Viewing a single comment thread. View all comments

megaultraman OP t1_jeaik93 wrote

Reply to comment by Simkinn1 in Subprime is back on the menu boys! by megaultraman

Yes and that amount, less liabilities, is their profit margin. In total last year, that amount was $5 billion. But they now have $70 billion less in assets! That is what deposits are to a bank: liabilities. Otherwise, where do they get the money to give them their deposits back?

And instead of selling those assets for a massive loss, they borrowed against them! From the Fed. At 5%. So now they have 40% less assets to pay an extra $5 billion dollars in interest payments.

The question then, and the point of this post, is WHERE ARE THEY GETTING THAT MONEY?

1

Simkinn1 t1_jeb1ndo wrote

My dude you are an alabaster regard.

1

alphabetasoupa9 t1_jeb5ug2 wrote

Then please explain, because it seems like a valid question to me:

How will banks survive when they're losing depositors, can't offer high enough interest rates to attract and retain depositors, and are having to take loans out against their underwater assets at the Fed funds rate to pay out the depositors who are leaving?

2