Today Jack interviews Randy Woodward, managing director at Raymond James Financial, and Joseph Wang, author at https://fedguy.com/, for a conversation on how the recent banking turmoil has muddled the Federal Reserve’s inflation-fighting mission. Woodward, a banking veteran with a rare understanding of the regional banks’ investment portfolio, gives a glimpse into the interest-rate exposure (“duration”) of the mid-sized and community bank community that is unavailable by just looking at public filings.
Woodward argues that Silicon Valley Bank’s (SVB) fall was not due to its interest rate risk management and that the Federal Reserve is to blame. Wang vehemently (but very politely) disagrees and what ensues is a masterclass on the most salient issues facing the U.S. banking industry. Filmed on Thursday, March 23, 2023, a day after the Fed raised interest rates by 25 basis points to 5.00% at the March Federal Open Market Committee (FOMC) meeting. __ 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 __ Follow Joseph Wang on Twitter https://twitter.com/FedGuy12 Follow Randy Woodward on Twitter https://twitter.com/TheBondFreak Follow Jack Farley on Twitter https://twitter.com/JackFarley96 Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidance Follow Blockworks on Twitter https://twitter.com/Blockworks_ __ Timestamps: 00:00 Intro 00:59 Joseph's Take On March Federal Reserve Meeting (FOMC) 04:59 Is The Fed To Blame For The Fall Of Silicon Valley Bank (SVB)? 12:35 Available-For-Sale (AFS) vs. Held-To-Maturity (HTM) Accounting Treatment 26:16 Public.com Ad 27:20 Was Silicon Valley Bank's Lack of Interest Rate Hedges Negligent? 34:30 There's No Way To Hedge Perfectly" 41:10 Uninsured Deposit Base As A New Vulnerability For U.S. Banks 53:01 The Psychological Aspect of Bank Runs 57:07 Bernanke on The Great Depression: Bad Visuals Are Self-Fulfilling Prophecies 01:00:06 Should The FDIC Deposit Guarantee Be Raised? 01:02:39 Will Bank Turmoil Cause Banks To Curb Lending? 01:06:41 How Many More Times Will The Fed Hike (If At All)? 01:08:39 BTFP is NOT Quantitative Easing, Says Joseph Wang 01:10:13 Central Banking 101 01:14:22 Closing Thoughts __ 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.
