent loans before they reached 90-days past due and sell the modified loan into a new Ginnie Mae MBS. The chart below shows early buyouts or "EBOs" from Ginnie Mae pools by banks, again illustrating how QE has artificially suppressed visible levels of delinquency. Source: FDIC   Just as QE and too much liquidity for too long by the Fed allowed a lot of fraud and criminality to blossom in private equity and credit, and commercial real estate, the same dynamic has hidden a mountain of delinquent residential loans that must now be resolved. Falling short-term interest rates will help issuers by lowering the cost of funds for financing loan buyouts and loss mitigation, but even lower interest rates will not prevent a lot of zombie mortgages avoid resolution. The good news of sorts is that credit metrics in the conventional and bank markets for 1-4s are still very good, but regulators in Washington know that the government loan market and Ginnie Mae are the true points of vulnerability for the mortgage industry. The table below shows loan repurchase requests for Fannie Mae in the most recent form 10-K. During the second quarter of 2025, Fannie Mae's single-family loan repurchases saw a 27.7% decrease compared to the first quarter of 2025, from $371.4 million to just $268.5 million, according to I nside Mortgage Finance . This mirrors the decline in bank credit losses on 1-4s. Yet a number of issuers have told The IRA  that loan repurchase requests by the GSEs have risen dramatically in the past three months. Of note, the MBA publishes an excellent monthly Loan Monitoring Survey that is must reading for analysts. As delinquency rises in the Ginnie Mae sector and loan repurchase requests increase in the conventional, bank and jumbo loan sectors, bank and nonbank issuers are going to face growing demands on liquidity. As the cost of resolving troubled loans rises, higher levels of delinquency will push down prices paid for loans sold into the secondary market. Large banks and nonbank issuers with access to the debt markets will be able to ride out the storm, but the rest of the mortgage industry faces a couple of very tough years ahead. In Washington, it is fashionable to talk about higher "capital" for banks and nonbanks, but today it may be time to focus instead on providing greater liquidity for the residential loan market, particularly the government loan market and Ginnie Mae. If a government lender is defaulted by Ginnie Mae because of inadequate liquidity, that means that the GSEs will face a default as well. The big question for attendees at the MBA Annual in Las Vegas to ponder: Does the Trump Administration understand the true nature of the risks to the US economy (and the GOP in the midterm election) created by the reckless monetary policies of the Powell FOMC? Instead of looking for ways to boost homebuilding, perhaps the Trump Administration should be filling sandbags in preparation for the coming battle regarding mortgage loan delinquency. Additional Content National Mortgage News : Why credit score politics have nothing to do with lending   Bloomberg Surveillance : Banks’ Trio of Alleged Frauds Sparks Fear of Broader Issu es The Institutional Risk Analyst (ISSN 2692-1812) is published by Whalen Global Advisors LLC and is provided for general informational purposes only and is not intended for trading purposes or financial advice. By making use of The Institutional Risk Analyst web site and content, the recipient thereof acknowledges and agrees to our copyright and the matters set forth below in this disclaimer. Whalen Global Advisors LLC makes no representation or warranty (express or implied) regarding the adequacy, accuracy or completeness of any information in The Institutional Risk Analyst. Information contained herein is obtained from public and private sources deemed reliable. Any analysis or statements contained in The Institutional Risk Analyst are preliminary and are not intended to be complete, and such information is qualified in its entirety. Any opinions or estimates contained in The Institutional Risk Analyst represent the judgment of Whalen Global Advisors LLC at this time, and is subject to change without notice. The Institutional Risk Analyst is not an offer to sell, or a solicitation of an offer to buy, any securities or instruments named or described herein. The Institutional Risk Analyst is not intended to provide, and must not be relied on for, accounting, legal, regulatory, tax, business, financial or related advice or investment recommendations. Whalen Global Advisors LLC is not acting as fiduciary or advisor with respect to the information contained herein. You must consult with your own advisors as to the legal, regulatory, tax, business, financial, investment and other aspects of the subjects addressed in The Institutional Risk Analyst. Interested parties are advised to contact Whalen Global Advisors LLC for more information.

October 17, 2025 | In this issue of The Institutional Risk Analyst , we provide our subscribers with a few thoughts on the markets in the wake of last week’s selloff and the relatively negative reaction to bank earnings so far. In response to comments from our Premium Service subscribers, we will keep this comment short and concise. Banks & Private Credit

October 13, 2025  |  Updated | Happy Columbus Day. Last week, the U.S. Senate decisively rejected an amendment to prohibit the Federal Reserve from paying interest on bank reserves by a vote of 14-83 . The dangerous amendment, proposed by Senators Rand Paul (R-KY)  and Elizabeth Warren (D-MA) , was rejected by a wide margin. Here are the fourteen members of the Senate who had the poor judgment to vote for the proposal from Senators Paul and Warren: Cantwell (D-WA) Durbin (D-IL) Hawley (R-MO) Lee (R-UT) Lummis (R-WY) Markey (D-MA) Marshall (R-KS) Merkley (D-OR) Murphy (D-CT) Paul (R-KY) Sanders (I-VT) Scott (R-FL) Warren (D-MA) Welch (D-VT) Keep this list handy. These are the fourteen members of the Senate who do not even remotely understand economics and finance, especially given the large public debt now owed by the United States. Warren probably understands the issue better than the rest, but she doesn't care about anything but publicity. We talked about why the central bank must be able to interest on bank deposits at the Fed in an earlier comment (“ Should the Federal Reserve Pay Interest on Bank Reserves? ”).   Why does the US central bank need to pay interest on bank deposits at the Fed? Because we have $35 trillion in public debt. The interest rate on T-bills, bank reserves deposited at the Fed and reverse repurchase agreements (RRPs) issued by the Fed must be roughly the same. Otherwise banks will sell reserves, buy T-bills and any other duration available, and drive short-term interest rates down to zero. You saw a little taste of that sort of market in March 2020 and again in April of this year.  Paying interest on bank reserves deposited at the Fed, which are created by the open market purchases of securities, allows the central bank to defend the lower bound of interest rates (a/k/a the “floor”). Paying interest on reserves that are created when the Fed buys securities from private dealers owned by banks, like during QE in 2020-21, is part of the cost of managing the federal debt. Remember, bank balance sheets have been inflated by QE, so  suddenly ending the Fed’s ability to manage the interest rate floor will result in some very nasty outcomes. And yes, we can end the Fed’s misguided “ample reserves” policy w/o taking away the necessary ability to pay interest on a smaller reserve base. That is the real world policy goal that ought to have the full attention of Senators Paul and Warren.    As we discussed in our two-part interview with Alex Pollock , the Treasury is the borrower, the Fed is the banker and de facto  market maker in US obligations of various tenors. The primary dealers take little risk and are really just brokers. Think of the Fed as the government's chief primary dealer. Ever since the Greenspan-FOMC nationalized the federal funds market, the central bank has taken responsibility for managing short-term interest rates, like most central banks around the world. Paying interest on reserves let’s them do this job. Otherwise, you deal with Mr. Market (h/t Jim Grant ).  The Bank Policy Institute led the charge against this reckless proposal by Senators Paul and Warren. Erik Rust , Senior Vice President & Head of Government Affairs at BPI, issued a statement: “Prohibiting the Federal Reserve from deploying one of its key monetary policy tools would have drastic economic repercussions and ultimately cost American households and businesses by making credit less accessible and more costly. We appreciate the Senate for rejecting this harmful policy that would impose costs, not savings, on the American taxpayer. Major policy decisions that affect the banking sector’s ability to support the economy and the Fed’s ability to conduct monetary policy should be heavily scrutinized under regular order.” Trump Tariffs China, Trashes Crypto Meanwhile, to add to the fun last week, President Donald Trump threatened China with a substantial increase in import tariffs. This had the result of tanking the US equity markets and set us up for a shortened trading week as earnings begin and uncertainty is rising. The chart below shows Bitcoin USD (BTC-USD) vs iShares Gold Trust (IAU) .  Banks are closed tomorrow for Columbus Day. As Monday looms in Asian markets, the question to ask is whether the latest Trumpian twist in the trade war with China will continue to take global stocks lower in the coming week. Has President Trump thoughtfully created another buying opportunity a la April?   The Invesco KBW Bank ETF (KBWB) is down since the mid-September peak, signalling that there may be some surprises to come in Q3 2025 bank earnings.  