Safer Banking Research Articles

OTC Derivatives Are Presenting Huge Tail-Risk To JPMorgan

Over-the-counter (OTC) derivatives are derivatives executed and settled bilaterally with counterparties without the use of an organized exchange or central clearing house. OTC contracts are the riskiest type of derivatives. JPM had $603B in total gross derivate payables as of the end of 3Q, of which around 76% were OTC derivatives.

by Avi Gilburt - 1 week ago

Are You Preparing For Another Banking Crisis? You Should Be

The Fed has recently published the October 2023 Senior Loan Officer Opinion Survey on Bank Lending Practices. This is a quarterly survey conducted by the Fed, which provides insights into the largest U.S. banks' lending practices. We have been discussing various issues in the U.S. banking system for more than 18 months now, and we expect that those issues are likely to lead to a major crisis in the sector. Notably, the October 2023 survey shows that the system is currently facing the issues of which we have been warning.

by Avi Gilburt - 3 weeks ago

Banking Crisis Likely On The Horizon - Are You Prepared?

It would seem that people do not want to hear that their banks have any issues. This tells me that most market participants are still quite oblivious to the issues we see in the bank balance sheets or are simply choosing to ignore them. Therefore, it seems that there are very few who are preparing for what can be the worst banking crisis seen since the 2008 financial crisis or even the Great Depression.

by Avi Gilburt - 3 weeks ago

Bank of America Is Developing A Big Problem: Commercial Lending

More than a year ago, we published an article on Bank of America (NYSE:BAC), in which we highlighted some of the bank's issues. In particular, we said that a massive increase in BAC's commercial loan book looked like a major concern to us, although BAC's management named this significant growth in its commercial credit portfolio as a "de-risking of the bank's balance sheet." In this article, we would like to show some recent data suggesting that BAC's decision to massively increase its commercial loan book could turn out to be a major strategic mistake.

by Avi Gilburt - 4 weeks ago

The Fed Lost $113 Billion And Is Underwater By $70 Billion

The recent data published by the St. Louis Fed shows that even the U.S. banking regulator itself is completely unprepared for a rising rate environment. The chart below shows that the Fed has posted a loss of almost $100B since the beginning of the year, and its total loss since September 2022 has reached $113B. Importantly, these are not paper losses but real losses to the U.S. Treasury and, hence, a part of the U.S. budget deficit. In this article, we would like to take a deeper look at this quite extraordinary event.

by Avi Gilburt - 1 month ago

Wells Fargo Is Developing A Big Problem

A month ago, we published an article titled "Commercial Real Estate May Cause The Next Financial Crisis," in which we mentioned that CRE lending is one of the major issues for the stability of the U.S. banking system, and, importantly, this issue is often underestimated by mainstream financial media, rating agencies, and research departments of large banks. We said that CRE lending, together with consumer loans and C&I credit, would be in the spotlight when banks start reporting their 3Q numbers. In this article, we would like to discuss Wells Fargo's (NYSE:WFC) Q3 numbers.

by Avi Gilburt - 1 month ago

Liquidity Is Still An Issue For Our Banks

If you follow mainstream financial media, you have probably noticed that most of them are saying that the liquidity crisis in the U.S. banking system has ended and is unlikely to repeat. In fact, Jerome Powell just that "banks are generally well capitalized and highly liquid in our country." However, a deeper look at the latest sector data published by the FDIC suggests that the liquidity position in the country's banking system remains challenging, and a potential sharp increase in policy rates could very likely lead to major issues and bank failures.

by Avi Gilburt - 1 month ago

Major Issues To Watch In The Upcoming Banking Earnings Season

In the first article in our series, we discussed consumer lending and its potentially significant negative impact on the stability of the banking sector. In our second article, we discussed CRE (commercial real estate) lending, which also is a major threat to the stability of the banking system, in our view. In this article, we would like to discuss commercial & industrial (C&I) lending.

by Avi Gilburt - 1 month ago

Is Schwab As Bad As Some Believe?

There have been several bearish articles on Schwab lately. For our clients, we published detailed reports on almost all large brokerages that disclose their financial data publicly, and Schwab was among them. As such, we would like to address the bearish thesis on Schwab. Most importantly, please recognize that we're going to discuss the long-term financial stability of the company rather than provide a short-term view on the stock. Our focus always is on the stability of the financial institution rather than opining upon the stock valuation.

by Avi Gilburt - 2 months ago

Big Banks Have Massive Exposure: Canadian Banks Have A Major Issue Developing.

