Clark Khayat: Yes, just maybe a couple of things. One, Gerard, I think among banks, and it’d be consistent with all the comments we’ve made about managing relationships, you’ll see all of us kind of defending our best relationships on the credit side, but it’s with additional business that comes with that to make those relationships hurdle to Chris’ point about standalone credit. So, again, I think that banks are being rational broadly, but defending their best relationships as you would expect. If you think about the third party non-bank credit market, I would just — I’d make maybe a retrospective comment and a prospective comment. Looking backward, I think there’s been a lot of credit that’s gone outside the bank market. The question I think which is sort of embedded in yours is, do some of those kind of, call it just for the sake of argument, non-bank or FinTech originated loans sit on bank balance sheets?
That would be a question we should be asking broadly. We do not at Key have much if any of that business. The second piece would be around the prospective, which is some of the capital rules are obviously making the private credit funds engage in conversations about flow agreements and taking credit over time. That is yet to be written. But clearly, there’s a lot of conversation and activity there.
Gerard Cassidy: Very good. Thank you for those insights. And then as a follow-up question, Clark, on the hedging strategy, you’ve given us a lot of detail. And we all acknowledge forecasting interest rate is very difficult. In fact, I find it very interesting. If you go back to the Federal Reserve’s June 21 dot’s forecast for the Fed funds rate, at the end of ’23 they were forecasting a 0.625 Fed funds rate. They missed it by 500 basis points. So my question for you guys, the long tail risk, what is that for next year? Everybody sees, you’ve been very clear about the benefits by the net interest income on an annualized basis first quarter ’25. Everybody sees that. What could go wrong? Or what’s that long tail risk that we need to just keep our eyes on or you guys are keeping your eyes on?
Clark Khayat: Yes, it’s probably a couple of versions. But if you think right now, we are asymmetrically at risk to higher rates. And so we are very contemplative of what happens when rates go up, because as the treasuries and swaps mature, there’s still a time component, right? So you feel the cost immediately in the yield sort of pull through. We are contemplating things like a stagflation scenario, right, where it’s — the macro economy is a little softer and you have higher rates. I think often we assume weaker economy rates come down, there are obviously scenarios where that’s not the case. So we’re just trying to think through all the implications of that and the levers and sensitivities that we have to address that. I think the other piece over time and we’ve talked — we used to talk more about this before 2023, which was rates come down quickly as these things are repricing and can we ensure that we’re getting the right repricing characteristics when the treasuries and swaps mature?
We’ve talked to that around the hedging we’ve done for ’23. And obviously, we have other significant advantages right now if rates were to come down rapidly. So we’re thinking about that broad range of conditions, Gerard, and we’re trying to project our best view of it, but we’re certainly making sure we’re prepared for different trajectories.
Gerard Cassidy: And Clark, on the comment about rates coming down more rapidly, which is a good way — I’m glad you guys are thinking about that, though it doesn’t seem likely. But if it did happen, would your funding costs, your deposit rate you think, would they fall as quickly as what would happen on the asset side of the balance sheet from your guys’ experience or would they lag?
