Mr Cooper Group Inc (COOP)

[redisnieurt]

This is not correct. Well, part of it is. The fact is, Covid relief money flooded the money supply but the economy was at a standstill so recipients of this money put it into the bank. But companies werent borrowing so the banks couldnt use the deposits for Loans. So they bought securities to generate a little interest income. Then rates shot up and the banks were forced to mark their securities portfolio to market. All those bonds lost value. THIS Much is accurate.

What is not accurate is that somehow these banks have avoided "declaring" these losses. The change in the fair value of these securities are recorded MONTHLY as an accounting entry called AOCI that doesnt go through the income Statement at all and goes STRAIGHT to equity on the balance sheet. the fair value of the securities is determined by models similar to Bloomberg, so there is very little room for accounting shenanigans. Nearly alll banks were impacted by this. Some more than others. Silicon Valley Bank is the poster child because their core business was to bankroll emerging tech companies prior to IPO. But during Covid alot of these companies slowed down their spending (and thus didnt need loans), and were flush with cash (and then deposited it at SVB).

Therea are no "zombie banks" just sitting on an "undeclared" powder keg of Securities losses. The bank that failed recently (Republic First, NOT First Republic) was only 6B in total assets and has zero impact on the broader industry. That bank was troubled for the last 5 years due to Management and Board disfunction. They failed for a completely different reason.