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.
steven / StevenMcClurg
npub1nv…0paqn
2023-03-10 14:11:56
in reply to nevent1q…ggxw
Author Public Key
npub1nvxnc8egjlhpqtzrxmav3yk8frf3p7y9wujgwrcgwep2xr77xrvsa0paqnPublished at
2023-03-10 14:11:56Event JSON
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"content": "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):\n\nBanks may be in more trouble than the rest of the markets think. \n\nMost 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. \nMany 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.",
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