Canadian banks were among the safest in the world during the 2008–2009 crisis, but a lot has changed since then, and we believe the Canadian banking system is very likely to face major issues. One of the most significant problems that we have discussed is that, in contrast to the U.S., Canada has quite a large share of variable-rate mortgages, which are certainly a big headache for borrowers in the current rising rate environment. The latest numbers reported by the Canadian banks suggest that the situation continues to deteriorate.

by Avi Gilburt - 2 months ago

Commercial Real Estate May Cause The Next Financial Crisis

In our first article, we discussed consumer lending and its significant negative impact on the stability of the banking sector. This is the second in this series of articles within which we will discuss commercial real estate (CRE) lending.

by Avi Gilburt - 2 months ago

Consumer Lending Is Deteriorating Banking System Stability

The current rise in consumer lending will likely place greater pressure on the already weak banking system in the coming years. This is just one of the many issues we have identified, upon which very few are currently focusing.

by Avi Gilburt - 3 months ago

Our Banks Are Sick And We Are Watching A Slow-Motion Train Wreck

As part of our ongoing series of articles on bank stability, and at the request of many of our clients at Saferbankingresearch.com, we wanted to address the recent Moody's pronouncement.

by Avi Gilburt - 3 months ago

Big Banks Have Massive Exposure: A Review Of The PacWest And Banc Of California Merger

As part of our ongoing series of articles on bank stability, and at the request of many of our clients at Saferbankingresearch.com, we wanted to address the merger between PacWest (PACW) and Banc of California (BANC).

by Avi Gilburt - 4 months ago

Big Banks Have Massive Exposure: Recent Banking Results Are Concerning

The Big Six Canadian banks have recently reported Q2 results, and the numbers confirmed various concerns that we have discussed in our previous articles. Canadian banks are very likely to face major credit quality issues due to a combination of significant exposure to variable-rate residential mortgages, a higher-for-longer interest rate environment, and a very elevated level of household debt in Canada. Moreover, there is also pressure on the revenue side.

by Avi Gilburt - 4 months ago

Big Banks Have Massive Exposure: The Fed Does Not Have Your Back

We have been skeptical of the Fed's stress tests for quite some time, but this year's results have undermined their credibility even further, in our view.

by Avi Gilburt - 4 months ago

Big Banks Have Massive Exposure: TD Bank Has Several Major Issues

Toronto-Dominion Bank was among the safest in the world during the 2008-2009 crisis. But a lot has changed since then.

by Avi Gilburt - 5 months ago

Big Banks Have Massive Exposure: A Look At Ally Financial

As part of our ongoing series of articles on bank stability, and at the request of many of our clients at Safer Banking Research, we wanted to address Ally Bank in this missive. I want to take this opportunity to remind you that we have reviewed many larger banks in our public articles. But, I must warn you. The substance of that analysis is not looking too good for the future of the larger banks in the United States.

by Avi Gilburt - 5 months ago

Big Banks Have Massive Exposure: A Look At Canadian Banks

As part of our ongoing series of articles on bank stability, we wanted to address Canadian banks in this missive. Canada did not have a banking crisis in 2008. In fact, during the Great Recession, Canadian banks, especially the so-called Big Six, were among the safest banks in the world. However, their business models have changed significantly since then. Yet, many retail depositors in both Canada and the U.S. still think that Canadian banks would be a safe haven in a major global crisis. In this article, we would like to highlight some of the issues we currently see at Canadian banks.

by Avi Gilburt - 6 months ago

Big Banks Have Massive Exposure: A Review Of PNC Bank

As part of our ongoing series of articles on bank stability, we wanted to address PNC Bank (PNC) in this missive. As you can see, PNC has a number of issues which could come to the foreground in the event the market begins to move into a difficult economic environment. In contrast to PNC, the Top-15 U.S. banks we have found at SaferBankingResearch have low exposure to commercial lending, rely on much cheaper funding, have better operating efficiency, and have much higher capital adequacy ratios. The banks we have identified also have lower shares of longer-duration bonds.

by Avi Gilburt - 6 months ago

How Many More Warnings Do You Need About The Danger In Banks?

George Santayana once wisely noted that "those who do not remember the past are condemned to repeat it." Throughout market history, market historians had many instances from which lessons in hubris should have been learned. Yet, most do not learn the lessons history has to offer.

by Avi Gilburt - 7 months ago

I Warned You About The Banks - You Really Need To Act Now.

