Understanding Goldman’s $687m trading loss

30 December 2024BanksBasel rules, Federal Reserve, Goldman Sachs, Value-at-riskNick Dunbar

The bank may look profitable to shareholders, but disclosures compiled by Risky Finance made it possible to uncover the story of this trading loss at Goldman Sachs

Dimon rolls trading dice with excess capital

13 June 2024Banks, Risk Commentarybank capital, Basel rules, Federal Deposit Insurance Corporation, Federal Reserve, JP Morgan, share buybacks, Stress tests, tradingNick Dunbar

The Fed softened its stress tests, which freed up bank capital, then came the Basel Endgame which would eat it all up again. Now, with the Endgame in doubt, JP Morgan has deployed its excess capital in trading bets

Market RWAs, trading revenues and the Basel Endgame proposal

26 January 2024Banksbank capital, Basel rules, Federal Reserve, tradingNick Dunbar

Banks complain that customers will lose access to capital markets products, but the Fed isn’t buying their argument. Use Risky Finance data to assess the debate between the Fed and the banks.

How averaging will solve Wall Street’s repo window dressing problem

17 January 2024BanksFederal Reserve, repo lendingNick Dunbar

The Federal Reserve’s Basel Endgame is about to solve an age-old problem: How big is a bank’s balance sheet? Right now, it depends when you look

Money funds ride the QT wave

19 October 2023Funds, Risk Commentarycash, deposits, Federal Reserve, government bonds, money market fundsNick Dunbar

The seven biggest money market funds used the Fed’s overnight repo facility to help boost their assets by 50% in just 18 months, while bank deposits have plunged. Now, with quantitative tightening, their strategy is changing.

The Fed’s Basel Endgame and the lazy supervisor problem

12 September 2023BanksBasel III, Federal Reserve, internal models, regulation, Silicon Valley BankNick Dunbar

The Federal Reserve is proposing to end its long flirtation with Basel internal models, and now is ousting the lead supervisor of Silicon Valley Bank. The actions are two sides of the same coin.

Conditioning and the Bank of England’s credibility problem

30 June 2023EconomicsBank of England, central banking, Federal Reserve, inflation, interest rate swapsNick Dunbar

The Bank of England uses forward rates derived from the swap market to forecast future base rates. This approach is flawed, and has contributed to the Bank’s loss of credibility in the fight against inflation.

JP Morgan swallows First Republic Bank

5 May 2023BanksAccounting, bank resolution, Federal Deposit Insurance Corporation, Federal Reserve, interest rates, JP MorganNick Dunbar

Six months ago we warned about held-to-maturity bond losses at US banks, but now the giants that hedged the risk are hoovering up depositors while unhedged regional banks are in crisis

Regulators zero in on commodities

30 May 2022Bankscommodity risk, Federal Reserve, JP Morgan, nickelNick Dunbar

Bank exposures to commodities have reached record highs and in the wake of the nickel market turmoil in March, the Fed is warning about financial stability implications

Cash positioning for an upwards rate shock

3 May 2022Fundscash, Federal Reserve, inflation, money market funds, repo lendingNick Dunbar

While the Federal Reserve anticipates 2-3% interest rates will be enough to combat inflation, the choice of cash holdings for financial institutions provides a clue to their confidence in the Fed’s strategy. The evidence shows that they expect a bumpy ride.