The One Chart US Banks Don't Want You To See

Tyler Durden's picture

Three years ago, the government in all its glory and sound central-planning decided to provide a fully-FDIC-backed facility to allow banks to raise capital at ultra-cheap cost of funds in the middle of the crisis. The Term-Loan-Guarantee-Program (TLGP) has not been far from our thoughts but the next month or so is going to be increasingly anxiety-inducing for the banks that took advantage of that bailout. By the end of June 2012 (i.e. the next six weeks) there is almost $60 billion of TLGP debt that matures for US banks (and will need to be refinanced we assume). This $60 billion has an average cost of funds of 0.3% (that is yield NOT spread) which when compared to the 3.5% - 4% cost of funds for mid-dated US financial debt currently (average CDS around 230bps) means a more than 10x increase in funding costs for this segment of their debt. Of course there are yield-hungry ETF-buyers to be satisfied (note LQD can soak this up and few retail investors realize just how exposed LQD - the investment-grade ETF - is to US financials) and so we expect them to get this off but it can only pressure spreads wider as supply dominates demand in this risk-averse market environment.

Data: Bloomberg

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MachoMan's picture

Why ruh roh?  Tarp got rolled into another program...  which will get rolled into another program...  which will get rolled into another program...  It's not like tarp ever got paid.  None of this shit gets paid.  Well, it does...  in smaller increments than expected and after killing any possibility of organic capital formation in the economy (suspending accounting rules, the rule of law, artificially low interest rates, etc.).

What's a few accounting entries among friends?

MachoMan's picture

Yes, but when banks are given a separate loan program (that repays the tarp money...  think GM), then it's counted as "tarp repayment."

Chuck Walla's picture

What's a few accounting entries among friends?

Rules make a scam into a system.

Sudden Debt's picture

nothing QE3 won't fix. We just got a date when it will be announced.

slaughterer's picture

QE 3 announcement in June 2012 is a 75% probability.  

LoneStarHog's picture

Boy! It is a good thing that Seseme Street teaches children the alphabet an an early age so that even the toddlers can understand the grand world of American finance.

bdc63's picture

There is not such thing as 'carefully' unwinding a ponzi scheme.  It's always messy and this time will be no different.

Extend & pretend, or crash & burn.  Choose your poison.

LawsofPhysics's picture

You are correct sir.  FYI, you have no choice when come to how it will go, you can only prepare and hedge accordingly, period.  

Rip van Wrinkle's picture

So you're really saying 'crash and burn'...after all extending and pretending just makes it even crashier and burnier.

ozzzo's picture

No need to choose; you will get both. E&P until it doesn't work anymore, then C&B. Be ready!

SheepDog-One's picture

They thought the had 'toxic assets' in 2008? That was just chicken scratch compared to this time.

chinaguy's picture

Yeah, but they had all of this time to play w/ it for free.......

hedgeless_horseman's picture



Ni hao ma?  Funny how banks complain about having difficulty making money when their "COGS" is near zero.

Flakmeister's picture

Just wait until the LGBT funding has to be rolled over...

Sandmann's picture

I am sure the Lesbians, Gays, BIs and Transsexuals on Wall Street will enjoy being rolled over

narapoiddyslexia's picture

... and over and over and over.

falak pema's picture

you are making it sound like fun...Facebook type funnn!

monopoly's picture

Just one more reason to stay away from all banks. YOu cannot get a real picture of their worth. Many are insolvent and on life support, even today. Why anyone would buy a bank tock is beyond any rational reasoning.

Vegamma's picture

Bank (tick) tock? Fruedian slip?

falak pema's picture

they say the euro banks are hocked clean as they have no equity which is not the case of US banks; but if you include the shadow banking liabilities of US banks does this not make Euro banks look better? There seems to be so much OTC fist pumping in the US that one does not get to understand how the shadow banking numbers of US/UK/EUro zone stack up. Any ideas?

Sophist Economicus's picture

They have ALL been technically insolvent for years now.   The only question is how long will the rules keep being changed to allow them to operate

slewie the pi-rat's picture

or just finally be "arranged" to kill the fuking zombies and wipe them out?

even as a memory they will be bad enuf, still

then howzabout: retrieve the purloined public purses from the putrid perps?

disabledvet's picture

i know i can't answer this but it sure is a good question. i would argue "Europe will buy American" and roll this thing over "lest the USA does a reverse financial Normandy" and implodes the whole euro experiment by leaving...this latter of which might happen anyways. The fact of the matter is both Wall Street and the euro-currency folks are both lashed to that mast whether they like it or not. Bad idea to begin with..."all economies are local" in my view..there will probably not be some spectacular blow up of the euro-zone--the financial tectonic plates have clearly been fissured however and "here comes the Continental drift" as the euro zone simply "goes its natural way" which is NOT together "en toto" but something more "apart but together."

slewie the pi-rat's picture

they "bought" some time

now, when the notes are "due" they will buy some more time by selling some more debt

what's not to like?


midgetrannyporn's picture

Nothing a few more bonuses can't fix.

chunga's picture

Of course they took advantage of the bailout[s].