Many depositors were shocked by the SVB collapse, which, in our opinion, demonstrates that the majority of them are ignorant of serious systemic risks in the U.S. banking system. In fact, we specifically warned about this issue residing at the major banks in an article just weeks before SVB (SIVB) collapsed.

by Avi Gilburt - 8 months ago

Is Your Money Really Safe? I Wouldn't Bank On It

It's only a matter of time before the tsunami is coming. It's time to seek higher ground while you still can. As Ben Franklin once wisely noted, "by failing to prepare, you are preparing to fail.

by Avi Gilburt - 8 months ago

We Are Seeing The Initial Cracks In Bank Stability - Time To Be Cautious

The FDIC recently released its Quarterly Banking Profile, a publication that summarizes the financial performance of all FDIC-insured institutions. In this article, we would like to highlight the key takeaways from the publication, which, in our view, suggest that most U.S. banks are very likely to face major liquidity issues soon.

by Avi Gilburt - 8 months ago

The Fed Is Trying To Pull A Fast One

The Fed is adjusting its bank stress test, but, unfortunately, its new testing standards leave serious holes in determining the true strength of a bank. Let's take a look at the red flags within the Fed's new testing standards.

by Avi Gilburt - 9 months ago

U.S. Bank: Survived The Great Depression, May Not Survive The Next One?

U.S. Bank has major issues of which depositors should be aware, according to our testing methodology for bank strength.

by Avi Gilburt - 10 months ago

Capital One: Danger, Will Robinson, Danger!

The latest in our "Is Your Bank Safe?" series, this one focusing on Capital One.

by Avi Gilburt - 11 months ago

Is Your Bank Safe? A Look At Wells Fargo

We have developed a testing methodology for bank strength, and Wells Fargo, one of the world's largest banks, has major issues of which depositors should be aware.

by Avi Gilburt - 1 year ago

Is Your Bank Safe? A Look At Goldman Sachs

We have developed a testing methodology for bank strength, and Goldman Sachs has major issues of which depositors should be aware.

by Avi Gilburt - 1 year ago

Is Your Bank Safe From A Credit Suisse Collapse?

Credit Suisse has major issues of which depositors should be aware, which can also affect weak US banks.

by Avi Gilburt - 1 year ago

Is Your Bank Safe? - A Look At Bank of America

We have just published the latest article in our "Is Your Bank Safe?" series on Seeking Alpha -- this one on Bank of America (BAC), which has major red flags of which depositors should be aware.

by Avi Gilburt - 1 year ago

Is Your Bank Safe? - A Look At JPMorgan

In our view, JPMorgan is one of the best U.S. mega banks. It is a well-run institution and its business and overall fundamentals have significantly improved over the past 10 years. However, even this high-quality franchise has quite a lot of red flags, which, in our view, could lead to major issues for depositors in a bear market.

by Avi Gilburt - 1 year ago

Is Your Bank Safe? - A Look At Citibank

Over the last few months, we have written several articles outlining our views of banks in general. We explained the relationship that you, as a depositor, have with your bank is in line with a debtor/creditor relationship. This places you in a precarious position should the bank encounter financial or liquidity issues. Moreover, we also outlined why reliance on the FDIC may not be wholly advisable. And, finally, we explained that the next time there is a financial melt-down, your deposits may be turned into equity to assist the bank in reorganizing.

by Avi Gilburt - 1 year ago

Is Your Bank Safe? - There Will Be No More Bank 'Bailouts'

You must understand the relationship you have with your bank in order to protect your assets.What is a "bail-in?"How can a "bail-in" affect your rights as a depositor?In my last article regarding the safety of banks today, I tried to explain the legal relationship you have with your bank:"Although you may feel that you have a credit balance in your bank account, pleaserealize that your credit balance is only as safe as the underlying bank's assets. Since a bank's assets are generally the loans it owns, the underlying loans of your bank are actually your problem. In fact, most people do not realize that the bank is not a simple depository agent for money.

by Avi Gilburt - 1 year ago

Is Your Bank Safe? - There Will Be No More Bank 'Bailouts'

You must understand the relationship you have with your bank in order to protect your assets.

by Avi Gilburt - 1 year ago

Is Your Bank Safe And Why Should You Care Now?

It behooves every investor to make sure that their money is in a safe bank, and there are not very many of those in the US.

by Avi Gilburt - 1 year ago

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