On Sunday, March 12, the Federal Reserve, the U.S. Treasury, and the Federal Deposit Insurance Corporation (FDIC) announced emergency measures to support U.S. regional banks experiencing bank runs. Were these actions a “bailout” and have they already created unintended consequences? To Joseph Wang, former senior trader at the New York Federal Reserve, the answer to both of these questions is an unambiguous “yes.”
Joseph joins Stephen Miran, co-founder & portfolio manager at Amberwave Partners, alongside Jack Farley for an in-depth conversation on the banking intervention and its effect on moral hazard and monetary plumbing. Recorded on March 13, 2023, at 4pm ET.
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Today's show is sponsored by Public.com: Get a 4.8% yield when you open a government-backed Treasury Account by going to https://public.com/forwardguidance
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Joseph Wang’s latest piece, “Hidden To Market,”on FedGuy.com:
https://fedguy.com/hidden-to-market/
The joint statement from the Federal Reserve, the U.S. Treasury, and the FDIC: https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm
Federal Reserve’s Bank Term Funding Program (BTFP): https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm
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Timestamps:
00:00 Intro
00:47 The Bank "Bailout"
09:10 The Shocking Incompetence of Silicon Valley Bank
20:02 Will There Be More Bank Failures?
22:40 Public Ad
23:44 Moral Hazard in U.S. Banking Bailouts
27:55 Why Hasn't Silicon Valley Bank Been Bought?
31:35 Emergency Relief From Fed, Treasury, and FDIC (Federal Deposit Insurance Corporation)
41:41 Consequences of Fed's BTFP Program on Big For Duration
52:25 Does Huge Fall In Interest Rates Mean Fed's Hiking Is Over?
01:01:13 February Inflation Data
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.
