2024-02-06 10:32:00 ET
Summary
- The Fed announced that it was cutting off the funding from BTFP in March and it is drawing up a plan to encourage banks to use the Fed Discount Window for liquidity needs.
- While everyone was discussing the potential for a CRE debt crisis to foment this year, the NYCB and Aozora earnings reports confirm that it has already begun.
- I wanted to discuss what happened to NYCB because Japan’s Aozora Bank ADRs plunged 26.1% Thursday after slashing the value of some of its U.S. office tower loans by more than 50%.
I didn’t watch Jay Powell on “60 Minutes” because I knew it would be mainstream media sugar-coated drivel wrapped around propaganda as the 60 Minutes anchor tossed J-Pow meatball questions. But I did learn that Powell asserted that it is unlikely that there will be another real estate-led bank crisis, particularly with the TBTF banks. I course, there’s no way he can honestly say that he has a clue as to the potential magnitude of CRE exposure via OTC derivatives at the TBTFs – no one does. And Powell’s statement is certainly reminiscent of when Ben Bernanke asserted that the subprime debt problem was “contained” in 2007....
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A Bank Crisis Is Percolating