Just remember that the fastest growing loan category for US banks is non-depository financial firms that were subject to a lot of margin calls on Friday. Perhaps more ominous, however, is the apparent correlation between stocks and crypto. We thought that the ethereal, chain-protected world of crypto was the successor to gold. Lower transaction costs, blockchain, right? But instead, Treasury collateral and close substitutes like Ginnie Mae pass-throughs soared Friday, but stocks fell and a lot of players in the world of crypto took a real kicking. Listen to the quiet. And the number of token operations being hacked is on the rise. Hyperliquid reportedly saw a “massive” $1.23 billion loss, this in an “unprecedented” selloff that apparently affected thousands of “wallets," reports Coincentral . That’s like money in cryptese . But is it really so extraordinary for the opaque world of tokens to completely fall apart periodically? After all, there is no market per se , just a series of pseudo news reports from equally opaque websites touting one token or another. Crypto tokens are not securities unless they have a stated yield, so promoters can make any claim or statement without fear of sanction. In terms of true market visibility, you are really better off playing dice on the floor of Trump Casino.   “A Satoshi-era Bitcoin whale opened over $1.1 billion in short positions against BTC and ETH just before President Donald Trump announced 100% tariffs on Chinese imports,” Trading View  reports , “generating an estimated $27 million in unrealized profits as markets crashed.”  Another remarkable aspect of last week's trade kerfuffle is that the CBOE Volatility Index (VIX) has barely moved, this after months of apparent torpor in the VIX series. The chart below from FRED shows the VIX vs the assets of the Federal Reserve System. Charlie McElligott at Nomura (NMR) stated things succinctly on Friday afternoon: "This is a taste of the reason we’ve been pitching VIX Upside (25d10d CS to be exact) as the referred space for investor hedging “…what is set-up to be a CONVEX MOVE”…look at that VVIX move go (~110 right now, +13 vols, yikes), as “Vol of Vol” is signaling a touch of “pucker” for those Short VIX Optionality..." The VIX is down for the year, as the chart above suggests. The chart below shows the IAU gold ETF vs the S&P 500 last week. Meanwhile, gold is positioned nicely to move higher on worries about the US government shutdown and general financial dysfunction in Washington. We keep wondering when the price appreciation in metal is going to slow the rally, but the accelerating increase in allocation to gold, silver and other strategic metals like copper seems to be driving a general revaluation in prices. Given the tight supplies for metal, especially in the US and UK, taking a short position in bitcoin may be a better trade next week than drawing a contrarian line in the sand on gold.   The Institutional Risk Analyst (ISSN 2692-1812) is published by Whalen Global Advisors LLC and is provided for general informational purposes only and is not intended for trading purposes or financial advice. By making use of The Institutional Risk Analyst web site and content, the recipient thereof acknowledges and agrees to our copyright and the matters set forth below in this disclaimer. Whalen Global Advisors LLC makes no representation or warranty (express or implied) regarding the adequacy, accuracy or completeness of any information in The Institutional Risk Analyst. Information contained herein is obtained from public and private sources deemed reliable. Any analysis or statements contained in The Institutional Risk Analyst are preliminary and are not intended to be complete, and such information is qualified in its entirety. Any opinions or estimates contained in The Institutional Risk Analyst represent the judgment of Whalen Global Advisors LLC at this time, and is subject to change without notice. The Institutional Risk Analyst is not an offer to sell, or a solicitation of an offer to buy, any securities or instruments named or described herein. The Institutional Risk Analyst is not intended to provide, and must not be relied on for, accounting, legal, regulatory, tax, business, financial or related advice or investment recommendations. Whalen Global Advisors LLC is not acting as fiduciary or advisor with respect to the information contained herein. You must consult with your own advisors as to the legal, regulatory, tax, business, financial, investment and other aspects of the subjects addressed in The Institutional Risk Analyst. Interested parties are advised to contact Whalen Global Advisors LLC for more information.

October 3, 2025 | In this special edition of The Institutional Risk Analyst , we feature a discussion with Alex Pollock , Senior Fellow at the Mises Institute. Alex provides thought and policy leadership on financial issues and the study of financial systems. He was president and CEO of the Federal Home Loan Bank of Chicago from 1991 to 2004. We spoke with Alex from his home in Lake Forest, Illinois. Read Part II here . The IRA:  Alex, thank you for taking the time to speak with us today. We were at the Lotus Club yesterday talking about Inflated: Money, Debt and the American Dream . One of our former colleagues from Bear, Stearns attended.  Pollock: Know something you and I have in common? The IRA:  Tell us. Pollock: You worked for Bear Stearns. I worked for Continental Illinois. Two firms that are no longer with us. Educational experiences. The IRA:  We were looking at the FINRA record while doing CE. It now lists JPMorgan as our first employer instead of Bear, Stearns. Well, so technically we worked for Jamie Dimon once upon a time. Thank you for sending over your latest testimony on the Federal Reserve, “ How Congress Should Oversee the Federal Reserve’s Mandates .” It provides an interesting counterpoint to the essay by Treasury Secretary Scott Bessent in The International Economy about reforming the Fed. We don’t think that anything will happen on reforming the central bank before the Republic has another financial crisis, but there you are. We are very happy to be living in Westchester County, though, instead of New York City. Leaving Gotham in 2021 was a good move and cut our living expenses by more than half. Pollock: I feel the same about Lake County, Illinois. The IRA: Despite the political and fiscal troubles in Chicago, we see that the developers are all scurrying back into greater Chicago. This despite the carnage for the banks. Developers must do development or they'll be out of business. Somebody just took Bank OZK (OZK) out of their misery in Lincoln Yards. But we digress. Let’s spend a little bit of time talking about the Fed and then we can switch gears and talk about gold if that works for you. Or maybe we’ll just talk about gold.   Pollock: Two highly related topics. The IRA: What questions and comments did you get from the Financial Services Committee members when you were up on the hill talking about the Fed? Do you think any of them understood some of the points you made in your excellent testimony? Pollock: The testimony was to a task force of the Financial Services Committee. We got some very good questions, including questions on what is the chief thing the Fed is supposed to do. I like the idea that the guiding fundamental principle should be that the first responsibility of the central bank is to provide a sound currency. I recommended that the Financial Services Committee in the House and the Banking Committee in the Senate should both have subcommittees devoted solely to the Fed. The monetary system is so overwhelmingly important that that would make a lot of sense. And then you would get a focus and a buildup of expertise over time. Members of Congress, if they serve on a committee long enough, become quite knowledgeable. Incidentally, the hearing last month was held in the Wright Patman room... The IRA: Oh, of course. Rep Wright Patman (D-TX) was a long-serving and populist politician from Texas. Known as a "fiscal watchdog," he served in the House for 24 consecutive terms, from 1929 until his death in 1976. Henry Reuss (D-Wisconsin) succeeded Patman in 1975. We can recall appearing before another great Texas populist, Chairman Henry B. Gonzalez (D-TX), years later. Gonzalez, who thought there was gold hidden below the Federal Reserve Board, became chairman in 1989. Chairman Gonzalez was responsible for discovering the secret FOMC transcripts.   Pollock: Wright Patman chaired what was then the Committee on Banking and Currency for 12 years. He was a big believer in the responsibility of Congress to oversee and direct the Fed. It was the Democrats in those days who thought that Congress should watch the Fed’s operations closely. Did you enjoy my quote from former Democratic Senator Paul Douglas to William McChesney Martin? –the one about, “I've typed out your saying that the Fed is an agency of the Congress. I'm giving you a piece of scotch tape so you can tape this up on your bathroom mirror and look at it every morning.”  I got a big kick out of that. The IRA:  Does the Congress really have any operations? I thought they were delegating all of the operational aspects of government to the executive branch. Pollock: The Fed should and does have oversight and policy guidance from Congress. Congress does not need to operate the central bank. Congress instructs their agency, the Fed, which as is often said, comes under the money power, the constitutional money power under Article One, Section 8. As you know, the Constitution says “coining” money, which we read these days metaphorically. The IRA: In those early days of the Republic, it was an acute need for an exchange medium that drove the Framers to give Congress power over money. Americans used barter for most exchanges and Spanish “pieces of eight” and pounds sterling for money in the 1700s.  Pollock: The Constitution then says “and regulate the value thereof.” Well, regulate the value of money is a congressional duty, in my view, not just a power. It is a duty under the Constitution and overseeing the Fed as part of that. That power is solely a congressional power and not an executive branch power.  The IRA: The central bank is clearly a peculiar institution because of the Constitutional empowerment regarding money, something that was extremely controversial at the end of the 18th Century. The fact that the Framers gave Congress this first mandate does not receive enough attention and supports your call for greater congressional oversight.  