As I've explained, BofA’s unrealized losses are tied to bonds they bought at super low yields (which have since dropped in value as rates went up). Most of their capital is tied up in these bonds, so if depositors demand better rates, BofA would have to sell some of them at a loss to free up cash. To avoid realizing those losses, they keep deposit rates low and hope depositors stick around. It’s all about preserving their balance sheet.
Why are the unrealized losses forcing BAC to pay a lower cost of deposits to depositors?
As I've explained, BofA’s unrealized losses are tied to bonds they bought at super low yields (which have since dropped in value as rates went up). Most of their capital is tied up in these bonds, so if depositors demand better rates, BofA would have to sell some of them at a loss to free up cash. To avoid realizing those losses, they keep deposit rates low and hope depositors stick around. It’s all about preserving their balance sheet.