{"id":16602,"date":"2016-01-17T17:50:23","date_gmt":"2016-01-17T22:50:23","guid":{"rendered":"http:\/\/olduvai.ca\/?p=16602"},"modified":"2016-01-17T17:50:23","modified_gmt":"2016-01-17T22:50:23","slug":"us-bank-counterparty-risk-soars-after-energy-mtm-debacle","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=16602","title":{"rendered":"US Bank Counterparty Risk Soars After Energy MTM Debacle"},"content":{"rendered":"

US Bank Counterparty Risk Soars After Energy MTM Debacle<\/a><\/h3>\n
\n
A few dots are starting to be connected now that\u00a0we have exposed the debacle of The Fed’s decision to allow banks to mark-to-unicorn their energy loans<\/a>. “Something” was wrong in recent weeks as the\u00a0TED-Spread surged<\/strong>\u00a0(implying\u00a0rising counterparty uncertainty among banks<\/strong>)<\/em>\u00a0and then the last week – since The Fed’s alleged meeting with banks – has seen\u00a0financial credit and stocks crash<\/strong><\/em>.<\/div>\n
\n

Coincidence? We don’t think so. In the week since The Fed gave the nod to banks to hide losses on energy loans, credit risk has spiked and stocks tumbled…<\/p>\n

\"\"<\/a><\/p>\n

It is clear banks are hedging against one another’s systemic risk.<\/p>\n

Simply put, it’s 2008 all-over-again as “when in doubt, sell ’em all” is back for the US financial system.<\/strong>\u00a0When you know\/question one bank (or some banks) is not transparent in their loan losses (and implicitly their capital ratios) then contagion (and collateral chains) tells any good fiduciary to sell them all – and the banks themselves will enable a vicious circle as they hedge.<\/p>\n

And of course, the\u00a0unintended consequence\u00a0<\/strong>of The Fed’s decision to enable cheating in the banks’ energy loans is a surge in financial system instability as\u00a0banks and the price of oil now become systemically more coupled.<\/strong><\/p>\n

\"\"<\/strong><\/a><\/p>\n

\n
\n
\n