Matt Levine’s Money Stuff: The Banks Are Re-Tranching

The re-tranching of banking

A bank is a special kind of company because of its funding model. Compared to normal companies, banks:

1. Borrow much more money. JPMorgan Chase & Co., for instance, has $4.36 trillion of assets and $4 trillion of liabilities; 92% of its financing comes from debt. Compare Meta Platforms Inc. ($280 billion of assets, $95 billion of liabilities, so 34% debt financed) or Walmart Inc. ($262 billion, $103 billion, 39%). Those book values understate the difference: Meta and Walmart have equity market values of $1.76 trillion and $775 billion, respectively. Their liabilities represent about 5% and 13%, respectively, ...