Josh Younger Explains How Banks Really Manage Rate Risk

Odd Lots

Bloomberg

News, Investing, Business, News Commentary, Business News

4.4 • 1.6K Ratings

🗓️ 30 November 2023

⏱️ 44 minutes

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Summary

The rate banks pay on savings accounts hit the headlines earlier this year, when an outflow of deposits contributed to the collapse of Silicon Valley Bank and other lenders. Suddenly, the mechanics of how banks attract deposits — and what they actually do with them — became a hot topic. And even before then, there'd been a lot of discussion over why many banks hadn't passed on the surge in benchmark rates to their customers by raising rates on savings accounts. So what exactly do banks use deposits for? How do those deposits behave? And can that behavior change in different interest rate environments? In this episode we speak with Josh Younger, senior adviser at the Federal Reserve Bank of New York and formerly at JPMorgan, about his recent research looking at how banks pass on higher interest rates and what it means for their own exposure to interest rates.

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0:00.0	Thought Creators, the Podcast for Financial Experts, brought to you by FAB.
0:08.0	My guest today is Sarah Piersada Osmani, head of Sustainable Asset and Project Finance at
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0:20.2	sustainable finance by 2030.
0:23.0	Plot Creators.
0:25.0	The Podcast for Financial Experts brought to you by FAB.
0:29.0	On December 4th and 5th, against the backdrop of the United Nations Climate Change Conference,
0:35.2	Bloomberg Green will convene the foremost leaders in business, finance, policy, academia, and
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0:44.9	the goals set forth at COP28. Join our community of global influencers and
0:49.5	problem solvers in Dubai to build connections, inspire innovation and challenge the status quo in the
0:55.1	battle against climate change. Register at Bloomberg Live.com slash B Green Radio. Hello and I'm
1:10.0	welcome to another episode of the Odd Lots Podcast. I'm Joe Wiesenthaw.
1:15.0	Joe Wiesenthaw.
1:16.0	Joe, what do you know about the dark arts of asset liability management?
1:21.0	Only things that have been told to us about it on the odd lots.
1:25.8	Wait, that's actually quite a lot.
1:27.2	Yeah, no, that's true.
1:28.7	It seems tough.
1:29.7	Deposits can be flighty.
1:31.2	Sometimes they can be stable. Sometimes when rates go up, they get passed on to deposit. Sometimes they don't.
	...

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