Pollock: Congress ought to want to take it seriously, the way Wright Patman and Henry Gonzalez did in their day. But the Democrats flipped and said, well, we ought to let the Fed do whatever it wants. It's very historically interesting, that flip. Anyway, there's another power though that's very relevant and that is the taxing power. The power of taxation under the Constitution is given solely to the Congress, in that same article of the Constitution. Inflation is a tax. Inflation is simply taking purchasing power away from the people and giving it to the government. The Fed creates inflation. The Fed is taxing. The Fed is responsible to Congress for its taxing activity. The IRA:  As Robert Eisenbeis of Cumberland Advisors taught us years ago, the Fed is always an expense to the Treasury when you net out all of the cash flows. The Fed gives the Treasury back its own money earned from securities, less operating expenses. And you are correct that the Fed is a taxing unit, an instrument of financial repression. But the Bernanke Fed onward with QE expropriate the assets of the Treasury without congressional authority and proceeded to lose money on their speculations! They also mismanage the Fed’s assets and liabilities. Pollock: Those losses are also a tax. When the Fed created a giant savings and loan type balance sheet on its own books, and has now lost $242 billion as a result, that is taxation, that is spending the taxpayer's money in a fiscal action without authorization of Congress. It comes right out of the remittances to the Treasury. The IRA: Ben Bernanke and Alan Greenspan before him figured that Congress had no idea so better just do what is necessary to keep the ship moving forward. But Alex, don't you think the evil goes back to 1935 when FDR created the Board of Governors and brought all of this to Washington? Since the New Deal, the Fed has taken on the role of a state planning agency like the Soviet GOSPLAN. Bernanke creates quantitative easing, where the Fed buys trillions in Treasury securities and also mortgage bonds, driving up home prices. And this is all done under the rubric of the Elastic Clause in Article I, Section 8, “necessary and proper”. The Fed is basically free riding on that part of the Constitution. Pollock: The 1935 Banking Act centralized the power of the Fed under FDR. Senator Carter Glass (D-VA) in his day used to ask witnesses before the Senate Banking Committee if the United States had a central bank. The answer he wanted was, “No, it does not. It has a federal system of regional reserve banks.” That was the Jeffersonian idea of Glass until 1935. And as you are saying, they flipped this around and centralized the power in the Board of Governors in Washington–the name was changed as a symbol of the power shift. The heads of the regional reserve banks were originally called “governor,” the Governor of the Federal Reserve Bank of New York or Chicago or whatnot. Also, Congress created the Federal Open Market Committee as a statutory body in 1935. It was originally a committee of the Federal Reserve banks themselves. The IRA: FDR turned the Fed into a unitary central bank a la Europe. Pollock: The Fed became a centralized body dominated first by the Board of Governors, but really by the chairman. So you got two centralizations going on here  in the Fed after 1935. One is a centralization of power out of the rest of the country into Washington, into the Board. And the second is the centralization of power in the office of the Chairman of the Federal Reserve Board, who is the chief executive of that agency and for whom all the staff works. All the hundreds of PhD economists and everybody else all work for the Chairman. And so you get this much increased power of the Chairman hitting a peak, I will say, in the days when Greenspan became “The Maestro.” The IRA: Clearly some of the Governors and Reserve Bank presidents were unaware that transcripts of meetings were being stored by Greenspan. We first reported on Chairman Gonzalez catching Greenspan obfuscating regarding the FOMC minutes in 1993 for the Christian Science Monitor . Now the Trump White House may not allow the reappointment of Reserve Bank presidents unless they toe the MAGA line on interest rates. Pollock: Greenspan had become enormously powerful, a kind of a media star. But then as you point out, the Fed’s mission creep hit another peak in the days of Bernanke and quantitative easing, manipulating the bond market, manipulating the mortgage market by buying a couple trillion dollars of 30-year fixed rate loans, which never were historically and never should be on the books of the Fed. The IRA:  The Fed may own those securities for decades to come. The Fed’s MBS have such low coupons that the average lives for the securities may be close to 15 years. There are a lot of lenders who would like the Fed to resume buying MBS. And I'm a little worried that Trump, who's not really a conservative, may want to go there if he puts Kevin Hassert in as Fed chairman.  Having the Fed buy MBS will just push home prices higher.  Pollock: A central bank in principle can buy anything–not necessarily legally, but in principle.  For example, as you know, the Central Bank of Switzerland has a giant equity portfolio. It's a big investor on the New York Stock Exchange. The dollar investments in Switzerland were part of their keeping down the Swiss franc .  But they also of course own gold. We're going to get to gold later, but how much gold does the Fed own? The IRA:  None. Pollock: Zero. Not one ounce. I think it's one of the few major central banks that doesn't own any gold.  The IRA: But the absence of gold was part of the American management of the post Bretton Woods period, when US officials poo-pooed gold and didn't want anybody to talk about it. As we can now see, that strategy ultimately failed and gold is again the largest reserve asset in the world. If you look at the timeline of all of the official actions that were meant to discourage people from talking about or owning gold, ultimately they failed in the late 1960s. The US withdrew from the London gold pool a year before Nixon shut the gold window in 1971.   Pollock: There is a great story in Paul Volker's autobiography,   Keeping At It: The Quest for Sound Money and Good Government .  Volcker was at the Treasury under Nixon and they knew they had a big problem with dollars and gold. They knew that they were going to have a lot of trouble maintaining the $35 peg. He tells the story in the book they were having meeting after meeting over what are we going to do, coming up with scheme after scheme to somehow prop up the dollar and hold down gold and so on. And he said there was an old Treasury guy who'd been at the agency for decades, and he would sit in these meetings when they'd come up with some scheme or other, and at the end of the discussion, this guy would say, “It won't work.” The IRA: You mean like selling gold to force the dollar down? Thats Steven Miran’s idea. The history of the United States suggests that selling paper and buying gold is a better strategy. But then again, many of these same people think that crypto tokens are the future of money. Americans are the only people dumb enough to think we can use buttons as money. Pollock: Well, the guy in Paul Volcker’s story was right. There was nothing they could do. By that time the dollar peg to gold was on the way out. By then the game was already lost. I guess maybe they could have devalued instead of simply defaulting on the commitment of the American government to redeem dollars for gold at $35 an ounce. You could have devalued and set a new price, but it would've been a big devaluation, like $70 or even a hundred dollars an ounce, something like that. The IRA:  The dollar is already down below the lows of Trump I. But that's the history of the fiat currency. On the one hand, the legal tender fiat dollar is the greatest invention ever. But if you don't have some degree of fiscal restraint, and you can't in a democracy, then ultimately it doesn't work to the point of the Treasury official in Volcker’s story. That's where we're are today.  Pollock: Where we were and maybe where we are again. Can I give you a great quote on this? An excellent private memorandum on gold viewed in the long term says, “A higher money price of gold is best read as a symptom of a weaker currency. It isn't really the gold going up, it's the dollar or fiat currency in general going down.” That seems to me to be right. And then he says, “The value of gold lies in being independent from political discretion. Fiat money is a claim on the future discretion of politicians.” Isn't that good? The IRA:  Indeed. Thank you for your time Alex END PART I We'll feature the second part of the discussion with Alex Pollock regarding the Fed and gold in a future issue of The Institutional Risk Analyst. The Institutional Risk Analyst (ISSN 2692-1812) is published by Whalen Global Advisors LLC and is provided for general informational purposes only and is not intended for trading purposes or financial advice. By making use of The Institutional Risk Analyst web site and content, the recipient thereof acknowledges and agrees to our copyright and the matters set forth below in this disclaimer. Whalen Global Advisors LLC makes no representation or warranty (express or implied) regarding the adequacy, accuracy or completeness of any information in The Institutional Risk Analyst. Information contained herein is obtained from public and private sources deemed reliable. Any analysis or statements contained in The Institutional Risk Analyst are preliminary and are not intended to be complete, and such information is qualified in its entirety. Any opinions or estimates contained in The Institutional Risk Analyst represent the judgment of Whalen Global Advisors LLC at this time, and is subject to change without notice. The Institutional Risk Analyst is not an offer to sell, or a solicitation of an offer to buy, any securities or instruments named or described herein. The Institutional Risk Analyst is not intended to provide, and must not be relied on for, accounting, legal, regulatory, tax, business, financial or related advice or investment recommendations. Whalen Global Advisors LLC is not acting as fiduciary or advisor with respect to the information contained herein. You must consult with your own advisors as to the legal, regulatory, tax, business, financial, investment and other aspects of the subjects addressed in The Institutional Risk Analyst. Interested parties are advised to contact Whalen Global Advisors LLC for more information.

