Just a small one:
Heartland Tri-State Bank of Elkhart, Kansas, failed on Friday, with the Federal Deposit Insurance Corporation taking control.
https://edition.cnn.com/2023/07/28/business/heartland-tristate-bank-failure/index.html
Having to be bailed out by over £50 million, even though they have £9 million net capital. Looking at their balance sheet it looks like the “available for sale securities” were the main problem:
I assume that lb sign should be a $.
Meanwhile elsewhere someone is promoting the KBE small bank ETF. Lots of shorts in position for more failures. Share price is trending upward. Could be a short squeeze.
You wonder who is right? Rising interest rates mean banks must increase rates they pay to keep from losing deposits. Loans outstanding are mostly fixed rate. Profits are squeezed.
But didn’t they just do a stress test for mid sized banks. Did the Heartland Bank pass the stress test?
Banks somewhere must be failing all the time. Are rates of failure rising? Or steady?
Sure Goof it would be as you point out…
…but…
The entire thing in Commercial RE is a house of cards.
Mohamed El-Erian is saying things about “people who will suffer”. He does not realize fully or he does but does not say the problems are coming soon.
Watch the video he lightly touches on the future. At least the depositors do not have to worry according to him. LOL
