I'd Like to Tap That
You can call me TARP or TALF, but ya doesn't gots to call me FDIC...Goldman Sachs issued a rosy quarterly report...
under the sheets: In Feb, Goldman sold only $2 billion of debt... on Apriil 16th JP Morgan sold $3 billion of debt WITHOUT FDIC guarantees.
Meanwhile through the FDIC guarantee program, Goldman has issued about $22 billion in debt since last November and JPMorgan almost $40 billion.
Traditional commercial banks have harge deposit bases which provide reliable capital to fuel lending operations.
The Goldman's and Morgan Stanleys of the world are more reliant on debt markets than a BofA or Wells.
Since the meltdown, as a whole, the banking brokerage financial sector has been dependent on FDIC guaranteed debt.
Since the FDIC guarantees where put in place, Goldman, Citigroup, Wells, JP Morgan, Morgan Stanley & BofA have issued more than $160 billion in FDIC guaranteed debt.
That fact aside, the ability to tap debt markets for capital is tantamount to a normally functioning market system, which is anything but what we have.
Even with shored up equity through TARP borrowing, investors are doubtful that many banks have enough capital to weather losses spurred by the housing crisis and markets meltdown.
Banks have kept functioning in spite of this, and in some cases staved off insolvency, largely because they were able to access debt markets due to the FDIC program.
Goldmans rosy Q1 report with outsized, first-quarter trading revenue of $8.5 billion, was fueled by the cheaper FDIC funding.
Even if markets are receptive to non-guaranteed debt, it will cost more because investors would want higher yields to compensate for the greater risk involved.
Until banks and brokers can issue debt without the FDIC guarantee, they will remain wards of the state.
Debt market self sufficiency will signal that banks are no longer government controlled utilities.
Investors: CAVEAT EMPTOR
Inspired by David Reilly at Bloomberg.
under the sheets: In Feb, Goldman sold only $2 billion of debt... on Apriil 16th JP Morgan sold $3 billion of debt WITHOUT FDIC guarantees.
Meanwhile through the FDIC guarantee program, Goldman has issued about $22 billion in debt since last November and JPMorgan almost $40 billion.
Traditional commercial banks have harge deposit bases which provide reliable capital to fuel lending operations.
The Goldman's and Morgan Stanleys of the world are more reliant on debt markets than a BofA or Wells.
Since the meltdown, as a whole, the banking brokerage financial sector has been dependent on FDIC guaranteed debt.
Since the FDIC guarantees where put in place, Goldman, Citigroup, Wells, JP Morgan, Morgan Stanley & BofA have issued more than $160 billion in FDIC guaranteed debt.
That fact aside, the ability to tap debt markets for capital is tantamount to a normally functioning market system, which is anything but what we have.
Even with shored up equity through TARP borrowing, investors are doubtful that many banks have enough capital to weather losses spurred by the housing crisis and markets meltdown.
Banks have kept functioning in spite of this, and in some cases staved off insolvency, largely because they were able to access debt markets due to the FDIC program.
Goldmans rosy Q1 report with outsized, first-quarter trading revenue of $8.5 billion, was fueled by the cheaper FDIC funding.
Even if markets are receptive to non-guaranteed debt, it will cost more because investors would want higher yields to compensate for the greater risk involved.
Until banks and brokers can issue debt without the FDIC guarantee, they will remain wards of the state.
Debt market self sufficiency will signal that banks are no longer government controlled utilities.
Investors: CAVEAT EMPTOR
Inspired by David Reilly at Bloomberg.
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