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Updated almost 5 years ago,

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565
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Kevin Lefeuvre#3 Coronavirus Conversation Contributor
  • Los Angeles, CA
391
Votes |
565
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Which big bank will sink first?

Kevin Lefeuvre#3 Coronavirus Conversation Contributor
  • Los Angeles, CA
Posted

Banks manage cash: inbound and outbound and "play" with that cash while they have it. Right?

What is happening now and is going to accelerate is that the inbound cash is drying. Cash out by traders is not in anymore. Small businesses are not sending cash to their banks. Employees are depositing less cash. Airlines, Hotels and many others have stopped depositing cash.

Now let's check the outbound. We are still using cash , sometimes even more (yeah those extra toilet papers were purchased with cash too. lol). Lines at Costco need more cash. Check yourself : In the past couple weeks how much did you deposit and how much did you spend?

On the other hand, with the stocks being cheap, banks had started buying their own stocks. (aka share buybacks). But under pressure from the Federal Reserve, they agreed to stop doing that because they realize they'll soon have a problem. 

https://www.cnn.com/2020/03/16/investing/bank-stock-buybacks-coronavirus/index.html

Just a reminder: FDIC cap is $250k per bank per depositor

All these shutdowns and confinements leading to less income and more expenses, aren't they put more pressure on cash? Is anyone else worried about that? Thoughts?

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