In this photo illustration Silicon Valley Bank (SVB) logo seen displayed on a smartphone screen with NYSE (The New York Stock Exchange) logos in the background in Chania, Greece on March 13, 2023.
Nikolas Kokovlis | Nurphoto | Getty Images
Even my mother is happy with the Silicon Valley Bank rescue plan.
On a phone call last night, she expressed delight with the FDIC’s decision to make whole deposit holders at that bank. Not just for what it will do for Silicon Valley depositors, but for what it will due for holders of bank savings accounts around the country.
“The banks are going to have to give all of us savers more interest, and it’s about time,” she told me.
Wall Street strategists seem to agree with her.
“Another, as yet unquantifiable aspect of the current situation is that it will likely intensify the competition for retail deposits,” Chris Kotowski from Oppenheimer said in a note to clients Monday morning.
Other strategists noted the impact paying higher interest on deposits would have on net interest income and margins.
One thing’s for sure: Mom’s bank is going to have to work hard to earn her deposits. She keeps only a minimal amount in her savings account to pay her bills. The rest she has invested in bank CDs. My mother, the bond maven.
She has been crowing about her newfound love of bond investing and its relationship to the Silicon Valley Bank debacle.
She had called me a couple weeks before to tell me that she was about to roll over a one-year bank CD and was astonished that her local bank was offering her a yield over 4%.
“I couldn’t believe it, after all these years of getting nothing, they finally offered me something,” she said.
She was considering putting even more money into bank CDs and even asked about investing in short-term Treasurys, which is exactly what the whole country is doing: taking money out of their bank accounts and investing in government fixed income on the near end of the curve.
She is friendly with the bank tellers at several…
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