Count the woman in the video below in to the millions of muppets who were also taken advantage of.

She worked with the JPMorgan in an effort to do something that would have been beneficial to the investors and herself.

But no, despite making her payments she got t-boned and foreclosed. The charts are great and all...but there are real people involved...not just numbers.

California Homeowner and Vietnam Widow Testifies before Legislative Committee on Foreclosure

This was just uploaded on Friday and I'm surprised it didn't get knocked down. None of the banks want anybody to see this.


Shizzmoney's picture

God bless you for posting this....I've retweeted to the heavens on twitter.

I mean, there has to be a special place in hell for these motherfuckers, right? 

chunga's picture

Thanks for spreading it around.

toady's picture

Smoke & mirrors.

slewie the pi-rat's picture

this is from booyah,  yesterday

Matt Taibbi's smack down.     Accidentally Released - and Incredibly Embarrassing - Documents Show How Goldman et al Engaged in 'Naked Short Selling' POSTED: It doesn’t happen often, but sometimes God smiles on us. Last week, he smiled on investigative reporters everywhere, when the lawyers for Goldman, Sachs slipped on one whopper of a legal banana peel, inadvertently delivering some of the bank’s darker secrets into the hands of the public.   The rest:   

[Paste fromTaibbi&RS}

The lawyers for Goldman and Bank of America/Merrill Lynch have been involved in a legal battle for some time – primarily with the retail giant, but also with Rolling Stone, the Economist, Bloomberg, and the New York Times. The banks have been fighting us to keep sealed certain documents that surfaced in the discovery process of an ultimately unsuccessful lawsuit filed by Overstock against the banks.

Last week, in response to an motion to unseal certain documents, the banks’ lawyers, apparently accidentally, filed an unredacted version of Overstock’s motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they’ve been fighting for years to keep sealed. {endPaste, my emph]

this is last week's news, but pretty squiddy reading! and funny...

MachoMan's picture

Hope the malpractice insurance is paid up...  geez.  (of course, as between the lawyers and the bankers, the bankers are more hated by a few car lengths...  which, would likely result in a goose egg).

Deo vindice's picture

 A fight between lawyers and bankers. I say, "Let 'em go at it".

MachoMan's picture

It's ultimately the only thing that will change the system...  but, the banksters checks keep clearing... 

boiltherich's picture

"...when the lawyers for Goldman, Sachs slipped on one whopper of a legal banana peel, inadvertently delivering some of the bank’s darker secrets into the hands of the public. "


If indeed it was inadvertent, by now it should be obvious that GS et al do what they want to for reasons that we will never know except that it ends up with more power in their hands and more money out of our pockets. As to the chart and health of the banking system, we have not had a banking system in at least four years now, what we have is a small group of oligarchs at the head of a global theft ring and your continued freedoms such as they are rest upon your willingness to quietly accept the marriage between government and corporate power of, by, and for the one percent.

Sad to say that resistance is really futile, there is no number of actual people they cannot eliminate should those people get too noisy or unruly.

silverserfer's picture

One only needs to realize GS is an arm of the CIA and is acheiving objectives in regards to financial matters. There are global implications to dealing in the US and foreign $ that they would deem national securiy.

imaginalis's picture

I wonder if SlimVirgin will "edit" these factual discoveries into the wikipedia page on

shutupnsing's picture

Didn't they just find another planet like earth...?

LouisDega's picture

Gee, The nice bank teller lady at my Chase branch didn't mention this. She offered me a cookie.

Bastiat's picture

I hope you didn't eat it.

francis_sawyer's picture

Banks just love blowing up in July (and in the 6 weeks prior to full elections)... You could set your sundial by it...

Miffed Microbiologist's picture

Oh my those poor banks! Why I must gird my loins, get a second job, pay more taxes and help them out! It's our patriotic duty! Eh, forget it I think I'll just buy more gold.


Dorky's picture

10x increase in funding cost?

Does that mean it requires at least almost $600 billion for the next QE3?

Deo vindice's picture

Not as I understand it. That is the increased funding cost of the loan. The loan is still $60 billion.

Of course, what's an extra zero between friends?