Peregrine

Looks like regulators finally waking up: https://www.reuters.com/markets/us/us-officials-assessing-possible-manipulation-banking-shares-source-2023-05-04/

And just like that, FT deleted their original story. Pretty slimy if they put false speculation out there to benefit some shorts.

Wow. I wonder how much of this is being manipulated by the short and distort artists.

Re: juiciness Because FRC is worth more to JPM than simply the market value of its loans. Re: quick receivership I don't see how this was at all rushed. FRC lost nearly all its deposits within a few weeks' time and was given nearly a whole month to find a private solution. And when it couldn't, this bank tried brinksmanship tactics by threatening its suitors that if they didn't save it the costs would be worse. You really think the FDIC should let this bank operate with no deposits of its own and negative NIM and generate losses for the foreseeable future?

"Juicy" terms? Based on FRC's own FV marks, JP Morgan paid $10 billion more than they should've to the FDIC! The longer it goes on, the worse the bid the FDIC gets. And the longer it goes on, the more desperate FRC gets. Back during the S&L crisis when probably more than a half of S&Ls were zombies and operating with negative equity, S&Ls kept upping the ante in raising deposit rates and driving further down the credit spectrum in a desperate bid to become viable. Needless to say, this is not good for the financial system.

Rapid receivership and sale happened all the time during the S&L and GFC crises, especially when a bank lost deposits at the rate that Signature, SVB and FRC did. Without rapid receivership and sale, the cost to the FDIC would've been a lot greater in all likelihood. The longer it goes on, the worse for the FDIC and the worse for the financial system.

It's kinda funny how posters in this thread somehow forgot that FRC was mark-to-market insolvent and based on their own FV marks, no less. They couldn't hold on to their deposits, which forced them to get high cost financing, which turned their bank upside down. The regulators didn't do that to them - if anything, they helped them. If there were no visible hand, this bank would've gone down a lot sooner and everyone owning the capital stack gets zero'd a lot quicker.

That number's from 2019. The 2021 census had the GTA at 7.3 million. With over 1 million new immigrants in Canada last year alone I have to imagine that the 2023 census is close to 8 million or above that. Not to mention that with urban sprawl what qualifies as GTA should be broader encompassing than the official definition.

The GTA probably has a population that's around 8 million now, on par with New York City. I remember 20 years ago when they had less than 5 million. I think it's surely the fastest growing developed city in the world. Combine this with housing NIMBYism and a public transport system that hasn't budged and it's really unsurprising why housing prices are what they are. The Tier 1 cities in China have the same problem with housing prices and they don't have the NIMBY problem because the state owns all the underlying land.

What I meant was that landlords will push back.

Well, the feds just pushed the annual rental increase to 2.5% and I suspect that there will be a lot of political pushback against that number given where inflation is.

One more thing that deserves mention: The speed of the housing decline. The 20% decline from peak to trough in Canada in 90s took place over the course of 7 years. In the US GFC, a 20% housing price decline from the peak took barely 2 years. I think this clearly was the effect of a huge amount of foreclosures or homes from distressed sellers that flooded the market with housing supply. And why were there so many foreclosures? It came from insanely lax mortgage rules that fueled a massive homebuilding boom that took the US a decade to recover from. As mentioned before, Canada's big housing problem is a lack of supply. I doubt that a huge number of homes suddenly come on market even if arrears rates kick up substantially.

Some more interesting data: Canada prime rate: 1972: 6% 1981: 21% Canada housing prices indexed to 2010 at 100: 1972: 39 1981: 52 So during the time frame when the prime rate more than tripled, housing prices went up 33%. The real downturn was from 1989 to 1996 when prices fell 20%. And this was during a period when prime rates fell from 12% to 5%. Seems like housing prices are more correlated with unemployment than anything else.

Yeah. I'm not sure there's as much meaning in this as there is in "US healthcare is 2x as a % of GDP as Canadian healthcare".

There's $200 bn in HELOCs in Canada, compared to $1.6 trillion in mortgages outstanding. I think that average balance might include HELOCs, though I'm not sure.