How Big Banks Stack Up to Silicon Valley Bank - Are Big Unrealized Losses a Risk?

Some articles have raised concerns over big unrealized losses at America's big banks - let's talk about it.

DISCLAIMER: Richard does not hold a position in any of the companies mentioned in this video. This channel is for education purposes only and does not constitute financial advice - Richard is not responsible for investment actions taken by viewers. Please seek out a registered advisor if you require assistance (while Richard is a registered portfolio manager at WDS Investment Management, he does not provide advice through The Plain Bagel, which is not affiliated with his employer).

[Leb.ertarian]

Still the best in the YouTube financial space. Real, clean information that is easily digestible.

[akaman]

As a former Prudential Banking Regulator, I approve this explainer. Great job as always Richard.

[jb_makesgames]

As a former banker - your video was excellent and rare to be found on Youtube. Another point you should have brought up is that the regulatory rules in the US are different from the global Basel rules that make comparing US/non-US banks. In the end the government will backstop all banks..

[brinistaco]

as an electrician, after the first 10 minutes, I was completely over my head. I am glad that you post these and most of the time, I get it. Seems like we don't have to worry, right?

[KingUnKaged]

Every now and then, I watch a video like this one and am reminded of just how far down the rabbit hole we really are. Imagine starting a conversation in any other context with the phrase: "You've probably seen one of these articles about the massive unrealised losses of US banks." I'd imagine it's the inverse of the time a friend tried to explain to me what a Vanderpump was.

[austingross]

As a finance major your videos are great for staying up to date in the industry

[MathematicsStudent]

This was a very fun video! I would love to see other videos featuring spreadsheets breaking down topical issues in the financial and business world

[GreenHotDogz]

Thanks for all your insight, Richard. After watching your videos for nearly 3 years, I've finally managed to get somewhere compared to the big meme stock days 😂😊

[ricowtfyoufailorg]

As a Canadian YouTuber, can you give some insight on TD Bank and how it is the most shorted bank? And how does this affect the average investor who is not in Canada?

[___________________________]

Love these more technical videos. Been a fan for ages, learned a lot from you, also really enjoy your goofier videos, but seeing analysis like this in practice is a different beast entirely and I'm so here for it

[jackterranova]

Easily the most informative media piece on the current banking situation ANYWHERE. Thanks for this awesome breakdown, Richard.

[ExcelTutorials]

This video was a hard throw back to intermediate accounting, lol. Great video!

[midimusicforever]

Thanks for being level headed. We need more of that in this time of sensationalism.

[fplbrunoo]

I just prepared a report on the same thing for my bank. I must say you covered it really well. Top tier knowledge

[marinal]

Question, a lot of this is rating-based, how accurate is the rating? I'm just thinking of the '08 crisis where ratings were laughably and devastatingly deceiving. I know it's completely different rating but just wondering.

[brettrace]

Why does Canada get "housing crash imminent" fear articles every other week since 2008? If they haven't been right since 2008, is it only a matter of time? What do you think of the most recent scary articles about TD? From what i see, its a bunch of shareholders on both sides of the TD/First Horizon that just don't like that deal.

[pm]

A few comments / additions
(1) CET is really about measuring credit risk (and yes that is likely the biggest shortfall of bank regulation). The very design of that ratio encourages investment in govies given the 0% risk weighting (= no equity requirement). There is indeed no consideration for duration risk in equity capital rules at present. I think the idea was that deposit insurance would cover this, but that is a bit debatable, especially as there is no penalty for deposit conversion.
(2) svb is sort of an example of how the banking (and fund/insurance) sector is absorbing rate increases from the government debt stack.
(3) the real crux (in europe especially) that is still largely ignored are fixed rate mortgages / loans on the books where no mtm losses are taken. Especially mortgages in europe span 30+ years 9n fixed rates. Now European regulators say that these banks hold cet against these. While that is correct, the Cet is meant to cover credit losses on a PoD x LGD basis, not rate risk. Thus a combination of higher credit losses and deposit withdrawal would be quite critical

[alanbi]

Hey Richard, great video as always. Do you have any theories as to why JPM chase is the only of the big four banks projected to lose money with a 100 bps hike? The only plausible explanation I could come up with is fewer IPOs in a high interest rate environment, and JPM oversees the most IPOs out of the big four.

[albertooo]

Excellent video!! I was just wondering about this very topic for these “too big to fail” banks. Thank you for being an amazing educator!!

[nixic_]

fav YT channel by far, thx for sharing your insights