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#1: Lod    To: Anthem (#0)

Any idea what sunk Cap One? I did not read the article.

Lod posted on 2020-03-29 22:03:46   Reply   Private Reply

#2: Anthem    To: Lod (#1)

At the core of the issue were plunging oil prices, which ended up having a margin call effect on the bank's swaps exposure; and since Capital One’s waiver lasts until Sept. 30, if energy prices remain low or the bank’s exposure remains above the threshold, it will register as a swap participant or make business adjustments, the CFTC said on Friday.

And here is why anyone who currently has a deposit account at CapitalOne may consider quietly moving the money elsewhere: according to Reuters, the CFTC designation entails a number of complex and costly reporting and compliance obligations, which the CFTC spokesman said could hurt the institution’s ability to keep lending.

In short, CapitalOne made a terrible trade, betting via derivatives that oil would not plunge to where it is now - at 17 year lows - and only CFTC intervention prevented a margin call of unknown magnitude from being sent to Capital One's corner office. Which is surprising considering that the bank is a relatively small player in the energy lending and financing business, with energy loans accounting for just 1.4% of its total loan book, according to its filings.

Anthem posted on 2020-03-29 22:07:57   Reply   Private Reply

#3: Esso    To: Lod (#1)

Any idea what sunk Cap One?

Greed.

Esso posted on 2020-03-29 22:10:57   Reply   Private Reply

#4: Lod    To: Anthem (#2)

Thanks for the details. It was not a great idea to allow banks to enter the equities markets as players instead of just investors.

Lod posted on 2020-03-29 22:23:40   Reply   Private Reply

#5: Esso    To: Lod, 4um (#4)

Hard to imagine a bank not making money when their CC interest averages 21% and they're paying depositors 0.01% interest.

I must really be busting MWAFCU's balls with that 2 something % 13 month CD I took out a while ago.

Esso posted on 2020-03-29 22:31:44   Reply   Private Reply