October 9, 2025  | So the $200 billion asset Fifth-Third Bank (FITB)  is buying $80 billion asset Comerica Incorporated (CMA) in an all-stock transaction. Is this the start of a wave of similar deals among regional banks? Hopefully not. This deal neither creates great shareholder value nor promises significant synergies, but it does make for a bigger regional bank with so-so financial metrics. As we discuss below, essentially FITB is rescuing CMA shareholders. The transaction is justified by FITB “to gain scale and diversify its business, expand into high-growth U.S. markets like Texas and California, and strengthen its middle-market commercial banking capabilities.” The deal will create the ninth-largest U.S. bank by assets, in theory allowing the combined entity to compete more effectively, reduce reliance on interest income with fee-based services, and leverage Comerica's strong commercial and wealth management expertise. Or at least that is the official story .  Comerica Financial and Edsel Ford The predecessor of Comerica was founded in Detroit in 1849 as the Detroit Savings Fund Institute, evolving through various mergers and name changes to Detroit Bank & Trust. Detroit was the most significant banking market in the US in the 1930s, as we noted in our 2017 book “ Ford Men: From Inspiration to Enterprise. ” You can buy a new copy of Ford Men signed by the author in The IRA store while they last.   A selfish and idiosyncratic Henry Ford helped to precipitate the Banking Crisis of March 1933, one of the early reasons for our research interest in the Great Depression. But his son Edsel Ford personally supported the Detroit banks. Even as the great inventor pushed the nation into Depression a month before FDR took office in 1933, Edsel Ford bravely founded a new bank and one of the predecessors of Comerica. Had the great inventor possessed a fraction of the intelligence and compassion of his son Edsel, Henry Ford would have easily won the presidency of the United States in 1916. As we wrote in Ford Men: “On the Sunday before the [February 13, 1933] meeting between Ford and Ballantine, The Detroit Free Press carried an interview with Couzens where the senator stated that the weak banks should be allowed to go under and, after a general moratorium, the stronger banks would be allowed to reopen. When Clifford Longley, Ford Motor Company’s counsel and a director of Guardian Trust Company, reported Couzens’ remarks, Henry Ford remarked, ‘For once in his life, Jim Couzens is right.’ On February 14, 1933, all banks in the state of Michigan were closed for eight days by order of Governor William A. Comstock. This began a domino effect that would lead to the collapse of the nation’s financial system three weeks later. Michigan was forced to default on its bonds and the state government was crippled, a default that rippled through the savings and balance sheets of individuals and companies around the world.” In 1933, Manufacturers National Bank of Detroit, Comerica's future merger partner, was founded by Edsel Ford, another example of the younger Ford’s sense of responsibility to his community – something he shared with Senator James Cousins , Henry Ford’s original business partner. But for James Cousins, there would be no Ford family fortune. Manufacturers bought United States Savings Bank in 1952 and in 1955 merged with Industrial National Bank. By that time, however, Detroit was experiencing a gradual decline in terms of economic prospects.  In 1955, the Detroit Bank acquired the Detroit Trust Company, forming Detroit Bank & Trust, which itself merged with The Birmingham National Bank, Ferndale National Bank, and Detroit Wabeek Bank & Trust Company in 1956. In 1982, the Detroit Bank & Trust Company was renamed Comerica Bank to reflect its growing ambitions. Those ambitions were not fully realized, however, since CMA has grown mostly via acquisitions rather than organic growth.  In 2007, after acquiring other banks and expanding into California and Texas, Comerica moved its headquarters to Dallas just as the Great Financial Crisis exploded onto the scene. It is fair to say that at first the TX business community did not know what to make of CMA, which located its new HQ in one of the more prominent office towers in downtown Dallas. But today downtown Dallas is as empty and underutilized as are many other urban centers and the pricey overhead is very visible in CMA’s financials. Does FITB + CMA = Value? So is the all-stock purchase of CMA by FITB a good deal for shareholders? It is certainly a good deal for CMA shareholders, who might even be characterized as receiving a rescue of sorts from the folks at FITB --and at a 30% premium to tangible book. Indeed, CMA's assets have fallen more than 10% since 2023 as core deposits have likewise declined. Based in Cincinnati, Fifth-Third is a sturdy regional banks that occasionally expresses desires to enter more competitive wholesale markets, like residential mortgage warehouse lending, but fortunately has not done so in such a scale as to threaten the bank.  Each bank has roughly the same breakdown in terms of net interest income and non-interest fee income, on of the supposed benefits of the combination. Both banks are peer performers overall, but FITB is far stronger financially and in terms of market performance.  FITB actually ranked 9th overall in the WGA Top 100 Banks in Q3 2025, while CMA ranked 43rd.   WGA Top 100 Banks A side by side comparison of the two banks is below showing key metrics vs average assets in percent. We use the consistent benchmarks published by the Fed and other regulators via the Bank Holding Company Performance Reports distributed by the FFIEC.  Source: FFIEC The numbers shown in red indicate where the two banks underperform the average for Peer Group 1. Obviously CMA is ten points out of line with FITB in terms of operating efficiency. CMA brings half a billion in goodwill and intangibles to the combination, plus $2.5 billion in mark-to-market losses (AOCI) on the bank’s underperforming bond portfolio. And as noted above, CMA has been shrinking pretty rapidly since 2023, when Silicon Valley Bank and several other regionals failed. FITB itself has $3.5 billion in goodwill and another $3.5 billion in mark-to-market losses (AOCI) on its books so these two middle-market mediocrities certainly have something in common. Credit costs at CMA are below peer, but FITB was 50% above peer in terms of credit costs in Q2 2025. But the low net loss numbers at CMA conceal a significant amount of loan modifications, principally in multifamily mortgage loans. Members of the Sell Side analyst community may see value creation in this combination, but why do we feel that FITB + CMA just creates a larger target in the coming credit correction? CMA was badly wounded in 2023, but the bank does not seem to have trimmed expenses as the balance sheet has shrunk involuntarily. The efficiency ratio for CMA was 56% at the end of 2022 vs 68% today. We need to see FITB management quickly combine these two banks and push down CMA expenses a lot in the next 12 months if this merger has a real chance of success. Or to put it another way, if FITB does not take a very tough minded approach to getting CMA's operating expenses under control, we won't be seeing FITB in the top ten US banks tracked by the WGA Top 100 Banks again anytime soon. And BTW, both banks need to stop dawdling when it comes to managing the treasury and earning assets. Any result below peer average for securities returns is unacceptable and should mean that people are getting fired. This is not just a problem for FITB and CMA, but a large portion of the US banking industry. The chart below shows the gross yield on securities for the top-seven depositories by assets. Look who's on the top and the bottom. Notice that both Truist Financial (TFC) and PNC Financial (PNC) have restructured and dramatically improved their returns. Source: FFIEC The Institutional Risk Analyst (ISSN 2692-1812) is published by Whalen Global Advisors LLC and is provided for general informational purposes only and is not intended for trading purposes or financial advice. By making use of The Institutional Risk Analyst web site and content, the recipient thereof acknowledges and agrees to our copyright and the matters set forth below in this disclaimer. Whalen Global Advisors LLC makes no representation or warranty (express or implied) regarding the adequacy, accuracy or completeness of any information in The Institutional Risk Analyst. Information contained herein is obtained from public and private sources deemed reliable. Any analysis or statements contained in The Institutional Risk Analyst are preliminary and are not intended to be complete, and such information is qualified in its entirety. Any opinions or estimates contained in The Institutional Risk Analyst represent the judgment of Whalen Global Advisors LLC at this time, and is subject to change without notice. The Institutional Risk Analyst is not an offer to sell, or a solicitation of an offer to buy, any securities or instruments named or described herein. The Institutional Risk Analyst is not intended to provide, and must not be relied on for, accounting, legal, regulatory, tax, business, financial or related advice or investment recommendations. Whalen Global Advisors LLC is not acting as fiduciary or advisor with respect to the information contained herein. You must consult with your own advisors as to the legal, regulatory, tax, business, financial, investment and other aspects of the subjects addressed in The Institutional Risk Analyst. Interested parties are advised to contact Whalen Global Advisors LLC for more information.

