The hottest Banking Substack posts right now

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The Deposit Myth

Altered States of Monetary Consciousness • 481 implied HN points • 08 Mar 24
💼 Business Banking Economics Finance Education
  1. When it comes to 'bank deposits', the traditional verb-noun pairing can be misleading. The term 'deposit' typically implies something being put in, but with banks, it refers to something issued out by the bank like digital casino chips.
  2. Comparing banks to casinos can help understand the concept better. When you 'deposit' cash in a bank, it becomes their asset, and you receive digital chips as a liability. This is opposite to the usual understanding that a deposit is something put in the bank.
  3. The language around 'bank deposits' can create misunderstandings, especially in economics. An update in how we define and understand 'bank deposits' can help clear up these misconceptions and align with the actual operations involved.

The Future Monetary System (From: Regulators)

DeFi Education • 439 implied HN points • 30 Jun 23
💰 Finance Monetary Policy Payment Systems Cryptocurrency Banking Regulation
  1. The Federal Reserve's new service called FedNow will start on July 1st. It will allow people to send and receive money instantly, anytime, day or night.
  2. This real-time payment system is much faster than traditional banking, which can take days for transactions to clear.
  3. With FedNow, transferring money will take only seconds, making it easier for everyone to manage their finances.
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The Keynesian Liquidity Trap Fable

QTR’s Fringe Finance • 19 implied HN points • 10 Dec 24
💰 Finance Monetary Policy Economics Investment Market Analysis Banking
  1. People often think the economy fails because consumers save too much and spend too little. But saving isn't always bad; it can help strengthen the economy if done right.
  2. When banks lower interest rates to encourage spending, it sometimes backfires. Instead of spending, people might just save more, leading to a 'liquidity trap' where money isn't flowing in the economy.
  3. Expanding the money supply might make it seem like the economy is growing at first, but if savings decline due to previous bad policies, this can actually hurt the economy in the long run.

The lies we tell ourselves

Known Unknowns • 275 implied HN points • 03 Apr 23
💰 Finance Economy Policy Banking Investments Regulations
  1. Interest rates may not return to normal, so be cautious. Collective DC plans might not be as ideal as they seem.
  2. Don't expect a recession to automatically solve inflation issues; it may not work as expected.
  3. Inflation brings uncertainty, making high real yields essential, and planning for Social Security reforms could involve risky collective DC plans.

The LIBOR scandal, part 1: background

The Jolly Contrarian • 79 implied HN points • 08 Apr 24
💰 Finance Interest Rates Derivatives Risk management Banking
  1. Banks have structural interest rate risk, which they manage by borrowing at a low rate and lending at a high one.
  2. The LIBOR rate was created as a benchmark for banks to set their interest rates and trade standardized instruments.
  3. Interest rate swaps changed the game by allowing banks to trade interest rates with counterparties, impacting how they managed their structural interest rate risk.

Fannie and Freddie: Single Family and Multi-Family Serious Delinquency Rates Increased in October

CalculatedRisk Newsletter • 23 implied HN points • 27 Nov 24
💰 Finance Real Estate Mortgage Delinquency Banking Housing
  1. Single-family serious delinquency rates showed a slight increase in October, marking 0.55% for Freddie Mac and 0.52% for Fannie Mae. This is still lower than delinquency rates before the pandemic.
  2. Multi-family serious delinquency rates also rose, with Fannie Mae's rate reaching its highest since 2011, excluding pandemic data. This indicates growing challenges in the multi-family housing market.
  3. Delinquent loans are defined as being three or more payments past due or in foreclosure. Despite some increases, many recent loans from 2009 to 2023 are still faring well, indicating overall improvement in loan performance.

Did the debt ceiling deal really save the US from bankruptcy?

Geopolitical Economy Report • 259 implied HN points • 25 Jun 23
💰 Finance Debt Inflation Banking Economy Reserves
  1. The US's debt situation is a small part of the global debt puzzle, with rising interest rates creating challenges not only for the US but also for poorer countries dependent on dollar debt.
  2. The debt deal exacerbates the unproductive nature of debt as it has been used to replace income for individuals and constrain companies from expansion and investment in productive capacity.
  3. The financial system will face challenges including declining value of US treasuries impacting banking system resilience, inflation persisting, and US dollar losing hegemony due to rising debt and market liquidity issues.

