What does “balance sheet banks” mean in this context?
"The balance sheet for a bank is the list of assets and liabilities that the bank directly is responsible for.  This would be things like loans the bank issues and accounts with the bank. Banks can make both ""balance sheet"" loans, meaning a loan that says on the balance sheet - one the bank gains the profits from but holds the risks for also.  They can also make ""off balance sheet"" loans, meaning they securitize the loan (sell it off, such as the mortgage backed securities). Most major banks, i.e. Chase, Citibank, etc., could be called ""balance sheet"" banks because at least some portion of their lending comes from their balance sheet.  Not 100% by any means, they participate in the security swaps extensively just like everyone does, but they do at least some normal, boring lending just as you would explain a bank to a five year old.  Bank takes in deposits from account holders, loans that money out to people who want to buy homes or start businesses. However, some (particularly smaller) firms don't work this way - they don't take responsibility for the money or the loans.  They instead ""manage assets"" or some similar term. I think of it like the difference between Wal-Mart and a consignment store.  Wal-Mart buys things from its distributors, and sells them, taking the risk (of the item not selling) and the reward (of the profit from selling) to itself.  On the other hand, a consignment store takes on neither: it takes a flat fee to host your items in its store, but takes no risk (you own the items) nor the majority of the profit. In this case, Mischler Financial Group is not a bank per se - they don't have accounts; they manage funds, instead.  Note the following statement on their Services page for example: Mischler Financial Group holds no risk positions and no unwanted inventory of securities, which preserves the integrity of our capital and assures our clients that we will be able to obtain bids and offers for them regardless of adverse market conditions. They're not taking your money and then making their own investments; they're advising you how to invest your money, or they're helping do it for you, but it's your money going out and your risk (and reward)."
Expensing a transfer of funds is incorrect. That will affect the Profit/Loss (Income) statement when you transfer it out and back in, which you do not want, at least for the principle. The interest should be recorded as a interest income. The general way to account for transferring money is to credit the originating account, and debit the destination account. This will only affect the balance sheet accounts. For example: Transferring (buying) 10,000 worth of fix term bank deposits Interest is paid: The bank deposit reaches maturity, so the principle is returned, with the final interest payment. The accounts Checking account and Fixed term bank deposit are asset accounts, which show up on the balance sheet. The Interest income is an income account, which will show up in the income statement. This is how a fixed term/CD is usually recorded. In certain cases, where the business must follow an accounting standard, this may very well be insufficient, but this situation will be unlikely if it's a small private sports club. Having said that, double check to make sure what you've stated is indeed correct, and look back into the past entries to see how it was dealt with before, especially since you said this bookkeeping job is temporary. I would strongly advise against changing non-recent entries, even if they are incorrect. For the insurance payments, that would depend on how the damaged assets were accounted for. It's a little hard to say without more detail-- the extent of the damage, how the diminished value was accounted for in the books, the cost of repair materials, etc. The three rating agencies S&amp;P,Moodys &amp; Fitch were the Architects of the 2007-2008 Financial crisis.  [Start here ](https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_crisis )   The Fed is now planning to unwind its [balance sheet](https://www.bloomberg.com/news/articles/2017-07-26/fed-says-balance-sheet-unwind-to-start-relatively-soon-j5lbf6ik) in October  The Feds balance sheet contains the same crap these assholes rated AAA  And so now as times come to try and sell that shit, they the rating agencies reappear to create misdirection while this hoax on the Global financial system is perpetrated. [Amazon Balance Sheet](http://markets.ft.com/research/Markets/Tearsheets/Financials?s=AMZX:GER&amp;subview=BalanceSheet)    [Best Buy Balance Sheet](http://markets.ft.com/research/Markets/Tearsheets/Financials?s=BBY:NYQ&amp;subview=BalanceSheet)   Best Buy has one billion in cash.  Amazon has nine.  If Best Buy does lower its retail prices, a sector that demands higher margins to compensate for larger fixed expenses, it's over.  They don't have the cash to pursue that strategy if they wanted to, and it means that they've given up trying to figure out another way to differentiate themselves.    It already is pretty much over.  Amazon could open up pop-up stores around Christmas time with it's top 20 products by margin and volume in each category and effectively end Best Buy.  But they don't really care because Best Buy isn't a competitor to them. "This is the best tl;dr I could make, [original](http://bruegel.org/2017/09/the-feds-unwinding/) reduced by 95%. (I'm a bot) ***** &gt; In Hamilton&amp;#039;s simulation, if the Fed were to continue reducing its balance sheet through the end of 2020, the level of Fed deposits by financial institutions may not be enough to cover the plausible variation in other Fed liabilities.  &gt; The political power of worries about the Fed&amp;#039;s balance sheet will help determine the endpoint for the Fed&amp;#039;s balance-sheet.  &gt; Given the profitability, prestige and jobs created by maintaining the Fed&amp;#039;s large balance sheet, it will not be painless for the Fed to shrink it.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/72i01i/the_feds_unwinding/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~216580 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **Fed**^#1 **rate**^#2 **balance**^#3 **sheet**^#4 **bank**^#5" "Someone's (or, a bank's) ""exposure to equities"" refers to the amount of value which has a risk that fluctuates with the equities market (ie: the stock market). In very broad terms, I think it might make sense to say that exposure to equities could mean, for example, owning many rental properties, if the rental market was ""highly correlated"" with the equities market. That is - if house prices go down when the equities market goes down, and if that relationship is very strong, then owning a house means you are exposed to the equities market.  However, in the sense it is used there, it seems to mean direct exposure to equities - ie: owning stocks and stock-based funds." "Total Capital This is a very old fashioned term that really is mostly only used in the finance industry today, like when everyone was obsessed with ""bank capital"". Total Capital = Preferred Equity + Common Equity + Liabilities True blue preferred shares are almost only used by financial companies, banks specifically.  The more modern ones that convert to common are used by all other companies. Notes Payable This is another old fashioned term that now carries a different meaning in Generally Accepted Account Principles (GAAP). The oldest definition of a note or a promissory note is a promise to pay a fixed amount of money on a specific date.   This has been modified to resemble more a bond and evolved into the zero coupon bond, a bond that makes no cash interest payments but makes one final payment that includes principal & interest.   A bank note, like a One Dollar bill, is a note that pays something, in this case One Dollar, never (technically, the repayment date is simply not specified in the contract).  While it pays One Dollar, it never pays it back, so it has a constant value of One Dollar.  The constant nature, inflation notwithstanding, is what makes bank notes the preferred medium of exchange. GAAP has taken its' own definition to mean any debt payable within 12 months, as it is a current (<12 months) liability." "Perhaps people in student loan debt aren't the source of the assessment. There have been multiple warnings from Nobel economists on the potential for student loans to do what the housing market did in 2008. If we suddenly find out a large fraction of the educations loaned weren't worth enough to pay back, many positives on company balance sheets would suddenly  appear as negatives. When negatives are realized, it triggers what some economists have termed a ""balance-sheet recession"": the great depression and 2008 recession both had this mechanism at their heart. They're a special type of recession that are not temporary and take on the order of a decade to crawl out of." Can you expand on your second point about how banks are now structuring these products to account for greater defaults and losses? Is it just that the securities are being correctly rated this time around as opposed to the MBS's back in the last crisis?