Why are some banks - like JPM - paying 0.01% on deposits? Because they don't need them, because they are still flooded with Fed reserves on which they collect hundreds of millions in interest daily. In fact, JPM is trying to slash its retail deposits which are a cost center
Other banks, mostly small regional banks, have seen their reserve exposure slide thanks to QT, and are increasingly reliant on depositors for funding. 88% of SIVB's total liabilities were deposits. Meanwhile, loan/deposit creation has collapsed due to imminent recession.
Big banks - which are not reliant on depositor funding - are incentivized to spark bank runs which will cripple small/regional banks. It's why JPMorgan was poaching SVB depositors on Thursday (per BBG).
bloomberg.com
bloomberg.com
Then, when the crisis becomes big enough, and Fed cuts rates/resumes QE, the big banks reload on reserves and the cycle begins from square 1.
And the crisis will get worse due to the avalanche of defaults coming to commercial real estate/offices and regional bank exposure
zerohedge.com
zerohedge.com
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