Joshua

Ruminates on risk, fintech, banking, regulation, sailing, and wine. Bitcoin and lightning too. #Bitcoin #fintech #Lightning

[Joshua @shuamp]

Because we have the national park system

[Dimitri Dadiomov @dadiomov]

Why can’t US malls be like this?

[Joshua @shuamp]

@RogueCfpb Just wait until Rohit starts leaning in!

[Peter Van Valkenburgh @valkenburgh]

Around $3 Trillion dollars were laundered through banks in 2025 despite the warrantless surveillance regimes they facilitate for governments. And they want you to think that people making peer-to-peer transactions on chain are the problem that needs to be outlawed.

[Ramp Capital @RampCapitalLLC]

I think the kids call this pardonmaxxing

[Joshua @shuamp]

The first year call reports for de novo banks are generally very weird. And drawing conclusions about the safety and soundness of those banks or regulators’ concerns is usually just speculation. But if I were to speculate, I’d say that Erebor is safe and sound, regulators aren’t worried, and uninsured deposits are not a concern right now.

Why aren’t uninsured deposits a concern? Erebor Bank maintains just shy of $600 million in tier 1 capital and a leverage ratio over 140% as of 3/31/2026. Compare this to the balance of uninsured deposits of approximately $256 million. This is especially important in relation to Erebor’s largest asset category: interest bearing bank balances (i.e. cash parked at the Fed and other correspondent banks), which totaled $1.1 billion on 3/31/2026.

Why does this matter? Because banks live and die (but mostly die) by their asset quality and capital. Take SVB for example. Their last call report showed just under $17 billion in tier 1 capital and a leverage ratio of approximately 8% as of 12/31/2022. When compared to uninsured deposits of $151.6 billion, that made me a little uneasy. But the biggest difference is the asset quality. SVB’s largest asset category was investment securities, namely US treasury securities totaling $92.2 billion. Normally that wouldn’t be a concern; US treasuries are highly liquid assets and the credit risk is essentially nil. The problem is that those securities were longer term and purchased in a low rate environment. When the Fed started increasing rates, those securities couldn’t be sold at or above their book value, resulting in unrealized losses. And those losses had to be realized when those treasuries were sold to cover the outflow of uninsured deposits. Not to mention that those securities plus interest bearing bank balances would have never been sufficient to cover a situation where all uninsured deposits fled the bank.

[Alex Johnson @AlexH_Johnson]

Regarding Erebor's first call report, which showed that the bank had acquired $1.1B in deposits in just 7 weeks, there's an important difference between depositor safety and bank safety.

- Only 23% of Erebor's deposits are uninsured (compared to roughly 90% for SVB before it failed), and the Erebor deposits that uninsured are from a small set of very large accounts, which are likely friends and family from the Luckey/Thiel multiverse of madness. The rest of the deposits are either with depositors under $250,000 or spread out through IntraFi.

- However, 88% of Erebor's deposits are interest-bearing (compared to roughly 50% for SVB), which, combined with the rapid growth, is cause for concern. This is a profile that is common in bank failures. You pay up to quickly acquire hot deposits, which is usually followed by excessive risk taking on the asset side of the balance sheet.

- Now, we don't know exactly what Erebor is going to do with the deposits. It hasn't made a single loan in its first 7 weeks. Palmer Luckey has said that the bank will have "the most conservative loan-to-deposit ratios of any bank in history," with early indications targeting around 50%, meaning the bank intends to lend out only half of every deposit dollar it takes in. However, this doesn't mean that the bank won't, at some point, take some risky gambles. Before it failed, SVB had a loan-to-deposit ratio below 50%.

The reality is that we don't know much yet. All we can say for sure is that the bank looks both safe to depositors and unsafe to regulators.

That may seem like a contradiction, but that's banking for you ...

[KC NoDak Brim 🇺🇸 @brim006]

Brother you have no idea

[Conor Rogers @conorjrogers]

No one is ready for the real solution to Gerrymandering:

A return to the Constitution's original standard of 1 Member of Congress for every 30,000 Americans, resulting in an 11,000-member House with city-council sized districts so small you can't Gerrymander them if you tried.

[Joshua @shuamp]

@adampsnyder @tphillips 🎯

[Jeremy Kress @Jeremy_Kress]

It remains a mystery how the Fed is supposed to be independent for one purpose, but not for others.

If independence over bank regulation/supervision is undesirable or unconstitutional, the Fed should be stripped of its authority.

[Joshua @shuamp]

I would love to see the cost comparison of maintaining 53+ MTLs versus a national license with “enhanced” compliance expectations. My gut says it’s a wash or slightly beneficial for a national charter.

Source: I worked at MTLs, consulted banks’ and broker-dealers’ AML/CFT program remediations, regulated banks as a commissioned OCC national bank examiner, and chartered a trust company

[Austin Campbell @austincampbell]

OCC compliance is vastly more expensive, demanding, and complicated than MTL compliance.

There are benefits but for many it will be vast overkill.

Source: I worked at MTL-licensed entities... and @jpmorgan

[Joshua @shuamp]

@RogueCfpb @AlexH_Johnson The stablecoin license continues regardless of administration change.

But yes, the MTL regime will continue to worsen and be incredibly awful 😉

[Joshua @shuamp]

@arshbot @austincampbell @jpmorgan This

[Joshua @shuamp]

I wouldn’t be too certain. While the national trust bank charter may not be the exact vehicle, a stablecoin issuer license from OCC (or one of the states) gives the license holder national access similar to passporting for the EU e-money license regime.

And he has another good point: the MTL regime is an outdated, overcomplicated, backwards regime for a modern financial system. Yes, CSBS and the states will fight tooth and nail, but their cries of “but the states are the hotbeds of innovation” will fall on the deaf ears of anyone who has attempted to engage with the MTL regime in the past six years.

[Harsha Goli @arshbot]

I'm going to make a prediction that will shock many of you:

Going forward, for at least the next few years, MTL licensure in the US will be obsolete.

And everyone who has a litany of MTLs will feel the compliance burden of an outdated vehicle they bought and paid for.

In it's place will be the occ bank trust charter (which is not the same as a depository bank charter like you'd interact with at JP morgan). The bank trust charter will turn into a kind of federal crypto license.

You've seen over the last few months many conditional or full approvals for bank trust.

@stablecoin, @coinbase, @bitgo, @nubank, etc

That will be the new norm. Bookmark this post.

[Joshua @shuamp]

@RogueCfpb @burkehenryt @ddayen Farming or ranching. Just put them out to pasture. Send them upstate to live their best lives!

[Paul Grewal @iampaulgrewal]

"Victim." I remember how terrible I felt the day in 1993 that I got that skinny envelope from @StanfordLaw. "Rejected". I wish I could back in time and tell myself to cheer up--you might have just dodged the biggest bullet by not learning law from these people.

[Rogue CFPB @RogueCfpb]

States out there devaluing state charters, all while the Feds are granting charters like drunken sailors.

Guess the states were tired of having state chartered banks

[Joshua @shuamp]

@RogueCfpb @mikulaja There’s already an exodus. Take a look at the number of charter conversions: Paxos, Circle, Fidelity, Ripple

[Senator Cynthia Lummis @SenLummis]

Someone’s looking for a pardon and doesn’t realize the Clarity Act would have you locked up for much longer than 25 years.

My legislation couldn’t be more different than the bill you tried to buy from Congress over my objection in 2022.

We do not need—nor want—your support.

[Joshua @shuamp]

@AlexH_Johnson I’ll take “GDPR” for $1000, Alex

[Joshua @shuamp]

@RogueCfpb Decades of underinvestment