Chapter
Impact of Asset Value Drop on Banks and Fed Borrowing
58:33 - 1:05:02 (06:28)
The value of assets held by banks may have dropped by 25%, resulting in the need for banks to borrow from the Fed to make cash available to depositors. The continuous movement of deposits from one bank to another is causing banks to sell bonds in the market, generating cash to pay back the Fed, causing problems similar to a game of musical chairs.
Clips
The 1.3% insurance premium paid by banks to FDIC has been understated and does not accurately reflect the true risk of depositing into a bank.
58:33 - 1:00:00 (01:26)
Summary
The 1.3% insurance premium paid by banks to FDIC has been understated and does not accurately reflect the true risk of depositing into a bank. In reality, it would cost roughly an additional hundred billion in premiums to cover all deposits.
ChapterImpact of Asset Value Drop on Banks and Fed Borrowing
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PodcastAll-In with Chamath, Jason, Sacks & Friedberg
Rapid movement of assets and deposits have caused banks to borrow from the Fed in order to keep up with depositors withdrawals, leading to a potential devaluation of loans and assets by up to 25%.
1:00:00 - 1:05:02 (05:02)
Summary
Rapid movement of assets and deposits have caused banks to borrow from the Fed in order to keep up with depositors withdrawals, leading to a potential devaluation of loans and assets by up to 25%. However, this issue would subside if depositors stopped moving their assets so quickly between banks, as banks would not need to continue borrowing from the Fed to keep up with liquidity demands.