Dream First Bank Assumes All of the Deposits of Heartland Tri-State Bank

Re:Dream First Bank Assumes All of the Deposits of Heartland... by kikokikokiko on Friday July 28, 2023 @09:05PM (#36915646)

And what happens if these impairments start to gradually become more and more realized losses, as their due dates come? I can't see the FED making a 180 anytime soon, in fact I've been buying treasuries for the most part. Everybody in the world may want (and need) lower rates, but it's like fighting against the sunrise, if it's time for it it's time and that's it. What will happen when it's not Heartland Bank from Bumf*ck Arkansas that is going under from betting on the wrong macroeconomic path, but let's say, Bank of America? Would the other banks have the cash to bail this one out? Or will the FED in the end have to print piles and piles of colored paper, raising inflation and then having to raise rates, bla bla bla. It's going to be interesting to see what happens in the next few years.

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Re:Dream First Bank Assumes All of the Deposits of Heartland... by berbec on Friday July 28, 2023 @09:17PM (#36915724)

My naive, and cynical, understanding of this type of policy, is the point is to kick the can down to the next generation. It didn't start this way (I hope), but I view it as an accepted solution to make sure the bomb's timer is my_age+1yr.

See [social security] & [climate change], et. al.

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Re:Dream First Bank Assumes All of the Deposits of Heartland... by toomuchtodo on Friday July 28, 2023 @09:08PM (#36915675)

Systemic banks will be fine, only the rinky dink banks are in danger. Each bank failure will be an orderly handover of assets and deposits to a better capitalized acquirer.

If you own treasuries, you’ve already bought into “full faith and credit.” Carry on with your day, and maybe don’t keep deposits at a regional bank.

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Re:Dream First Bank Assumes All of the Deposits of Heartland... by dylan604 on Friday July 28, 2023 @10:04PM (#36916068)

> but let's say, Bank of America?

4 simple words: Too big to fail.

We've already seen this play. It looked like TAARP bailouts. I'm sure congress will be lobbied and something similar will play out if it comes again

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Re:Dream First Bank Assumes All of the Deposits of Heartland... by landemva on Friday July 28, 2023 @10:28PM (#36916216)

SVB marked their debt to maturity, until they ran out of liquidity and were shut down. But rising rates does not affect fixed rate loans.

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Re:Dream First Bank Assumes All of the Deposits of Heartland... by ruds on Wednesday August 02, 2023 @11:53AM (#36972600)

In many of these bank failures, the problem has been that they are holding very safe loans at an interest rate that is too low for today's environment. In practice, if they are allowed to survive until the loans mature, they will get all the principal back, so there won't be a realized loss there. Unfortunately, the rate is so low that if you need to sell the loan today it will be at a substantial discount to face value.

The losses that the banks would actually realize are that the cost of deposits have gone up: People want a higher interest rate on their deposits. If they don't get that rate, people pull their deposits, and banks aren't allowed to hold their safe loans to maturity because they need cash now.

Historically, rising rates have been good for banks because deposits are sticky and the banks can raise their customers' interest rates more slowly than they raise the rates on the loans they make. It seems that customers are more fickle now, and many banks weren't prepared for that.

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