October 10, 2025 | In this special edition of The Institutional Risk Analyst , we feature Part II of the discussion with Alex Pollock , Senior Fellow at the Mises Institute , that we first published on October 3, 2025. You may read Part I of the interview (“ Interview: Alex Pollock on the Fed and Gold ”). As we noted in Part I, Alex provides thought and policy leadership on financial issues and the study of financial systems. He was president and CEO of the Federal Home Loan Bank of Chicago from 1991 to 2004. We spoke with Alex from his home in Lake Forest, Illinois. Alex Pollock Pollock: Can I give you a great quote on this? An excellent private memorandum on gold viewed in the long term says: “A higher money price of gold is best read as a symptom of a weaker currency. It isn't really the gold going up, it's the dollar or fiat currency in general going down.” That seems to me to be right. And then he says further: “The value of gold lies in being independent from political discretion. Fiat money is a claim on the future discretion of politicians.” Isn't that good? The IRA:  That is a great comment about gold. In the book of Deuteronomy, Moses commands that there be “one measure” of value, something that Fred Feldkamp  and I wrote about in Financial Stability: Fraud, Confidence and the Wealth of Nations .” Basically what Moses said was that you have to deal at a mid-market price, no built-in profit from a bid-ask spread. So of course, Jesus of Nazareth points this out in the temple and the money changers, who used a particularly wide bid-ask spread, crucify him. Jesus did not commit any particular religious offenses, he simply outed the money changers in the Temple for violating the laws of Moses and also not paying taxes to Rome on their hidden profits. Forty years later, the Roman legions destroyed the Second Temple down to the last stone to find the hidden gold. In this way, Jesus’ prediction in Matthew 24:2 that the Temple would be utterly destroyed and “not one stone would be left upon another” came true. Pollock: I didn't know that about Deuteronomy. That's interesting. It's hard to have a dealer market with no spreads, Chris. The IRA: That depends. In the late 1980s at Bear, Stearns & Co in London, our head trader Paul Murphy made a mid-market price in Canada 9s and the 10-year Treasury every morning to get the customers stirred up. A mid-market price means that if you get lifted by a buyer who has superior knowledge, then you immediately have to adjust. A pure free market. But going back to the earlier point about the Roosevelt era reforms to the Fed and the centralization in Washington, our view is that we need change to make Trump’s reforms meaningful. We’d get rid of the Board of Governors in Washington, make Cleveland a branch of Chicago, convert four branches into new reserve banks in the west, and make all 15 of the Federal Reserve Bank heads presidential appointments with Senate confirmation. We’d take the references to the FOMC out of the statute and let the Fed organize its operations as before 1935.  Pollock: Well, in doing that, you're undoing the fundamental political deal of the Fed which you know very well. The stock of the Federal Reserve is not owned by the government or the Treasury, but by the private member banks. I just read a very good and very knowledgeable book in which the author said, however, that the government owns the Fed. Well, at least the government doesn't own the stock of the Fed. The private banks own 100% of the Fed stock and have since the original Federal Reserve Act. The IRA: That “ownership” is not enforceable privately because of the very argument you made about Congress and the power to coin money. The federal government retains dominion over the Federal Reserve System no matter who provided the initial capital. To paraphrase Supreme Court Justice Louis Brandeis  in the 1925 case Benedict v. Ratner , a transfer of property meant to be security for a debt is "fraudulent in law and void as to creditors" if the transferor retains the right to control, or reserve dominion over, that property.  Congress created the Fed and sold stock to the member banks. The fact of private capital didn't prevent Franklin Roosevelt and his New Dealers from stealing the gold that private banks contributed to the original capital of the Fed. Pollock: That's right. Some people still say that the Fed owns gold. What they mean is the Fed owns something called “gold certificates,” which is simply proof of confiscation by the Treasury, which took their gold and gave them in exchange a paper dollar claim.  All the subsequent profit from the devaluation of the dollar against gold in the thirties or anytime goes to the Treasury, zero goes to the Fed. This profit is the origin of the Exchange Stabilization Fund of the Treasury, an exceptionally handy slush fund for the Treasury and the President when they want to do things and don't want to have to get Congressional approval. The IRA: You mean like bailing out Mexico and banks like Goldman Sachs in the 1980s and 1990s or Argentina today? We used to rail against the use of the ESF to bail out dictators, but nobody in Congress cares today.  Pollock:  Yes, like they bailed out Mexico in 1994, etc., as you say. The IRA: We wuz there, helping Cuauhtémoc Cárdenas run for president in Mexico. So the Fed and the banks could claim that the gold in Fort Knox belongs to them and obviously it does. But when you touch the government, of course, you know that they're going to steal your money. The example of Fannie Mae and Freddie Mac since 2008 is another case in point. Since the 1930s, the Fed and Treasury have essentially been short gold in a sense that policy was directed at avoiding any reference to gold. As you noted, unlike other central banks, the Fed has not been buying gold, even though now since the repeal of the Depression era gold laws they could. If Governor Steven Miran really wants to adjust the dollar lower, shouldn’t the Fed be a buyer of gold for its own account?  Pollock: If you are a seller of paper currency, dollars or any paper currency, then you drive the other side up. All prices are exchange rates, and the price of gold or equally stated, the price of a dollar expressed in ounces of gold, is an exchange rate. Of course, you can move the exchange rate by selling one and buying the other, like the Fed did when massively buying mortgage bonds, more than $2 trillion of them, during QE. The Fed drove up the price of mortgage-backed securities and drove down the yields on mortgage loans financed by simply printing up the money, resulting in much higher home prices.   The IRA: That's right. But if we're Governor Miran and we are concerned that the dollar is overvalued don't we then sell paper and buy gold?  Like FDR, we're going to buy gold and essentially devalue the dollar until we get it to where we think it needs to be.  Don’t you think it's surprising that nobody in government of either party over the past several decades has even thought about the dollar and gold until President Trump?   Pollock: Yes. The other part of that story is the potential revaluation of the Treasury's gold, the government's gold taken from the members of the Federal Reserve Banks, which is on the books at $42.22 an ounce. The statutory definition of the official price of gold owned by the United States government is “42 and 2/9 dollars per ounce.” The IRA: The U.S. government's official book value for its gold reserves is $42.2222 per fine troy ounce, a statutory price set by Congress in 1973 that remains constant for accounting purposes. What do you think would be the symbolic impact if we changed the official price? VanEck Junior Gold Miners ETF (GDXJ) Pollock: As you say, the official gold price is a matter of law, as established by the Act to Amend the Par Value Modification Act of 1973.  You'd have to get Congress to act to change this. If you did get Congressional action, you should just say, as I have recommended, that the official price of gold is “the fair market price of gold as certified by the Secretary of the Treasury”  Today that is over $4,000 an ounce. Then you would've a tremendous writeup of the price of gold. The Treasury Exchange Stabilization Fund would get a lot bigger. Like FDR in the 1930s, they could monetize the market value gain by creating new gold certificates, depositing them in the Fed and writing checks on the Fed. The IRA: I seem to recall that Senator Carter Glass ridiculed FDR in public for this accounting charade. But in a system so dependent upon confidence and inflation, perhaps that is overmuch concern.  Pollock:  The gold certificate is a deposit of the Treasury at the Fed, the Fed credits the Treasury's account for the gold certificates, which are already authorized by law. If you change the law to have the Treasury's gold valued at its fair value as opposed to its 1973 value, then Treasury could just write checks and, in effect, borrow the new market value of the gold from the Fed. You could have another nearly $1 trillion of new fiat cash right now. The Eisenhower administration used this gold certificate strategy back in the 1950s, by the way. The IRA: We don't want to say that too loud. People will get the idea. But the Treasury and the Fed could buy gold for paper. Imagine if you have Kevin Hassett at the Fed. He could start buying gold and force the dollar significantly lower. As you said, it is the dollar that is falling in terms of the gold-dollar exchange rate, not the value of the metal rising.    