First Republic Bank Seized by Regulators and Sold . . .
Commenter Fred Dobbs reports (NYT) on the seizure of First Republic Bank by banking regulators in the comments section of Angry Bear. I am beginning to wonder how many more seizures will occur. How many failures are resulting from the loosening of Dodd-Frank? It appears the Fed has a greater impact on banks than Labor.
JP Morgan Chase to the rescue . . .
Earlier Angry Bear commentary on Dodd – Frank here and here.
Fred Dobbs comment; First Republic Bank Is Seized by Regulators and Sold to JPMorgan Chase – The New York Times, Maureen Farrell, Lauren Hirsch and Jeanna Smialek
Regulators seized control of First Republic Bank and sold it to JPMorgan Chase on Monday, a dramatic move aimed at curbing a two-month banking crisis that has rattled the financial system.
First Republic, whose assets were battered by the rise in interest rates, had struggled to stay alive after two other lenders collapsed last month, spooking depositors and investors.
First Republic was taken over by the Federal Deposit Insurance Corporation and immediately sold to JPMorgan. The deal was announced hours before U.S. markets are set to open, and after a scramble by officials over the weekend.
Later on Monday, 84 First Republic branches in eight states will reopen as JPMorgan branches.
JPMorgan will “assume all of the deposits and substantially all of the assets of First Republic Bank,” the F.D.I.C. said in a statement. The regulator estimated that its insurance fund would have to pay out about $13 billion to cover First Republic’s losses. JPMorgan also said that the F.D.I.C. would provide it with $50 billion in financing . . .
Additional information: Fact Sheet: The Senate’s Bipartisan Dodd-Frank Rollback Bill, Center for American Progress, Gregg Gelzinis and Joe Valenti
How heavily vested are/were they in crypto?
Good question and I do not know. Just exploring the bank now. It will require me to deep dive some stuff (technical terminology and too difficult to explain stuff).
Ten Bears as reported
How to Buy Crypto With First Republic Bank  | Step-by-Step
First Republic did not dabble in Crypto, it did provide a platform to invest. First Republic is the 14th largest bank in the US to fail. Same article, scroll down in the article.
2nd largest failure evah according to NYT.
Why are deposits over 250 K safe, when clearly stated policy and insurance premiums limit it to 250K?
Yes, How many more will fail. This is not about creepto.
Because they can do it knowing full well there are others who have done it. The real issue is the loosening up of Dodd-Frank. I argued against this and one commenter at The Washinton Monthly excoriated me for my opposition. There was no way we should have opened this open as wide as we did. 2008 was a once in a fifty-year event. Now here we are again. We can expect more.
Agreed on Dodd Frank. They took something that had worked and worked well, and did away with it. $ talks, BS walks. And we are worse off.
Anyway, if they were allowed to get into trouble, surely the guv’mint would bail them out, or prevail on even larger banks to do so. Go figure!
Note that JP Morgan Chase is not liable for First Republic shareholders’ losses.
What happens to First Republic Bank’s stock and shareholders?
The shareholders are most likely wiped out.
The stock has stopped trading as of Monday, and shareholders won’t receive stock in JPMorgan, according to a JPMorgan spokesman. The New York Stock Exchange said on Tuesday that it is delisting First Republic’s shares.
The FDIC’s insurance fund has a priority claim on the bank’s assets, which must be fully reimbursed before the next class of creditors — general trade creditors — can get reimbursed, according to the FDIC. The FDIC estimated the cost to the Deposit Insurance Fund at about $13 billion. …
With near free money and the distortion of the largest ever dr/dt increase in US money supply in 2020-21, large companies, old zombie companies, and new tech companies borrowed money at low rates from the intermediate sized banks to acquire commercial real estate (and home residencies), establish the new companies, and instill a few more months/years of life into the Zombies. With resulting and predictable money supply related consumer inflation, US (and other) central bank historical QT over the last 14 months with the absolute low to high percentage and greatest-ever dr/dt rise in the fed funds rates undercut the intermediate-sized banks’ valuations in invested sovereign debt instruments and destroyed the risk takers’ current and expected near term future valuations on their investments. Big companies like Blackrock simply defaulted and gave the acquired overvalued assets back to the banks.
The US small and intermediate banking community is at the edge of the crumbling fault line. Many more intermediate-sized banks will fold. The percentage GDP-private debt problem in China, linked to its domestic 50-60 trillion dollar equivalent real estate market valuatio, is in a relatively (much) worse position. Large Chinese banks funding the domestic real estate market are on a relatively (much) greater fault line.
Globally (and qualitatively), this will not end well. A global nonlinear asset devaluation dating to 1981-82 is expected.
So what do you think Powell should be doing? We have higher Fed Rates and Republicans calling for cuts in programs. Where do you believe both of these will lead too? I believe it is a pretty easy question. Being fiscally and monetarily concervative is not the correct move at this point in time.
What should Powell do at the current time? It really doesn’t matter what the fed does in the near term. The global equity and commodity markets will crash and fed funds rates will rapidly return to zero with likely even negative yielding ten year US interest rates in the future as Germany had in 2016, 2019, and, 2020, and 2021.
The US is a service-based debt-based economy whose 2 percent GDP average growth for the last 30 years has been fed with 6% yearly average GDP budget deficits.
A debt dependent economy only survives by inflation of assets, new money and new debt creation reducing the burden of previously accumulated debt.
A 1% cap in annual increases in US federal budget expenditures would be disastrous and result in negative GDP’s of at least 2-3%.
With the current anarchist populist politics, it is difficult to imagine a debt-limit increase compromise that will be acceptable to a majority of (house) representatives. The emergency economic stabilization Act of 2008 lost its first house vote on Monday 29 September. The market lost 8-9 percent on Tuesday. The Senate then passed a revised version 74-25 on 1 October and the house passed the amended version 263/171 on 3 October with signature by the president on the same day.
1. Should quit blaming Labor as the foundation for “all” the nation’s economic issues. Even in the Service industry, they are the lower cost. And without them spending in our economy, we would collapse.
2. Recognize what is occurring in the economy. There have been so many ridiculous and purposely caused supply chain issues costing the nation $billions and causing many down stream business higher costs. This has nothing to do with Labor. It is purposeful manipulation by corporate interests who have the means and the power to manipulate business in their sectors and the resulting supply chains.
3. Corporate learned from 2008 they could raise prices with no reason to do so. The cost of manufacturing did not go up. I see the same companies going down the same path as what they did in 2008.
4. What could Jerome the lawyer do as the Chair of the Fed? Jawbone, explain why prices are really increasing besides just blaming inventory shortages and Direct Labor. There is history to this as well as present actions. Why does Biden have to tell the West Coast ports to run extra shifts?
Much of these actions are without any congressional actions needed. Too much is being done to maximize profits.
re: “JP Morgan Chase to the rescue . . .“
of itself, actually…it has been on the wrongside of a lot of derivative exposure to First Republic…they’d been trying to prop the sucker up for over a month before this weekend, but the writing was on the wall after half of First Republic’s depositors flew the coop…
I read the propping up help also. $62 billion comes to mind.