We will see what happens this weekend but if Ackman is right then we’ll see bank after bank go to 0 in the coming weeks and months.
50% of mortgages were written (new + refinanced) between 2020 and 2022. These are all in bonds paying 3% or less. Who is holding these?
If deposits were used to buy these then so many banks are done for. Those depositors want their money back so they can get 4%+ interest now. Everyone is going to start to pull.
Okay it's technically not a part of the government, but it's a Government Sponsored Entity with public ownership. All mortgages bought by them have an implied guarantee by the US government.
So they did sell them to "a government-sponsored entity and the US government has an implied guarantee to pay any defaults."
50% of mortgages were written (new + refinanced) between 2020 and 2022. These are all in bonds paying 3% or less. Who is holding these?
If deposits were used to buy these then so many banks are done for. Those depositors want their money back so they can get 4%+ interest now. Everyone is going to start to pull.
Contagion is here.