U.S. Banking Fears, USDC post-mortem + March Q&A

DeFi Education • 539 implied HN points • 14 Mar 23
💰 Finance Banking Investments Cryptocurrency Economics Market Trends
  1. There are concerns about the stability of U.S. banking, and this has created a sense of fear in the market. Many people are worried about what might happen next.
  2. The USDC cryptocurrency faced serious issues recently, raising questions about its reliability. Some are analyzing what went wrong and what it means for the future.
  3. In a time of crisis, quick actions and communication from venture capitalists helped to calm the situation. It shows how important leadership and support can be during financial troubles.

What's So Special About the Fed's Bank Term Funding Program?

Without Warning • 235 implied HN points • 12 Apr 23
💰 Finance Banking Federal Reserve Market Valuation Central Banking
  1. The Fed's Bank Term Funding Program offers unique benefits such as par valuation and no haircut for certain collateral.
  2. Mark-to-market accounting can lead to time-based losses for banks using market-based funding like the BTFP.
  3. Central bank interventions like the BTFP in crises may have implications for bank capital and risk management.

Gold Is Back—And So Is Judy Shelton

QTR’s Fringe Finance • 25 implied HN points • 13 Nov 24
💰 Finance Investing Gold Banking Monetary Policy Economic Theory
  1. Gold prices are rising due to economic and geopolitical concerns, attracting more interest from central banks. This suggests that many countries are starting to value gold again.
  2. Judy Shelton proposes a new kind of bond that would let people redeem their bonds for gold or dollars, giving the public more control over their money. This could help stabilize the economy.
  3. Shelton believes that moving back to a gold standard could improve trust in the financial system and reduce government control over money supply, which many people see as a good thing.

News You Need To Know Before Money2020: Goldman & Apple Hit With CFPB Enforcement Actions

Fintech Business Weekly • 104 implied HN points • 27 Oct 24
💰 Finance Banking Regulation Credit Lending Fintech
  1. Goldman Sachs and Apple have to pay nearly $90 million due to issues with how they handled customer complaints about the Apple Card. They didn't follow the rules about resolving billing errors and misleading customers about financing options.
  2. The final open banking rule is now in place, but it faces a legal challenge from big banks who argue it could increase fraud and harm consumer data safety. This rule aims to give consumers more control over their financial data.
  3. SoLo Funds, a peer-to-peer lending service, is facing a lawsuit for allegedly misleading customers about loan costs. The company has been criticized for operating without the necessary licenses and using confusing practices.

Running on Empty

The Last Bear Standing • 32 implied HN points • 14 Feb 25
💰 Finance Monetary Policy Banking Liquidity Interest Rates Economic Trends
  1. The Federal Reserve's balance sheet reduction is mostly just moving money around rather than actually reducing the money supply. This means the impact on inflation might not be as significant as it seems.
  2. The Reverse Repo Facility, which helps maintain liquidity in financial markets, is running low. As it decreases, there could be less stability in short-term funding.
  3. While some people say the situation is either a disaster or not a problem at all, it's more complex. We might see tighter banking conditions and more market volatility as the Fed continues its quantitative tightening efforts.

Lou Jiwei on China's banking, PE/VC, IPOs, and Big Tech's role in lending

Pekingnology • 49 implied HN points • 06 Jan 25
💰 Finance Banking Investment Regulation Technology Market
  1. Finance should support high-quality development by improving access to loans for private companies. This includes reducing risks for banks and treating all companies equally, whether state-owned or private.
  2. Government-backed venture capital funds need to focus more on market-driven models. This will help them foster innovation while allowing for some tolerance of failure among startups.
  3. It's important for internet platforms to share the risk in lending to small businesses. By co-lending a portion of the loans, they can help prevent systemic risks in the financial system.

"Anonymous" Crypto Debit Card Startup Sues BaaS Platform, Ex-Evolve Partner Solid

Fintech Business Weekly • 66 implied HN points • 15 Dec 24
💰 Finance Banking Investing Fintech Fraud Capital
  1. Fraud and scams are becoming bigger issues for businesses compared to individuals. Companies need better tools to protect themselves from these threats.
  2. Many fintech companies are raising significant funding, which shows growth in the industry. Some are also getting ready for potential IPOs in the coming years.
  3. There's a legal battle between a crypto debit card company and its banking partner. It highlights the risks and challenges in the fintech sector, especially in compliance and service delivery.