Pollock: The seizure of gold in 1933 was a profit to the Treasury and an economic loss to the Fed under the Gold Reserve Act of 1934.  The Fed had to turn in all its gold and couldn't buy any more. That law was reversed in 1974 in an amendment included in the International Development Association Appropriations Act of 1975 sponsored by Senator Jesse Helms (R-NC) . The government stopped the incredibly despotic action of forbidding its citizens from owning gold. I think it's true that the Fed, also from 1974, could have bought gold for itself again. Of course, that would be the opposite, as you point out, of its whole ideology, which is to run the world on fiat paper dollars. The IRA: Have we not come full circle, Alex? We've gone from the FDR confiscation of gold and all of these laws that were passed to prevent Americans from even thinking about gold. But the Russians and the Chinese particularly have turned this around. The opening of the Shanghai Gold Exchange in 2002 ended the embargo on gold as a reserve asset. Today gold seems to be back in the ascendancy. Was this just bound to happen or was it the US frittering away their franchise with a lot of deficit spending that forced this issue and sanctions and all the rest of it too?   Pollock:  I think that is true about deficit spending hurting faith in the dollar. Nor has the United States helped itself in this sense by weaponizing our dominant currency to punish people. It does make the rest of the world less willing to hold dollars as assets and as their central bank foreign currency reserves. Now we see this very interesting move to a new reserve allocation around the world, central banks buying gold. Interesting to think that just a generation ago, the central banks were selling gold.  The IRA: Then-Chancellor of the Exchequer Gordon Brown sold a large portion of the UK's gold reserves between 1999 and 2002, a major financial blunder because it happened at a 20-year low in the gold market, just before the price began a massive, sustained rally. Pollock: The Bank of England, the Bank of Canada and others all sold gold. A friend of mine in Switzerland told me that he knew officers of the Swiss National Bank, the Swiss Central Bank, when they were forced by the politicians to sell some of the bank’s gold along with the other countries in the nineties. The Swiss literally cried, he said, when they were forced to sell. And they were selling at the bottom, although of course the central banks were in the aggregate making the bottom by selling. That really looks bad in retrospect. Now needless to say, they're buying again. But the central bank buying also seems to be making this top if it is a top, at least making this very high price over $4,000 per ounce– getting close to 100 times the official US price and more than 100 times the old Bretton Woods par of $35. The IRA: The central banks have been buying in volume. They were indifferent to the price. They just told their people to go out and buy, particularly the Chinese but many other central banks as well. Pollock: And many want to get out of dollars or at least stop accumulating dollars and accumulate gold instead. The IRA: It is hard to make a case for holding dollars when we look at the behavior of the Fed and Treasury over the past decade. The Fed bought $7 trillion worth of securities during and after COVID and did not stop buying until 2022, after interest rates had gone up. Fiscal policy was likewise running full tilt. Powell's FOMC provides one of the most egregious examples of procyclical government behavior in modern economic history, perhaps the single best reason for Congress to reform the Fed. Pollock:  The Fed led the housing market into a giant house price bubble with prices rising very rapidly.  It was still buying and stoking that bubble in 2021 up to early 2022. Unbelievable. To my mind, an amazing blunder. But part of the mystique of being a central bank is you never admit you made a mistake. It must be that when you enter the secret society of central bankers, you have to pledge never to admit to making a mistake. The IRA: Well, do you think if they confirm Kevin Hassett as Fed Chairman that he's going to betray Trump like all the other Fed chairman have done? Pollock:  I know Kevin personally from our days together at AEI. He is a very smart and knowledgeable guy. There is, of course, the most famous historical story of betrayal. When Harry Truman was President, he forced out Fed Chairman Thomas McCabe in 1951 to make room for a new appointment. Former Chairman Marriner Eccles stayed on the Board as governor to support McCabe and thwart Truman. Eventually the President got Chairman McCabe to resign. The issue was that the Fed would not commit to keep on buying Treasury bonds to peg the yield at 2.5% to finance the Korean War. While these negotiations were going on, the US Army had just retreated 200 miles south down the Korean peninsula. So you have got to have some sympathy for President Truman. He was losing a war. The IRA: Reminds us that President Trump’s efforts to remove Chairman Powell are not unique in recent US history.   Pollock: After McCabe’s departure, Truman put in William McChesney Martin , a great Fed chairman and the longest serving one. He was appointed by Truman from the Treasury because it was assumed that Martin would follow the Administration line. Martin didn't.  Chairman Martin believed in sound money. The IRA: And Martin defended the independence of the Temple. Hassett is already starting to make noises about the challenges of inflation. Everyone who is confirmed by the Senate as a Fed governor defends the Temple.   Pollock:  There's one point when Martin was now Fed Chairman that he runs into Truman, by the Waldorf Hotel in New York. President Truman looked him in the eye and said one word, “traitor!” The IRA: Well, given all of that, the Trump administration has articulated a lot of things they would like to change at the Fed that would greatly limit the central bank’s ability to do creative things. How do you think that would change things given the deficit and everything else? Pollock: It would be very dangerous, of course. My view of Fed “independence," if you talk about absolute independence, it's nonsense. You can't have one piece of the government that becomes an autonomous power running around doing whatever it wants. That's ridiculous. But the Fed should be independent of the President and the Treasury. The reason why this is completely clear was explained by none other than William McChesney Martin: The Treasury is the borrower. The Fed is the lender. You can't have the borrower telling the lender what the lender has to do. I think that's wonderful logic, and so true. Instead, the Fed reports to the Congress and telling the Fed what to do is the responsibility of Congress.  The IRA: Unless your President is a former real estate developer.  Pollock: But all presidents wish to control the Fed. Of course. The IRA: Of course. Thank you Alex.  The Institutional Risk Analyst (ISSN 2692-1812) is published by Whalen Global Advisors LLC and is provided for general informational purposes only and is not intended for trading purposes or financial advice. By making use of The Institutional Risk Analyst web site and content, the recipient thereof acknowledges and agrees to our copyright and the matters set forth below in this disclaimer. Whalen Global Advisors LLC makes no representation or warranty (express or implied) regarding the adequacy, accuracy or completeness of any information in The Institutional Risk Analyst. Information contained herein is obtained from public and private sources deemed reliable. Any analysis or statements contained in The Institutional Risk Analyst are preliminary and are not intended to be complete, and such information is qualified in its entirety. Any opinions or estimates contained in The Institutional Risk Analyst represent the judgment of Whalen Global Advisors LLC at this time, and is subject to change without notice. The Institutional Risk Analyst is not an offer to sell, or a solicitation of an offer to buy, any securities or instruments named or described herein. The Institutional Risk Analyst is not intended to provide, and must not be relied on for, accounting, legal, regulatory, tax, business, financial or related advice or investment recommendations. Whalen Global Advisors LLC is not acting as fiduciary or advisor with respect to the information contained herein. You must consult with your own advisors as to the legal, regulatory, tax, business, financial, investment and other aspects of the subjects addressed in The Institutional Risk Analyst. Interested parties are advised to contact Whalen Global Advisors LLC for more information.

