webcams for christ posted:

https://twitter.com/BoyBoy_Official/status/1640310649418027009

Buffer posted:

They did. There are(were) a bunch of services that do this and it was a really known risk / one of the bedrock risks of the financial deposit system.

VCs were just too stupid to / correctly bet that the limit wouldn't be applied / are bad at capitalism.

The thing I find most galling is that loving payroll company that hosed up their cash reserves is *still* around.

super sweet best pal posted:

I have a question about the banks: if deposits are only insured for up to a quarter million, why don't the billionaires spread their money around as many banks as possible and convert the rest into gold, silver, rare art and other miscellaneous treasure? Surely they have the resources to build their own Scrooge McDuck style money bins.

super sweet best pal posted:

I have a question about the banks: if deposits are only insured for up to a quarter million, why don't the billionaires spread their money around as many banks as possible and convert the rest into gold, silver, rare art and other miscellaneous treasure? Surely they have the resources to build their own Scrooge McDuck style money bins.

Spoondick posted:

3d printing is the reason fentanyl-laced pills took off instead of increased availability of fentanyl

now anyone with a 3d printer can download a mallinckrodt oxycodone 30mg pill press and make their own at home

fits my needs posted:

guess they were right

https://twitter.com/wealth/status/1640434017190174720?s=20

quote:

Annie Massa and Edward Harrison
Mon, March 27, 2023 at 2:33 PM EDT·6 min read

(Bloomberg) — On the surface, Charles Schwab Corp. being swept up in the worst US banking crisis since 2008 makes little sense.


The firm, a half-century mainstay in the brokerage industry, isn’t overexposed to crypto like Silvergate Capital and Signature Bank, nor to startups and venture capital, which felled Silicon Valley Bank. Fewer than 20% of Schwab’s depositors exceed the FDIC’s $250,000 insurance cap, compared with about 90% at SVB. And with 34 million accounts, a phalanx of financial advisers and more than $7 trillion of assets across all of its businesses, it towers over regional institutions.

Yet the questions around Schwab won’t go away.

Rather, as the crisis drags on, investors are starting to unearth risks that have been hiding in plain sight. Unrealized losses on the Westlake, Texas-based firm’s balance sheet, loaded with long-dated bonds, ballooned to more than $29 billion last year. At the same time, higher interest rates are encouraging customers to move their cash out of certain accounts that underpin Schwab’s business and bolster its bottom line.

It’s another indication that the Federal Reserve’s rapid policy tightening caught the financial world flat-footed after decades of declining rates. Schwab shares have lost more than a quarter of their value since March 8, with some Wall Street analysts expecting earnings to suffer.

“In hindsight, they arguably could have had more prudent investment choices,” said Morningstar analyst Michael Wong.

Chief Executive Officer Walt Bettinger and the brokerage’s founder and namesake, billionaire Charles Schwab, have said the firm is healthy and prepared to withstand the broader turmoil.

The business is “misunderstood,” and it’s “misleading” to focus on paper losses, which the company may never have to incur, they said last week in a statement.

“There would be a sufficient amount of liquidity right there to cover if 100% of our bank’s deposits ran off,” Bettinger told the Wall Street Journal in an interview published Thursday, adding that the firm could borrow from the Federal Home Loan Bank and issue certificates of deposit to address any funding shortfall.

Through a representative, Bettinger declined to comment for this story. A Schwab spokesperson declined to comment beyond the Thursday statement.

The broader crisis showed signs of easing on Monday, after First Citizens BancShares Inc. agreed to buy SVB, buoying shares of financial firms including Schwab, which was up 3.1% at 2:29 p.m. in New York. The stock is still down 42% from its peak in February 2022, a month before the Fed started raising interest rates.

Unusual Operation

Schwab is unusual among peers. It operates one of the largest US banks, grafted on to the biggest publicly traded brokerage. Both divisions are sensitive to interest-rate fluctuations.

