Ed

They were, of course, massively increased and hardened after the financial crisis.

This is to say how many dollars of actual equity capital you have to have for every dollar of loans or assets or whatever you have out there.

So we were worried that what they call Basel III endgame was going to mean

You know, JP Morgan has to hold two more dollars in addition to the 11 or $13 they already hold for every hundred dollars of assets.

Looks less like that's going to happen.

Uh, acquisition, you know, mergers are getting easier.

They're getting executed faster.

All this good stuff.

So regulatory, right?

Good.

That is good.

Now for the tricky part where listeners should either pay attention or just tune me out altogether.

One or the other.

Take your pick.

So back when interest rates were really low, before 2022 and there was inflation and rates got higher,

Any asset a bank bought then has a really low yield on it.

If you bought a mortgage or even a business loan or 20-year treasury, you bought it at a yield of just a couple of percent.

When interest rates go up, the price of all those assets has to reprice to the new interest rate, which means the value of those assets goes down.

So if you buy a mortgage bond with a yield of 2%,

And rates go to 4%.