[Mick]

It's only a loss if they sell now.  Unlike smaller banks, BAC should (in theory) have diverse enough of a deposit base and overall business that they don't need to be selling right now.

That is not correct. All investments need to be adjusted to current market values on the balance sheet ("marked to market"), and federal regulators look at the market value of assets when assessing systemic risk. Any devaluation of this magnitude will materially impact their balance sheet and their systemic risk of failure

Banks do not have to mark assets they plan to hold to market.  This was one of the changes coming out of the GFC.  It is true that regulators will look at market values.

FWIW, BofA is not in any kind of real trouble due to its balance sheet.  For that matter, SVB wasn't either.  Without the deposit run SVB would have easily been able to manage its way through the increase in interest rates.

Silicon Valley Bank's assets tripled from 2020 to 2022. They had too much liquidity, and not enough lending opportunities, so they locked up billions in 10-year T Bonds. When rates skyrocketed, the value of those bonds dropped like a rock...which, BTW, numerous internal risk officers at SVB noted as far back as 2019. At best, SVB sold $20 billion at a loss (really at market price) because they needed the case. The market noticed. And their depositers who had more than $250k in the bank were uninsured (Roku had $500 mms. in SVB), so $41 billion sprinted out of SVB in a single day. What SVB did -- make an enormous, unhedged bet on low interest rates -- was so wrong, and so scary, that other banks were hit with significant withdrawals.

[Mick]

It's only a loss if they sell now.  Unlike smaller banks, BAC should (in theory) have diverse enough of a deposit base and overall business that they don't need to be selling right now.

That is not correct. All investments need to be adjusted to current market values on the balance sheet ("marked to market"), and federal regulators look at the market value of assets when assessing systemic risk. Any devaluation of this magnitude will materially impact their balance sheet and their systemic risk of failure

Banks do not have to mark assets they plan to hold to market.  This was one of the changes coming out of the GFC.  It is true that regulators will look at market values.

FWIW, BofA is not in any kind of real trouble due to its balance sheet.  For that matter, SVB wasn't either.  Without the deposit run SVB would have easily been able to manage its way through the increase in interest rates.

Silicon Valley Bank's assets tripled from 2020 to 2022. They had too much liquidity, and not enough lending opportunities, so they locked up billions in 10-year T Bonds. When rates skyrocketed, the value of those bonds dropped like a rock...which, BTW, numerous internal risk officers at SVB noted as far back as 2019. At best, SVB sold $20 billion at a loss (really at market price) because they needed the case. The market noticed. And their depositers who had more than $250k in the bank were uninsured (Roku had $500 mms. in SVB), so $41 billion sprinted out of SVB in a single day. What SVB did -- make an enormous, unhedged bet on low interest rates -- was so wrong, and so scary, that other banks were hit with significant withdrawals.