October 7, 2025  | Goldman Sachs (GS) CEO David Solomon  arguably committed heresy the other day when he stated that he would not be surprised to see a "drawdown" in equity markets over the next one to two years. Such a cautionary statement is certainly prudent for Solomon, but also illustrates the manic aspects of investing in this thing called “artificial intelligence.” Solomon also cautioned that while some capital deployed into AI will generate significant returns, a substantial amount will not. After all how many electronic parrots speaking to us based upon analysis of past history does any society need?  Solomon also warned that investors are excited and therefore less likely to be skeptical of risks, leading some to overinvest. Speaking of over-investing, GS remains the most highly leveraged bank in the US, with equity leverage below 7% and growth rates for assets and loans well-above average. As we noted in an earlier missive, GS has half of its $300 billion credit book deployed in exposures to nonbank financial institutions. More, GS has the highest exposure to derivatives of any large bank after Morgan Stanley (MS) , but MS has little on balance sheet credit exposure compared with GS. Source: FFIEC More than half of the derivatives exposure at GS and MS are interest rate contracts, but the magnitude of the exposure – thousands of times average assets – is eye watering. A tiny unexpected loss on the GS or MS derivatives books could wipe out total equity capital. While MS may have a slightly higher level of derivatives exposure than GS, the latter is a much higher-risk franchise in terms of overall leverage. Notice that MS and GS are well above the other large banks, with Citigroup (C) , then Bank of America (BAC) and JPMorgan (JPM) next in order of derivatives exposure, Wells Fargo (WFC) way down the list, then the rest of the banks and Peer Group 1 below 100% of average assets. Yet the derivatives exposure of the entire group of banks has been falling since 2019.  The Asset Gatherers: GS, SCHW, MS, AMP, RJF & SF Below we set up Goldman, Morgan Stanley and the other asset gatherers as we go into Q3 2025 earning this week.  As you might expect, GS is ahead of where it was a year ago in terms of non-interest income, earnings overall and equity market value. Total overhead expenses were up in dollar terms, but the telltale efficiency ratio fell as volumes grew more than expenses. The fact that GS CEO David Solomon is worried about investors taking winning chips off the table is belied by his firm’s aggressive deployment of capital and people as 2025 comes to a close.

October 1, 2025  | The big question in the residential mortgage market: What is going to happen to FHA/VA/USDA loans in the event of a government shutdown? Answer pretty much nothing. Nada. FHA will stop processing certain new loans, including single-family mortgages and new applications for housing projects. This creates major delays for new housing developments and financing deals. HUD posted this unusual message on the website (h/t Scotsman Guide ). The second big question facing the mortgage industry concerns the $900 million bond deal by CrossCountry Mortgage (CCM) , which claims to be the largest retail mortgage shop in the US. Most of the big players in residential mortgage shot retail lending in the head years ago, but hope springs eternal. Mortgages is, after all, still a people business. Yet the fact of CCM's retail focus did not discourage bond market investors. The CrossCountry raise went well, with CCM pricing an "upsized" offering of $900 million in senior unsecured notes due 2030. The offering was increased from an initial planned size of $600 million due to strong market interest and carried a 6.5% coupon for the "B+" rated issuer (Fitch). That's inside of +300bp over the yield on the five year Treasury note or an implied "BB" spread. Nice job CCM. In fact, most of the major mortgage issuers have been raising new capital in the bond market, leveraging the sellers market in credit that has propelled debt and equity issuance this year to record levels. Some issuers use the proceeds to finance mortgage servicing rights (MSRs), while others may shop for acquisitions. But when it comes to M&A, a good valuation for most mortgage firms today is the fair value of the MSR plus a warm handshake.  For the 12-month period ending in August 2025, U.S. mortgage lenders and government-sponsored entities issued $1.1924 trillion in mortgage-backed securities (MBS). This represents a 21.7% increase in volume over the previous year. For many mortgage firms, 2025 will be significantly better than last year in terms of volumes and a toss-up in terms of profits, depending on who is driving the bus. Below we talk about the members of the mortgage issuer group as we head into an eventual falling interest rate cycle.  Why Does United Wholesale Mortgage Sell Low Coupon MSRs?

September 29, 2025  | As markets open Monday, most managers and investors are concerned about the looming government shutdown this week. Congress is not even coming back into session until October 1st, so a shutdown is pretty much a given. The mortgage industry is preparing for significant disruptions processing government loans, among other worries. But unlike past episodes of political chicken, this time it is different. The White House team led by OMB head Russ Vought  is fully prepared to keep non-essential government functions closed indefinitely. Indeed, ‘47 and his team seem to see a prolonged government shutdown as an ideal way to advance many goals of Project 2025 . “The executive Power shall be vested in a President of the United States of America.” Accordingly, Vought writes in Project 2025, “it is the President’s agenda that should matter to the departments and agencies,” not their own. Seen from the perspective of the White House, the prospect of a shutdown of the government is not a problem but rather an opportunity.  “President Donald Trump is threatening large-scale firings of federal workers  if the federal government shuts down next week,” reports Punchbowl News , “a nuclear tactic to make any funding lapse as painful as possible for Democrats.”  A federal shutdown without salaries would force many remaining government workers to seek other employment. And that is precisely what the Trump Administration wants. Paramount Group & Aspirational Office Valuations Meanwhile in New York, the owners of commercial real estate are still reeling from the transaction announced last week. Residential mortgage REIT Rithm Capital (RITM)  surprised the industry and announced it would acquire Paramount Group (PGRE)  in an all-cash deal valued at $1.6 billion or $6.60 per share. This is less than half of book value and < 25% of the net asset value of the commercial properties owned by the REIT. As we noted in a Premium Service  comment last week, the winning bid suggests that all Class A office space in Manhattan is significantly overvalued. The sale of office landlord Paramount for a 40% discount to its book value is a harsh reality check on commercial real estate valuations in New York City. The deal highlights weaknesses in the market that contradict more optimistic assessments, particularly the tax assessments of the City of New York.  In the last disclosure from PGRE in July, the REIT claimed to have net assets of $7.2 billion and net operating income (NOI) of ~ $300 million across 17 Class A office properties in New York City and San Francisco. The implied cap rate was a little over 4% or a premium valuation. But the winning bid from RITM suggests a double-digit cap rate for these “premium” properties, meaning that the assets are seriously impaired. But here's the real joke: The City of New York pretends that property values have gone up 7% since 2020 after a 10% dip in 2022. Really? A double digit cap rate indicates a relatively high-risk commercial real estate investment with the potential for significant returns, suggesting a lower property price relative to its net operating income (NOI). Or in other words, RITM CEO Michael Nierenberg  is stealing these admittedly prime office properties at 5x NOI instead of the 25x implied by the Q2 2025 PGRE disclosure.  But are these properties really prime? Really? Although the PGRE purchase price signals greater risk, it also means the investor may be able to recover their initial investment faster – if the assets continue to generate positive cash flows. But that is the question. Several players in commercial real estate contacted by The IRA last week suggest that the winning RITM bid for PGRE is a shock to New York commercial operators and exposes the inflated book values of commercial properties across New York City. The table below from the City of New York shows the assessed values of commercial real estate for tax purposes. The first big loser of the Paramount debacle is New York City. After cutting taxable values 11% in 2022 during COVID, the City of New York has pretended that the value of all office properties have gone up since that time. But is that really true?  