CitiBank Is Speculating In Metals With YOUR Money. Guess Who Bails Them Out When They Lose The Gambles?
Posted by freedomforall 6 months, 2 weeks ago to Politics
Excerpt:
"I would not give a rat’s ass what Citi did with its own money. But as long as it is deemed too big to fail, it should not act like a hedge fund.
Banks Should Be Banks, Not Hedge Funds
Citi is now one of the biggest players is metals speculation.
In practice, I doubt this position is big enough to matter, but it’s another example of the willingness of banks to make speculative bets.
Silicon Valley Bank Speculation
Earlier this year, Silicon Valley Bank blew up by making speculative bets on interest rates.
The 2023 bank failures arose from what the banks did with uninsured deposits, not the fact that the deposits were uninsured.
Banks could easily have parked the money back at the Fed collecting generous amounts of free money because the Fed pays interest on reserves.
Instead, the banks made enormous bets that interest rates would not rise rapidly. When rates rose, paper losses soared, and the banks became capital impaired.
Fed Admits Mistake
The Fed even admitted a mistake. For discussion, please see The Fed Admits a Mistake in Collapse of SVB, Seeks More Power Anyway
This borrow-short, lend-long issue applies to all banks, not just the troubled banks that failed.
And the Fed has done virtually nothing to address speculative risk seeking."
"I would not give a rat’s ass what Citi did with its own money. But as long as it is deemed too big to fail, it should not act like a hedge fund.
Banks Should Be Banks, Not Hedge Funds
Citi is now one of the biggest players is metals speculation.
In practice, I doubt this position is big enough to matter, but it’s another example of the willingness of banks to make speculative bets.
Silicon Valley Bank Speculation
Earlier this year, Silicon Valley Bank blew up by making speculative bets on interest rates.
The 2023 bank failures arose from what the banks did with uninsured deposits, not the fact that the deposits were uninsured.
Banks could easily have parked the money back at the Fed collecting generous amounts of free money because the Fed pays interest on reserves.
Instead, the banks made enormous bets that interest rates would not rise rapidly. When rates rose, paper losses soared, and the banks became capital impaired.
Fed Admits Mistake
The Fed even admitted a mistake. For discussion, please see The Fed Admits a Mistake in Collapse of SVB, Seeks More Power Anyway
This borrow-short, lend-long issue applies to all banks, not just the troubled banks that failed.
And the Fed has done virtually nothing to address speculative risk seeking."
