EVERYONE STOP WHAT YOU ARE DOING: a huge banking crisis is happening; @fdic just closed Silicon Valley Bank (couldn't last 5 hours to get to the weekend) & contagion is coming esp b/c only covering insured depositors, which will ignite a run on many similarly situated banks; 1/
per recent report, 93%+ of SVB deposits are uninsured & they only getting "receivership certificates" meaning getting in line w/ all other creditors; tells depositors everywhere to run asap (including to Wall St's too-big-to-fail banks which @federalreserve won't let fail) 2/
But @federalreserve policy is at the root of this growing crisis: maturity mismatch and the inverted curve due to the Fed’s unprecedented pace/amount policy pivot. Flipping some of the AFS portfolios to HTM and FHLB backstops will help, but that’s not going to be enough 3/
Huge swings in treasuries in last 48 hours or so loosening financial conditions caused the stock mkt to temporarily pop, but the immediate financial stability implications are serious & growing. Hard to see how the @federalreserve isn’t going to have to intervene . 4/4
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