The table below shows the increases and decreases in valuation assumed by the City of New York across zip codes. The second big losers are the owners of New York commercial property and their auditors. Imagine you are the auditor of PGRE or any number of other owners of commercial real estate or a lender on such assets. The very public 75% discount for PGRE vs the previously disclosed NAV for the assets suggests that all such assets should be haircut significantly. The independent registered public accounting firm for Paramount Group, Deloitte & Touche, could face significant litigation. Did Deloitte do a proper audit by accepting the stated $7.2 billion valuation of PGRE’s assets? The winning $1.6 billion bid from RITM strongly suggests that the valuation was inflated. You cannot explain the low-ball valuation won by RITM on the well-publicized governance issues inside PGRE. More, there is no public record of Deloitte challenging Paramount's valuation. Deloitte, which is reportedly the most sued of the top audit firms , issued a report on the effectiveness of PGRE’s internal control over financial reporting in PGRE’s February 2025 10- K . The bigger issue created by the audacious deal struck by RITM is that all of the auditors of all of the publicly traded owners of commercial property now have a problem. The public comp created by the purchase of this commercial mortgage REIT suggests that all of the stated net asset values in the industry should be haircut say 50%, just to be conservative.  PGRE owns a lot of showcase, Class A properties in New York and San Francisco, so ignoring this comp is going to be impossible for the industry, auditors, bankers and other financial professionals. But the idea of RITM going deeper into commercial real estate as the resi market is preparing to roll over makes us a little queasy.  As we discussed last week, we are not thrilled to see one of the largest issuers of residential mortgage servicing diving into troubled commercial real estate. Even at 22% of the publicly claimed net asset value, the 17 properties owned by PGRE may not be a great deal for RITM investors. “I remain bearish on RITM, viewing its current valuation as overextended and its acquisition timing as risky amidst structural office market headwinds,” wrote Harrison Schwartz   in Seeking Alpha last week . “Office vacancies remain high, and long-term trends favor remote work, challenging the narrative that Class A properties are immune to these pressures.”  To us, the big headline of the RITM purchase of PGRE is the demise of the fiction that Class A commercial real estate is still a prime asset that deserves low-single digit cap rates. But in the back of our mind, we worry that one of the biggest owners of government residential servicing assets is taking on a high profile gamble on dubious commercial assets in blue cities. Mayor Eric Adams just dropped out of the New York City mayoral race and a silver spoon sucking Indian socialist from Uganda looks set to become the next Mayor of New York. You cannot make this up. But while a lot of political energy is focused on Zohran Kwame Mamdani's plans for rent stabilized properties, it is commercial real estate that pays the bills in New York City. “Commercial real estate in New York City accounts for 21.9 percent of all property market values as of fiscal year (FY) 2025,” NYC comptroller’s office. “Because the City’s tax structure relies on higher relative levies on Class IV (commercial properties), they account for 44.1 percent of all billable assessed values on which the property tax levy is based.”  The Institutional Risk Analyst (ISSN 2692-1812) is published by Whalen Global Advisors LLC and is provided for general informational purposes only and is not intended for trading purposes or financial advice. By making use of The Institutional Risk Analyst web site and content, the recipient thereof acknowledges and agrees to our copyright and the matters set forth below in this disclaimer. Whalen Global Advisors LLC makes no representation or warranty (express or implied) regarding the adequacy, accuracy or completeness of any information in The Institutional Risk Analyst. Information contained herein is obtained from public and private sources deemed reliable. Any analysis or statements contained in The Institutional Risk Analyst are preliminary and are not intended to be complete, and such information is qualified in its entirety. Any opinions or estimates contained in The Institutional Risk Analyst represent the judgment of Whalen Global Advisors LLC at this time, and is subject to change without notice. The Institutional Risk Analyst is not an offer to sell, or a solicitation of an offer to buy, any securities or instruments named or described herein. The Institutional Risk Analyst is not intended to provide, and must not be relied on for, accounting, legal, regulatory, tax, business, financial or related advice or investment recommendations. Whalen Global Advisors LLC is not acting as fiduciary or advisor with respect to the information contained herein. You must consult with your own advisors as to the legal, regulatory, tax, business, financial, investment and other aspects of the subjects addressed in The Institutional Risk Analyst. Interested parties are advised to contact Whalen Global Advisors LLC for more information.

September 24, 2025  | Updated | In preparation for our quarterly reader call, a few thoughts below on the markets and the remarks by Fed Chairman Jerome Powell . Then we reflect on some of the developments in the world of mortgage finance,  with one of the larger players in residential mortgages making moves in commercial office properties that frankly leave us a bit perplexed. Is Michael Nierenberg, CEO of Rithm Capital (RITM) , really paying a double digit cap rate for an "Irreplaceable Portfolio of Class A" properties in San Francisco and New York? What does this say about the true market value of all New York commercial properties? Holy bananas Batman! Rates Down Small, Gold Up Large While speaking to the Greater Providence Chamber of Commerce in Warwick, Rhode Island this week, Chairman Powell told us nothing that we don’t already know. But the question is, does this hyperbolic market want to know anything that detracts from the higher and higher market price narrative?  Yesterday we had a discussion with Myles Uland  at Yahoo Finance about the banks and our view of the sector going into Q3 2025 earnings. The basic thrust is that the large-cap banks seem to be running out of gas, while the story stocks led by SoFi Technologies (SOFI)  are still near 52-week highs, like much of the rest of the market. But as we told Uland, higher credit costs are going to force investors to reevaluate many of these names and perhaps take some profits. Suffice to say that in a falling interest rate environment, we like the nonbank members of our residential mortgage group a lot more than we like the banks at all-time highs.  And yes, make sure you read the timely front-page article in the FT today  about the sudden collapse of Tricolor Holdings at the start of this month and the impending collapse of First Brands Group . When we see that federal regulators are preparing to start ignoring the impairment of modified assets owned by banks and REITs, this is not a great endorsement for bank stocks. We must note that crypto token leader Bitcoin is trailing gold by a significant percentage this year, refuting the idea of tokens as a substitute for real money. "Money is gold, nothing else,” banker J.P. Morgan famously said in 1912, thirty years after the US restored gold convertibility of dollars, but few people in the 21st Century even understand Morgan’s perspective.  They're all too busy staring at their smartphones, the new god of the 21st Century. Meanwhile, a growing number of crypto Treasury platforms that chose to go public in order to accumulate worthless tokens are now desperately buying back stock to prevent their equity prices from plummeting. Could we be witnessing the unwind for the great crypto trade? The number of banks and other companies that have committed to facilitating crypto trades will make a wonderful target list for members of the trial bar in the event that this classical ponzi scheme collapses.  Despite the public whining by Chairman Powell, the lower interest rate narrative is already starting to see an uptick in residential lending volumes. Many lenders pushed down  loan coupons over the past three months in anticipation of a half-point rate cut, but now the market is backing up a bit – although loan volumes should continue to grow into the end of the year and 2026.  “Mortgage applications remained elevated last week, with the conventional indices down slightly (-1.8%) and government indices up modestly (+5.28%),” writes Scott Buchta at Brean. “While primary rates are up about 1/8 of a point from their recent lows, they remain well below our first threshold (6.50% for conventionals) and we expect refi application volumes to remain elevated.” But not all mortgage issuers are created equal. And REIT stocks often don't reflect NAV. Subscribers to our Premium Service get all of the details.  RITM Buys Paramount Group?  At One Quarter of NAV?

September 22, 2025  | A number of analysts are concerned about a slowing economy, yet so far the credit markets are not seeing a US recession. Indeed, as we describe below in this edition of The Institutional Risk Analyst , the larger consumer lenders in the WGA Top 100 Banks are showing very little credit stress as Q3 2025 comes to an end.