I think FRC is probably the last one to fall.
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FRC
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In what form was that $30B infusion of cash they orchestrated for FRC in March? It was some form of financing from 6 big banks at $5B each. Presumably they had some kind of guarantees, right?
Yes those are priority deposits, but I would expect that even the uninsured deposits and FRC are going to be made whole under the same “systematic exception” they used on the other two failures. As long as you’re sure this is the last failure, it’s not too hard to justify paying up for that. Then again maybe they let the depositors lose their money too - it’s not like they didn’t have over a month to leave since the troubles started, if they were worried about it.
FRC bonds were treating at about $.15-$.25, so maybe that suggests there’s enough money to pay the creditors, and the uninsured depositors are ahead of them.
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“Mistakes were made”
Notice that he refers to SVB’s failure, not the failure of the woke, San Francisco Fed lesbian president, Mary Daly
I also appreciate that others will have their own perspectives on this episode. We welcome external reviews of SVB’s failure, as well as congressional oversight, and we intend to take these into account as we make changes to our framework of bank supervision and regulation to ensure that the banking system remains strong and resilient.
FDIC expecting a $13B hit on FRC, sold the assets and accounts to JPM.
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Can’t be the taxpayers funding the $13B+ bailout, says Joe.
- BIDEN: ALL DEPOSITORS AT FIRST REPUBLIC BANK ARE PROTECTED. AND TAX PAYERS ARE NOT ON THE HOOK
- BIDEN: WE ARE WELL ON THE WAY TO STABILIZING THE BANKING SYSTEM.
- BIDEN STRESSES NEED TO STRENGTHEN BANK REGULATIONS
Right, it’s the FDIC and the Fed who are on the hook for the guarantees on all those loans JPM bought (in case they go down), who definitely aren’t funded by the taxpayers. They’re funded by bank customers and money printing, which just so happens to cost taxpayers money (and some non-tax-payers I supposed as well).
Instead, lets come up with some hokey scheme where only business accounts aren’t insured or have to pay lots more for that.
- US Weighs More Business Deposit Insurance After Bank Failures
- FDIC Signals Support for Narrow Changes to Deposit Insurance – WSJ
- FDIC Says Targeted Changes to Deposit Insurance Could Stem Run Risk in Banking System – WSJ
- FDIC Says Lawmakers Could Significantly Increase Deposit Insurance for Business Accounts – WSJ
Again, not the taxpayer! Just higher inflation when the businesses bill you for these extra proposed costs in their prices.
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I think it’s the opposite - they want to cover more business deposits, recognizing that all but the smallest businesses can have day to day working capital that exceeds current insurance limits.
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A great recap by Matt Levine on the FRC/JPM buyout.
https://www.bloomberg.com/opinion/articles/2023-05-01/jpmorgan-got-a-deal-on-first-republic
Backup link
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rate hikes have handed many fixed income investors large losses, and banks’ portfolios are no exception.
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This “disappearing cash / deposits trick” is now happening at Schwab of all places…
There are likely some more shoes left to drop - Zions, M&T Bank, PacWest.
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what is this “magic bullet” other than drop rates
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PACW and WAL were crashing today on news that they might be looking to sell themselves. WAL denied that news, and threatened to sue the financial times for reporting it!
PacWest in talks with investors. The regional bank’s shares plummted in off-hours trading after it said it had been approached by investors and would evaluate all options. It also gave an update on deposit flows, saying they have stabilized since the seizure and sale of First Republic Bank.
Interesting times, indeed.
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SI-now-SICP has been kicked off the stock exchange amid layoffs and financial troubles. this crypto friendly bank is now in liquidation, just like the Feds wanted.
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Sorry but crypto is a problematic asset/investment. Can’t imagine the Feds or governments wanting crypto friendly banks around.
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But in these cases, “crypto friendly” means merely facilitating transactions for crypto firms. Not taking investment postions in crypto. It’s the Fed’s attempt to attack crypto itself without directly attacking crypto.
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Buffett / Berkshire bought Capital One stock (COF) recently, up to the maximum 10% allowed. The stock is up nearly 10% on that news this evening, as apparently they’re not one of the ones you should be worrying about.
They sold a few other bank stocks including US Bancorp (USB).
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