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U.S. bank lending slumps by most on record in final weeks of March

finance.yahoo.com

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Re: U.S. bank lending slumps by most on record in final weeks of March

#51

Post by selimthegrim »

canadiantim wrote: post #25
anonporridge wrote: post #17

Earlier quoted context omitted.

Retiree wealth mining is the next great gold rush! One interesting scheme I recently came across is an assisted living home that doesn't take regular payments. Instead, they have their residents sign over their entire net worth at the event of their death, leaving nothing for their inheritors. The tradeoff is that they get to stay for as long as they live. Of course, this scheme has some obvious perverse incentives f…

Those are some terrifying perverse incentives, jeez

As long as they don't name the home Tontine

Re: U.S. bank lending slumps by most on record in final weeks of March

#52

Post by MR4D »

iamdamian wrote: post #39
adamsb6 wrote: post #31

Earlier quoted context omitted.

Fractional reserve requirements limit the amount of loans a bank can make relative to its deposits.

Are there still fractional reserve requirements in the U.S.?

No.

https://www.federalreserve.gov/monetarypolicy/reservereq.htm

Re: U.S. bank lending slumps by most on record in final weeks of March

#53

Post by somewhereoutth »

kneebonian wrote: post #2

The days of cheap capital are over, and not because of the Fed. The largest generation, boomers, are now retiring. Up until now they've been pumping money into the economy and the investing with their 401k and things like that. Now that trend is reversing as they retire they are taking money out of the 401k, out of their life savings, at the same time their purchasing power is decreasing. The end result is a lot less…

Quite possibly.

Another way to look at this is from the resource, instead of financial, perspective - the boomers will stop producing but will carry on consuming, this will put a burden on the rest of us (modulo automation and immigration from / offshoring to places with different demographic characteristics - crudely, robots and immigrants would be cleaning up after them). Financial engineering (i.e. pensions) ensures that they (mostly) will be looked after, instead of tossed on the scrap heap.

Re: U.S. bank lending slumps by most on record in final weeks of March

#55

Post by JumpCrisscross »

MR4D wrote: post #46
JumpCrisscross wrote: post #22

Earlier quoted context omitted.

> they are taking money out of the 401k, out of their life savings, at the same time their purchasing power is decreasing Withdrawing from a 401(k) has no real effect. Spending the proceeds does. The decrease in purchasing power blunts the restrictive effects of those savings being spent with no corresponding contemporaneous production. > a prolonged slump is coming Careful. America is uniquely tuned to benefit from…

> Withdrawing from a 401(k) has no real effect. Highly disagree here.... First, selling stocks puts downward pressure on price and also p/e ratio. A lower p/e ratio means startups and growth companies trade at lower multiples. Second, selling bonds increase yields, which means the price of borrowing (interest rates) goes up. When that happens, companies that borrow money (most of them) see lower profits because more…

> selling stocks puts downward pressure on price and also p/e ratio…selling bonds increase yields

These are financial effects. It takes extra steps to get to a real effect, unlike spending. (Financial effects are monetarily mediated, which means the Fed can do things.)

> lower growth for a good period of time

Agreed. That’s different from “a prolonged slump” [1][2].

[1] https://news.ycombinator.com/item?id=35512928

[2] https://www.investopedia.com/terms/s/slump.asp

Re: U.S. bank lending slumps by most on record in final weeks of March

#56

Post by chrisabrams »

adamrezich wrote: post #41

in case it wasn't clear from the terrible headline, this is about all United States banks, not U.S. Bank.

Oh wow thank you for clarifying that. I was thinking it was odd that we're getting a single bank's update here.

Re: U.S. bank lending slumps by most on record in final weeks of March

#57

Post by s1artibartfast »

toast0 wrote: post #33
s1artibartfast wrote: post #15

Earlier quoted context omitted.

I think that's a pretty unrealistic hope. I don't think the government is going to spin up up millions of workers to be in home caregivers and start building government funded nursing homes. That's not to mention the budget implications is such care. Some states are looking at or implementing new mandatory Insurance programs nursing home care, but these are far too late for Boomers to pay into them in a meaningful wa…

If you have medical necessity, Medicaid pays for long term nursing homes once you meet their financial requirements (spend down assets and have low enough income). Some nursing homes specialize in medicaid patients, which isn't much different than a government funded nursing homes IMHO.

I fully agree that's the case. I was more addressing the idea of the government providing the services directly and cutting the private providers out of the loop

Re: U.S. bank lending slumps by most on record in final weeks of March

#58

Post by dragonwriter »

throwaway6734 wrote: post #13
n00bskoolbus wrote: post #6

Earlier quoted context omitted.

Lets just hope it's done by the government and not by private corps gouging people who just need care.

The government will be gouging the young to pay for it. From the generation that brought you Ronald Reagan, boomers will have no trouble bankrupting the youth to pay for their entitlements

> From the generation that brought you Ronald Reagan,

The age groups that Reagan won were the ones that are (predominantly composed of, because the categories don't perfectly match generation boubdaries) Silents and older. The Boomer age groups were tied (22-29 went 44 Carter, 44 Reagan, 11 Anderson) or for Carter (18-21 went 45 Carter, 44 Reagan, 11 Anderson.)

The generation(s) that brought you Reagan are, for the most part, dead.

Re: U.S. bank lending slumps by most on record in final weeks of March

#59

Post by mholyland »

ljoshua wrote: post #36

When the article says, “Commercial bank lending dropped nearly $105 billion in the two weeks ended March 29, the most in Federal Reserve data back to 1973,” and later also notes that banks “divested” themselves of billions of dollars in loans, where is the money going? Are they selling the loans off their books to third parties? Or are they just refusing to make new loans that they would have otherwise consistently m…

I was listening to Jim Cramer discuss it this morning, and he said the banks are nervous about lending out money/investing, in what is usually considered safe. Things like US treasuries or real estate. They are fearing a liquidity crunch.

I'm looking for a more concrete source.

edit: Found a source: https://www.federalreserve.gov/releases/h8/current/

Re: U.S. bank lending slumps by most on record in final weeks of March

#60

Post by LarsAlereon »

tlogan wrote: post #54

I think this is just a temporary slump caused by the SVB failure. The economy is not doing great but it is not in a complete metldown. I do expect interest rate to continue going up: inflation seems to be quite stubborn.

Bingo, banks are realizing that they underestimated their deposit risk so are lending less to build their reserves up to levels they now think are healthy. It sucks if you need access to capital right now, but it means we'll be less likely to see another bank failure next month.

If someone wants to chicken little about anything it should be wages not rising to keep pace with inflation. If unchecked this would eventually cause a collapse in consumer demand that WOULD melt down the economy.

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