Like SVB, Schwab gobbled up longer-dated bonds at low yields in 2020 and 2021. That meant paper losses mounted in a short period as the Fed began boosting rates to stamp out inflation.

Three years ago, Schwab’s main bank had no unrealized losses on long-term debt that it planned to hold until maturity. By last March, the firm had more than $5 billion of such paper losses — a figure that climbed to more than $13 billion at year-end.

It shifted $189 billion of agency mortgage-backed securities from “available-for-sale” to “held-to-maturity” on its balance sheet last year, a move that effectively shields those unrealized losses from impacting stockholder equity.

“They basically saw higher interest rates coming,” Stephen Ryan, an accounting professor at New York University’s Stern School of Business, said in a phone interview. “They didn’t know how long they would last or how big they would be, but they protected the equity by making the transfer.”

The rules governing such balance sheet moves are stringent. It means Schwab plans to hold more than $150 billion worth of debt to maturity with a weighted-average yield of 1.74%. The lion’s share of the securities — $114 billion at the end of 2022 — won’t mature for more than a decade.

The benchmark 10-year Treasury yield now: 3.5%.

Cash Business

Schwab’s other headache from higher interest rates stems from cash.

At the root of Schwab’s income is idle client money. The firm “sweeps” cash deposits from brokerage accounts to its bank, where it can reinvest in higher-yielding products. The difference between what Schwab earns and what it pays out in interest to customers is its net interest income, among the most important metrics for a bank.

Net interest income accounted for 51% of Schwab’s total net revenue last year.

“Schwab’s counting on inertia,” said Allan Roth, founder of Wealth Logic, a financial-planning firm.

After a year of rapidly rising rates, there’s greater incentive to avoid being stagnant with cash. While many money-market funds are paying more than 4% interest, Schwab’s sweep accounts offer just 0.45%.

Though it’s an open question just how much money customers could move away from its sweep vehicles, Schwab’s management acknowledged this behavior picked up last year.

“As a result of rapidly increasing short-term interest rates in 2022, the company saw an increase in the pace at which clients moved certain cash balances” into higher-yielding alternatives, Schwab said in its annual report. “As these outflows have continued, they have outpaced excess cash on hand and cash generated by maturities and pay-downs on our investment portfolios.”

In their statement, Bettinger and Schwab wrote that “client deposits may move, but they are not leaving the firm.”

FHLB Borrowing

To plug the gap, the brokerage’s banking units borrowed $12.4 billion from the FHLB system through the end of 2022, and had the capacity to borrow $68.6 billion, according to an annual report filed with regulators.

Schwab borrowed an additional $13 billion from the FHLB so far this year, the filing showed.

Analysts have been weighing these factors, with Barclays Plc and Morningstar lowering their price targets for Schwab shares in recent weeks.

Bettinger and Schwab said that the firm’s long history and conservatism will help customers navigate the current cycle, as they have for more than 50 years.

“We remain confident in our client-centric approach, the performance of our business, and the long-term stability of our company,” they wrote in last week’s statement. “We are different than other banks.”

—With assistance from Silla Brush, Miles Weiss and Noah Buhayar.

Zodium posted:

what's killing our children is Capital

HallelujahLee posted:

consumer confidence seems like the most useless measure of anything ever measured

HallelujahLee posted:

consumer confidence seems like the most useless measure of anything ever measured

namesake posted:

Rich people don't hold cash, they already diversify into stocks and property and things.

Its businesses which need to be buying and selling things all the time or who have gotten mega profits but would be liable for some sort of taxation if they did anything with the cash which are holding vast deposits.

Mirthless posted:

I cant tell if you're joking or just repeating some "legislate against micro manufacturing" astroturfed garbage but farrrrrrrrrrt

You could buy machined aluminum pill presses off ebay until recently and they have been available on the clear web since forever. Pill pressing at home was never hard. A 3d printer costs ten times what a pill press costs.

quote:

The raids relate to a dividend arbitrage strategy known as Cum-Cum where shareholders transferred stock for a short period to investors based abroad to avoid a dividend tax. Investors held the shares during the period when dividends were paid out and either weren’t taxed or taxes were refunded. They then sold the securities back to the original owner and the amount saved was split between the parties.

genericnick posted:

Didn't expect Clinton to rake in more than Barrack. Was that during his wife's presidential runs?

