steven on Nostr: Here is something I posted on an internal channel in June that we can discuss (I cant ...
Here is something I posted on an internal channel in June that we can discuss (I cant seem to post a screenshoot in Nostr, sorry):
Banks may be in more trouble than the rest of the markets think.
Most banks have been holding MBS on their balance sheets to generate yield. These securities probably yielding 2-3.5% (the more senior tranches) and have 7 year expected WALs. In rising rate environments, people don't re-fi nor move as much. This extends life of MBS. Also rates are at 6% + now. So these holdings have decreased in price- about 10%. If banks sell these holdings, they are at losses.
Many regional banks have also taken up venture lending, given the higher rates these lines of credit can command. I've seen 9-12% - imagine if you will a blockchain startup taking a loan and buying say, Avax or ETH heavily on their balance sheets because they are in that ecosystem. Not too crazy to imagine someone doing that. I just spoke to an entrepreneur in the NFT space that raised $1mm, and spent $700k on JPEGs just to get in the clubs. I imagine some of those venture loans might be in trouble.
Banks may be in more trouble than the rest of the markets think.
Most banks have been holding MBS on their balance sheets to generate yield. These securities probably yielding 2-3.5% (the more senior tranches) and have 7 year expected WALs. In rising rate environments, people don't re-fi nor move as much. This extends life of MBS. Also rates are at 6% + now. So these holdings have decreased in price- about 10%. If banks sell these holdings, they are at losses.
Many regional banks have also taken up venture lending, given the higher rates these lines of credit can command. I've seen 9-12% - imagine if you will a blockchain startup taking a loan and buying say, Avax or ETH heavily on their balance sheets because they are in that ecosystem. Not too crazy to imagine someone doing that. I just spoke to an entrepreneur in the NFT space that raised $1mm, and spent $700k on JPEGs just to get in the clubs. I imagine some of those venture loans might be in trouble.