Which big bank will sink first?

[Kevin Lefeuvre]

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?

[Patricia Steiner]

Banks buy and sell money. They buy deposits by paying interest and then sell the same money by lending it out at higher rates and retaining not only the interest spread but fees.  The banking system is extremely healthy now.  No "big bank" is on the watch list.  There has been one bank failure this year (a small farmers and merchant bank), four in 2019 (again, small independent banks), and none in 2018.  Here's the complete list of bank failures since 2000:

https://www.fdic.gov/bank/individual/failed/banklist.html

It's not banks - but the credit markets aka corporate bond market that is in turmoil and present a real danger:

https://www.cnbc.com/2020/03/12/bonds-the-credit-markets-are-signaling-that-a-problem-is-afoot.html

And, despite all the lessons and regulations stemming from the global financial collapse in 2008, derivatives are still way too dangerous and could create another crisis:

https://www.bloomberg.com/opinion/articles/2019-04-10/derivatives-are-still-too-dangerous

The financial markets are complex; interest rates, cash supply, and bank health are not the issues.  If you want something to worry about in the financial world, it's bonds and derivatives.