Zim: "Am I right in thinking that that is only if one sells?"
I don't think that is how things work in accounting - nor in rational investing. HIDING losses for any of these PUBLIC institutions is, I'm sure, a felony (albeit in a country which no longer prosecutes felonies if you are politically connected enough...like Biden, Clinton, Bush, etc).
You LOSE the value of your investments when their mark to market price goes down — not when you sell. In ALL cases smart money would have not invested before the crash, but waited until after, if at all. A 50% paper loss requires a 100% paper gain...just to get you back to even, and 100% gains are not that easy to come by in conservative circles.
The banks which lent money long term when interest rates were at historic lows (and WAY below real rates which factored in inflation) SCREWED UP MASSIVELY. They GAMBLED that trees grow to the sky...and that
the Fed would never do what it did.
The really spooky thing to ask is what banks, pensions, insurance companies, etc. did NOT make long term loans when mortgages were at 2-4% and Treasuries were below 0.5%? If you lent fixed-rate, long-term on RE you are screwed. If you lent on 10 year Treasuries or blue-chip corporate bonds, you are also screwed.
I'm trying to think how I would find out the amount of such long-term paper losses held at various banks vs. their liquid assets. Maybe there is something I am not properly considering but, at the moment, I'm wondering if there are ANY commercial institutions which are still solvent on a mark to market basis. How could there be? Only if they didn't loan anything long term or didn't use any leverage (margin). But that doesn't fit ANY public institution I can think of!
If you have much money in any smaller banks (which are less likely to be politically connected enough) you might want to rethink that...quickly...before other people start rethinking it! Even below the FDIC insured level, there is massive risk as the FDIC didn't have even 1% of the money it would need to bail out the deposits it has supposedly insured ... and it is a quasi private institution. All this based on the last time I checked. (I actually took the time to call them once, a long time ago, to find out if this was all true...it was...but they told me not to worry because...well, just because!;!)
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