Default rate on credit card loans from small lenders is now higher than:
Dot Com bubble
Financial Crisis
C-19Buckle up. pic.twitter.com/1dBkzHOI1X
— Game of Trades (@GameofTrades_) September 7, 2023
Credit card delinquencies at small banks are at 7.51% — an all-time high.
Small banks almost failed in March, were rescued by the Fed, and hold 71% of CRE loans… 92.3% of which were past-due in July.
Regional banks are teetering on the brink & we aren't even in recession yet. pic.twitter.com/JCmD2TtyaI
— Joe Consorti ⚡ (@JoeConsorti) September 7, 2023
Delinquencies are going higher.
More Americans are falling behind on their car loan and credit card payments than at any time in more than a decade, a troubling signal of consumer stress as higher prices and rising borrowing costs are squeezing household budgets.
The pain is… pic.twitter.com/iQSAtU37ar
— Wall Street Silver (@WallStreetSilv) August 31, 2023
🇺🇸 United States debt
US government debt: $32.8 trillion
Household debt: $17.1 trillion
Mortgage debt: $12.01 trillion
Auto debt: $1.6 trillion
Student loan debt: $1.57 trillion
Credit card debt: $1.03 trillion pic.twitter.com/EdnNOoZKjB
— Win Smart, CFA (@WinfieldSmart) September 5, 2023
Fed's bank rescue facility hits all time high. Someone is in for a surprise. pic.twitter.com/WSCSZdBK9w
— zerohedge (@zerohedge) September 7, 2023
Real-Estate Doom Loop Threatens America’s Banks
Usage of the Fed's emergency bank funding facility jumped by $328 million last week.
It now stands at a new record high of $108 billion, even as the regional bank crisis is "over."
The current rate banks are paying the Fed on these loans?
An alarming ~5.5%.
The banks that… pic.twitter.com/6lWAavqC1b
— The Kobeissi Letter (@KobeissiLetter) September 8, 2023
Record High: Banks Increasingly Rely on Fed’s Emergency Funds
Usage of the Fed’s emergency bank funding facility hit a record $108 billion, signifying growing financial stress. Money-market funds surged by $42 billion to a record $5.625 trillion. Institutional fund assets rose by $24 billion, and retail funds grew by $17.7 billion. The gap between fund assets and bank deposits widens, reflecting distrust in traditional banking. The Fed’s balance sheet shrank by $20 billion, signaling potential economic challenges. Fed Quantitative Tightening (QT) continues with $18.4 billion sold last week, adding to market uncertainty.
U.S. Banks still holding massive unrealized losses on investment securities pic.twitter.com/kxLyDhYjxg
— Barchart (@Barchart) September 7, 2023
You can hear bank accounts draining from here.
We'll see which banks run into liquidity issues in October. t.co/Xr74rwBD4h
— Financelot (@FinanceLancelot) September 8, 2023
‘Significant Downside Risks’ for Banking Industry: FDIC Chair
FDIC Chair Martin Gruenberg warns of significant risks to the US banking industry due to inflation and high interest rates, leading to weakened profitability and credit quality. The second quarter was one of the most tumultuous periods for banking since the 2008 crisis. Deposits continued to decline, adding pressure on banks to raise funding costs. Gruenberg notes these challenges, along with concerns about a softening commercial real estate market, will remain under FDIC scrutiny.
Bank of America’s Hartnett Says Get Defensive Brace for a Hard Landing
Bank of America warns of a potential “hard landing” for the US economy and a stock market selloff over the next two months due to the lingering threat of higher interest rates. Rising bond yields make stocks less appealing, with the S&P 500 earnings yield trailing behind Treasury bill yields. Michael Hartnett, the bank’s strategist, emphasizes the need to “get defensive” and prepare for a “long and hard landing” as yields continue to climb.