Willa Rogers posted:

Former President Bill Clinton has made the most of any modern president on the speaking circuit. He gives dozens of speeches a year and each brings in between $250,000 and $500,000 per engagement, according to published reports. He also earned $750,000 for a single speech in Hong Kong in 2011.

In the decade or so after Clinton left office, from 2001 through 2012, he made at least $104 million in speaking fees, according to an analysis by The Washington Post.

Clinton makes no bones about why he charges so much.

“I gotta pay our bills,” he told NBC News.

genericnick posted:

Didn't expect Clinton to rake in more than Barrack. Was that during his wife's presidential runs?

Mr Hootington posted:

The real crime has been uncovered! SBF was a communist spy!
https://twitter.com/markets/status/1640713801103474690?t=-k784eUhGmKFrFdWwE3eSA&s=19

quote:

After Chinese authorities froze several Alameda accounts worth more than $1 billion, Bankman-Fried directed an employee to make bribery payments to at least one government official there, the indictment says. The Alameda accounts were held in two major Chinese cryptocurrency exchanges.

“After confirmation that the accounts were unfrozen, Bankman-Fried authorized the transfer of additional tens of millions of dollars in cryptocurrency to complete the bribe,” it says.

The alleged bribe appears to have been a last resort. Bankman-Fried initially tried several other methods to unfreeze the funds, the indictment says. Those tactics included hiring attorneys to lobby for him in China and opening up accounts on those Chinese exchanges using the personal information of several unnamed people who were unaffiliated with his companies.

Nothus posted:

The Clintons were the main conduit for buying influence in the party for a while. I get the feeling that greasing Obama's palm doesn't actually get you anything

webcams for christ posted:

https://twitter.com/lines_down/status/1640723253625774081

also today France raided 5 banks who are facing $1.1 Billion in fines for money laundering & tax evasion

https://twitter.com/business/status/1640656421162307584

the name of the scheme? Cum-Cum

Willa Rogers posted:

lol, he bribed them bc his funds were frozen, according to nbc news:

genericnick posted:

Didn't expect Clinton to rake in more than Barrack. Was that during his wife's presidential runs?

sullat posted:

Banks are where poor people keep their money that isn't properly invested

FlapYoJacks posted:

He's making 3/5ths the amount of Clinton.

FlapYoJacks posted:

Mr Hootington posted:

The real crime has been uncovered! SBF was a communist spy!
https://twitter.com/markets/status/1640713801103474690?t=-k784eUhGmKFrFdWwE3eSA&s=19

silentsnack posted:

yea but the way its implemented in this bill is especially stupid. like nobody has been able to articulate exactly why tiktok is a threat that needs to be Taken Seriously or what it's doing with user data that is so different from google or amazon giving surveillance data to the NSA, and computers are just inscrutable magical boxes that mortals cannot comprehend, so it's left completely open for congressional committees to fill in the blank that decides what kind of entities or actions pose a "risk" to the US.

Willa Rogers posted:

lol, he bribed them bc his funds were frozen, according to nbc news:

mycomancy posted:

loving

Willa Rogers posted:

Former President Bill Clinton has made the most of any modern president on the speaking circuit. He gives dozens of speeches a year and each brings in between $250,000 and $500,000 per engagement, according to published reports. He also earned $750,000 for a single speech in Hong Kong in 2011.

In the decade or so after Clinton left office, from 2001 through 2012, he made at least $104 million in speaking fees, according to an analysis by The Washington Post.

Clinton makes no bones about why he charges so much.

“I gotta pay our bills,” he told NBC News.

sullat posted:

Banks are where poor people keep their money that isn't properly invested