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Comment by HDThoreaun | Hacker News Reader

As long as rates eventually go back down before boa runs out of money this really isn't an issue. Of course you point out that they very well could run out of money but imo boa is easily in the "too big to fail" category. It would be bailed out if it faced major trouble, possibly even just the fed deciding to end the high interest rate era and "solving" the whole thing. Certainly bankees would be saved as they were at the other failed banks which removes most of the incentive to run the bank.

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Why would rates need to come down again? The mark-to-market of those securities will go back to par regardless. Or are you saying they are financed via floating rates and negative carry will start to hurt them?

BoA deposits are down 8.5% yoy. This is forcing them to take out expensive loans from other banks that cost more than the loans they made early pandemic. Not a crippling issue, but they are losing money everyday rates stay high.

I received an offer from BofA for a 4.00% savings rate if I brought X amount of new money into the bank. Anyone else get an offer like this?

A few banks have been offering 4.00 or higher for the past 9 months or more. The apple card with Goldman Savings is currently at 4.15% and has been since it launched. It was mostly smaller banks that I saw offers in this range, but It looks like the bigger banks have to play along now, lest they lose more inflow.

You can get 5.02% if you bring $100k to them anytime. They only make it available in a Merrill CMA (cash management account) though (see preferred deposit in pdf below). You can also reduce that $100k to $1 after you make the initial deposit and still maintain access to that savings rate.

https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMO...

The preferred deposit account has always paid very competitive savings rates amongst all FDIC insured accounts.

Short term treasury bonds yield 5-5.5% near zero risk some minor duration risk but very minor

Ally bank offers over 4% for any amount, and has a no-penalty CD (you can close the account at any time, they use a trust behind the scenes) offering 4.5% iirc.

I don't see the point.

If you want an FDIC-insured savings account from a large institution, Marcus offers 4.4%, and it isn't even the highest -- Synchrony isn't as big a name but it offers 4.75%.

And while I can see keeping an intermediate buffer in such an account (since you can ACH directly from it), it's not much more hassle to use a money market fund (details do matter a little), e.g. FZFXX, VUSXX, or SNSXX (those are Treasury funds; prime funds typically give a slightly higher rate), for around 5%. Even there you're giving up a little vs. laddering T-bills, but it's so easy and it's completely liquid.

The only reason not everybody does this has to be that they're just not used to brokerage accounts, or that they don't have enough money to bother.

Probably most people who want to hold cash should just open an account at Fidelity, and put any money that can afford a couple day's lead time into FZFXX.

How much of their funding is deposits and how expensive is longer term unsecured funding for them?

> the fed deciding to end the high interest rate era

I observe, with two USA war fronts, broad inflation will remain high and Federal Reserve will follow inflation with increasing rates.

Treasury's Yellen says we can afford it.

https://www.foxbusiness.com/economy/yellen-says-us-afford-su...

> imo boa is easily in the "too big to fail" category.

Then Bank of America needs to be shattered into as many pieces as it takes to no longer be in the "too big to fail" category.

Banks are investment vehicles that utilize a novel structure (being a bank) to enjoy the investment edge of, in case of failure, being able to hold customers money hostage, thereby strongarming the government into bailing them out to avoid the risk of financial mayhem.

Correct - it's legalized extortion for all intents and purposes.

I appreciate the sarcasm. Of course it would take a lot more to prevent the money being held hostage than making it illegal. The whole concept of fractional-reserve banking would have to be abandoned. Whether you like the idea or not, we're stuck with it, there's no way to change it at this point.

I can't believe Im reading this comment on 2023!

For TEN YEARS we have all had the ability to be our own bank. TEN YEARS ago I was telling people that within a year people would be carrying their net worth in their pocket and everyone would be their own bank in 5.

Now, TEN YEARS later we still have people bemoaning the fack we are "dependent of banks".

Lol, we are dependent on banks like a heroin addict is addicted to his fix, their cheap, easy free money. Banks are a sickness.

If you refer to bitcoin, that‘s not new, you could with withdraw and store cash before. Or even gold. Or other small assets, such as art. Bam, no banks. And all of those options are as good or better than crypto.

At least as long as you can‘t pay taxes in crypto and can‘t pay most services.

It's hard to read between the lines. "Be your own bank" in particular is a specific form of finance woo that gets peddled (also under the terms "infinite banking", "cash flow banking", etc). All of those are layers on top of really, really crappy life insurance policies.

But the "hold net worth in pocket" part does sound like crypto.

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