And the future. Current Banking Crisis "Is Not Over Yet" - Jamie Dimon Warns Of "Repurcussions For Years To Come" | ZeroHedge
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Dimon is an optimist. I am surprised at some of his views in this letter.
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Dimon knows his opinion moves markets , he doesnât want to be blamed for a ten percent sell off in certain sectors, imo.
It could also be that he wants to drive down the values of certain prime banking assets that he may take over at very attractive valuations.
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Dimon doesnât play games, which is why Buffett respects him.
JPM, BAC, WFC all rolled-up to grow in size. There is going to be consolidation in regional banks. I hope FDIC prefers that over institutions going down. If you think he is not interested in picking few cheap assets, you donât understand. When you get to the top in any organization, let alone a $3 T bank, the CEOâs are aggressive, ambitious and have sharp elbowâs. Buffett and Jamie knows how to hide that, but donât mistake that as âniceâ.
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Did you read what Dimon said ? ââ The CEO is the nationâs largest bank warns of damage to âtrustâ in the banking system:
*âAny crisis that damages Americansâ trust in their banks damages all banksâ a fact that was known even before this crisis. While it is true that this bank crisis âbenefitedâ larger banks due to the inflow of deposits they received from smaller institutions, the notion that this meltdown was good for them in any way is absurd,â Dimon wrote.â A panic sell off would help Buffett put tens of billions to work, Dimon and Buffett arenât interested in instigating a panic, no way.
I read Dimonâs banking section.
I had no issue with it. Nor did I see any great warning over the bow. He just pointed out how detailed banking is in the trenches. How vital a healthy banking system is. That regulators implement silly rules that cause unintended behaviors. For example. Originating and Owning a mortgage has a high risk rating making it uneconomic, but originating the same loan and selling it to fannie mae and buying it back as part of a security has a low risk rating. So all the banks sold their loans and loaded up on securities? Why should this incentive be in place? Dimon has previously pointed out how uneconomic mortgages were under the new rules. He said he would blow them out several quarters ago.
I would point out that one of the critical issues at this time, unrealized losses on securities, is likely much lower as I write vs. Q4 2022. My guess is the industry referenced $620 BB is under $500 BB as I type. This is in reference to capital of $2.2 Trillion I think.
Donât get alarmed. It is fractional reserve system, which operates on the depositors faith, that their cash will be available when they want to withdraw. It is not the trust that is the issue, rather the banks paying 0.01% on deposits, while you can get 4~5% on a money market fund, T-Bills and you can move with a click on your phone has changed/ changing banking.
Jamie can talk about confidence all he wants, but if banks are not going to increase the deposit rates, the money is going to walk/ run. People are looking to earn something on their money.
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I received an email, and a phone call!!! from WFC asking me to switch to premier checking to earn higher rates and the higher rates are .5% and I have to maintain $250K balance to avoid paying $35 monthly service fee.
Banks are still not getting it. The credit score system is so screwed is the only reason I have not yet closed the bank account.
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Hi, for various reasons Iâm on many accounts , not just family but friends as well. So , in the aggregate I see statements from many firms. Itâs incredible what banks, brokerage firms, and other financial institutions are, offering, to hold on to and attract money. This tells us banks, cost of deposits, will be up, substantially, going forward, as Americans become better educated. Itâs going to be a very interesting year for bank earnings , as their cost of deposits, explode, and they are forced to mark to market.
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Yes, and they are aggressively promoting CDs as well, but again, what is that doing to the banks cost of deposits?? Americans and businesses had way too much money in accounts yielding very little, at regional and big banks. Those days are over, forever.
What is new ? Depositors keep their money in checkings and savings accounts not to get high interest but they need that money for transactional needs.
This has and will be the same. No one is moving rent money to money market or stocks or cds. Big banks are fine, in fact better as money is moving into them.
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What? The banks that failed had a very high percent of, uninsured deposits, no? Those days are over, cheap money for banks and brokerage firms is history, thatâs, what has changed. Retail and many businesses had way too much money in low yield accounts.
As I mentioned, I worked for First Interstate Bank pre 1996 B4 Wells bought us. Long ago we new that if the majority of accounts receiving no interest would just move their money to our savings/money market account that a substantial portion of our earnings would be impacted. It just didnât happen. While this issue is more in the media today, I would guess that only a small percentage will act on this. My mother in law has $900K at Wells in non-interest checking accounts. That is all of her funds in the world. Wells broker and I try to get her to move them to CDâs. She wonât do it. She is worried about her expenses and afraid she will need the money anytime. I try and explain that if she buys CDâs she would have $30K more to spend each year. It falls on deaf ears. This is a hard concept to grasp, while I fight for every basis point on my balances, most americanâs donât. Peopleâs behavior is not what you and I expect. You have to learn this from real life experience. Most of the consumer money in banks is from the elderly, not the 30 year old on a trading platforms. I would speculate that less than 15% of these funds will eventually move to high interest bearing opportunities.
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Good morning, with all due respect, this is why you get power of attorney for elderly parents and loved ones who are not family, you are caring for. Your mom is no longer able to make sound financial decisions, been there, done that. If you have to, reason with her, on something so obvious, perhaps you can convince her to give you power of attorney, or, make you joint on the account. Seriously, I had a situation where a friends grandma called me and asked for a ride. Her eyesight went bad so I had to sell her car. I asked, where do you need to go grandma? She responded, if I wire 10k to this nice man who called me on the phone, he will deposit one million into my account, yep, real world 101, which explains why we still get those calls and emails. I took her to my branch of B of A, had her explain to the manager , who I knew for years, what she wanted to do , and I acted. I left 5 k in her checking account, and I protected her remaining assets, plus going forward, she couldnât spend any serious money without my approval. This paperwork and documentation protected my hide when her ignorant leach relatives showed up after she passed away, looking for her money. Good luck bud, itâs aggravating as hell, but love and compassion have to control the situation.
Here is Dimonâs bank
Money is leaving big and small banks but big banks are fine. Small banks are in trouble.
Big banks are not matching treasuries/money market because they want to keep the profits. They donât need the money because they are tightening the credit standards so will give out fewer loans and those will be at high interest.
This cycle will reverse if/when Fed starts lowering the rates.
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You can only get power of attorney in California if she is openly willing to agree. Which she isnât. As people lose their ability they become more unwilling to make cooperative decisions. We had Doctorâs recommend this to us and we spent $10 K in court to no avail. California protects the rights of the individual, even if it is not in the interest of the individual.
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