$200 Billion in Bank Scams

DeFi Education • 739 implied HN points • 20 Sep 22
🔮 Crypto DeFi Fraud Banking Regulation Market Manipulation
  1. The banking industry has a long history of fraud and scandals, with $200 billion in fines paid for various crimes like money laundering and market manipulation. This shows that big banks often get away with serious misconduct.
  2. Critics argue that crypto is a hotbed for crime, but it's clear that traditional banks have also facilitated illegal activities repeatedly without facing serious consequences. This double standard highlights the need for fair scrutiny of both systems.
  3. DeFi (decentralized finance) offers solutions to prevent manipulation and enhance transparency. Technologies like blockchain could potentially do a better job of reducing financial crimes compared to traditional banks.

What Can We Learn From Banking Policy In Trump’s First Term?

Fintech Business Weekly • 89 implied HN points • 10 Nov 24
💰 Finance Banking Regulation Fintech Investments Economic Policy
  1. Banking regulations during Trump's first term favored a more business-friendly and less restrictive approach, making it easier for financial innovations to flourish.
  2. Several key appointments in his administration were focused on encouraging small-dollar loans and improving access to credit for underprivileged communities.
  3. There are concerns about the transparency and accountability of banks, especially regarding how they handle customer funds during crises like bankruptcies.

Fed Stonewalls Synapse FOIA Request

Fintech Business Weekly • 44 implied HN points • 19 Jan 25
💰 Finance Banking Regulation Fintech Investments
  1. The Cash App recently settled legal issues, which included fines for not properly handling anti-money laundering rules. They also agreed to improve their security and support for users.
  2. The Consumer Financial Protection Bureau released a report on 'buy now, pay later' services, revealing that many loans are small but often lead users to take out multiple loans at once.
  3. There are ongoing concerns about transparency from banking regulators, especially regarding their responses to Freedom of Information Act requests, indicating a gap between what they promise and what they deliver.

The Macro Story of SVB Isn't Just About the Fed

Without Warning • 196 implied HN points • 05 Jul 23
💼 Business Banking Regulation Economics Risk management Innovation
  1. SVB's business model relies heavily on uninsured deposits to support the innovation sector.
  2. The narrative around SVB's challenges involves blaming the Fed for its interest rate policies and the impact on bank assets and liabilities.
  3. The uniqueness of SVB's model in banking the Silicon Valley innovation economy raises questions about regulatory changes and potential consequences for American innovation.

How Banks (Zeros) Make Money

DeFi Education • 899 implied HN points • 12 Apr 22
💰 Finance Banking Investments Cryptocurrency Regulation Asset management Revenue streams
  1. Banks make money by accepting deposits and giving loans. They charge fees for services like managing assets and processing transactions.
  2. Decentralized finance (DeFi) is changing how finance works, allowing people to cut out banks and manage their money directly. This means banks might lose some of their income.
  3. Crypto and other digital methods are making it easier for people to manage their money and investments without needing traditional banks. This could change the banking industry a lot in the future.

Links - 03/13/2023

Value Investing World • 176 implied HN points • 14 Mar 23
💰 Finance Investing Banking
  1. When uncertain, we trust the crowd, assuming they know something we don't.
  2. The crowd is often wrong because they follow social proof, not superior information.
  3. Learn from individual experts and unique perspectives, rather than crowd mentality.

Is the Fed Financing the FDIC?

Without Warning • 176 implied HN points • 04 Sep 23
💰 Finance Federal Reserve Insurance Banking Liquidity
  1. The FDIC is primarily funded by banking industry fees, not congressional appropriation.
  2. During the Global Financial Crisis, the FDIC did not borrow money from the Fed but instead used clever financial maneuvers like prepayments to maintain liquidity.
  3. The FDIC may be utilizing the Fed's loans as a form of financing, with evidence suggesting that FDIC guarantees are used to back these loans, allowing for liquidity creation.