The reason the dividend is safe is the coverage of earnings is high enough to cover it. The paper loss on the MBS is just that a paper loss. The rates increase with the MBS postion is going to hurt NIM, yet the paper loss will workout to net zero. It is the same as if you had the MBS---you get the interest and your money back. The problem is that MBS bought them with borrowed money---borrowed at short term rates. So if short term rates go above 4% then MBS lose money. Profitablity is going to be hurt anyway since NIM and gains sales of loans(which also drops with rising rates) need to cover bank expense.
That is a problem. You dont know. Banks have tons of accounts and they all have different balances with different interest rates. Some checking accounts might be paying just .20% right now and 5 yr Cd might be paying 3-4%. The FDIC insurance and state banking regs require an amount of cash to be on reserve to protect against a run on the bank and other assets to invest. This whole thing about betting the bank is dumb, but they should have invested short term. The thought they did,,,the MBS is avg life of 3.5 years. They made a mistake. It was a bad move, and they should match deposits with loans. Banks make money off spread of the invested funds and the borrow funds.
NYB is fine and I will just wait for all this bull crap to blow over.