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Why First Republic failed. Are other banks to follow?

31 Comments

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31 Comments
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more like other countries will follow. Japan is close to collapse...

Nice conflation of private-sector debt and fiscal debt. As long as Japan can purchase its own debt with a currency it can issue at will, it ain't gonna "collapse." These banks, by contrast, went south due to flawed business models and short-sighted strategies.

3 ( +7 / -4 )

“While depositors are being protected, shareholders are losing their investments," said President Joe Biden during a Rose Garden event focused on small businesses, when asked about the bank seizure. "Critically, taxpayers are not the ones who are on the hook.”

Biden voice of neo-liberal faint charity:

Look! Our monetary policies have given a QE UBI to the investor class for years. Along with corporate welfare and pandemic stimulus monies that vastly enriched them.

Now they have to take a little haircut that will reduce their great wealth by .02 percent, like your couch change.

Are you not grateful?

-3 ( +3 / -6 )

@Larr Flint: You will be still be saying Japan is 'close to collapse' in 10 years. Who will they owe money to precisely?

2 ( +8 / -6 )

As long as inflation remains elevated, deposits will run-off and the banks borrow short term lend long term credit biz model will be disorderly/unprofitable.

Question's how long for and how bad the damage?

As US 'core' inflation's basically unchanged since Aug 22, so starting to feel ENTRENCHED, meanwhile deficit spending skyrocketing, most forecast STAGFLATION.

-5 ( +2 / -7 )

Lots of banks are Zombie banks,they have just operation to act as a quasi ,but have no growth potential,I read this bank financial statement, saying they are at the mercy of others

-4 ( +4 / -8 )

Lots of these bankers are delusional, bank got have lots problem with insolvent assets,but hundred of banks are being investigated for PPP fraud , either way it goes they have something to worry about,if a Criminal bank application can be traced backed to you.

-3 ( +2 / -5 )

“Too many (First Republic) customers showed their true loyalties were to their own fears,” wrote Timothy Coffey, an analyst with Janney Montgomery Scott, in a note to investors.

What?? So, blame the customers for not being loyal to the Bank? What nonsense is this.

If the banks could back up every dollar stored there, this would never be a problem. But instead, they are allowed to take your money, tell you it is safe, and then go spend or invest it. It's a bad system.

7 ( +9 / -2 )

FRB high exposure to rate sensitive high net worth customers, that's it in nutshell, plus places like San Fran CRATERING, commercial vacancy THRU THE ROOF!!!

-6 ( +0 / -6 )

Banking system WENT LONG with ZERO rates, party's OVER, long duration assets being written down, deposits FLEEING. HANG-OVER due to Money Printing & 0% rates

Same situation globally, global inflation's real, Central Bank money printing's been out of control for TOO long, Covid and Ukraine War BROKE the Central Banks DAM!

-7 ( +1 / -8 )

Clay, American do not care about inflation,American spend money out of necessity or just for the hell of it

-3 ( +2 / -5 )

True! But according to recent polling, INFLATION's #1 concern of Americans, it's NEW tax stemming from largely Govt. Money printing, impacting those that LEAST afford (elderly and poor) the MOST.

-6 ( +1 / -7 )

Cash is king in America, anytime you use a credit or debit ,you are charge and merchants is charge card are not convenience,you will also be access and convenience fee about 2 percent per and poor people generally cannot afford

-2 ( +2 / -4 )

Here too! Coffee, olive oil, anything imported especially has on average basically doubled in price last two years.

Even domestic stuff, like milk for kids, up 20% or so and it's subsidized/protected by Govt.

Inflation's, NEW GLOBAL VIRUS!

-6 ( +2 / -8 )

Our hearts bleed for these big bank failures...NOT !!

-1 ( +3 / -4 )

I think more to follow. Especially if rates continue to rise.

2 ( +3 / -1 )

Greed, that is all.

But common sense shall tell you not to put money where you are at risk. And First Republic was unknown to me until they bankruptcy.

It is like regilnal banks in Japan, they sure will be the first dominos if anything goes wrong. It will one day as there is an end to everything ballooning (or trees don't reach space...).

0 ( +2 / -2 )

Risks UP, digital banking means money MOVES FASTER!

-5 ( +1 / -6 )

I read this bank financial statement, saying they are at the mercy of others

Did you @Yrral: Can you post a link to that here please? Also buddy, 19% of transactions that matched 6% of value were by cash in 2020. I would think that has now declined further during the Pandemic and remained that way. Where do you read this stuff?

-1 ( +2 / -3 )

Remember it's NOT Systemic, fact 3 of 4 LARGEST BANK FAILURES (Signature & SVB), PURELY CONCIDENTAL!

-4 ( +0 / -4 )

Real question - HOW Big is Collapse in CREDIT, especially, Mortgage, Auto, Home Equity, Student, etc.

High Inflation takes all fun out of Zero-Sum $ Game!

Re-issuance of Maturing DEBT, GOING TO GET UGLY,

E.g. imagine you're OFFICE BUILDING with high vacancy, your Rates Going UP and just WRONG time!

STAGFLATION DEAD AHEAD, GOOD LUCK JOE, You'll need it, as Powell ain't bailing you out boy!

-4 ( +0 / -4 )

Yellen say US could default on debt by June 1, meaning bank would have no way to remain solvent Google Yellen Default

-2 ( +0 / -2 )

Default PURE Myth, why? Because US Govt. revenues unchanged, taxpayer withholdings, corps taxes, fees, etc.

LAST thing US Govt. will not pay's accrued interest owed on Govt. debt securities. US Govt. vendors, they'll wait, US Govt. employees furloughed, services will be cut, etc.

US Govt. revenues can cover US debt service EASY, max, approx. 10% of current US Govt. revenues.

Game of chicken/negotiations/fear mongering using media as 'Tool' as USUAL, same game, different year!

Shutdown will do economic and confidence damage, maybe that's what's NEEDED to bring down inflation?!

Consider, SHUTDOWN LIKELY/see above, they REALLY want FRB to START cutting rates after all, another SIGN of the partisan TIMES!

Do I sound crazy or just RIGHT? You decide but days numbered, just market research for moi, gotta go dark as exiled oligarchs going CRAZY after all!

-2 ( +1 / -3 )

Japanese banks are next but you don't have to worry. Bank of Japan has already owned almost everything within Japan. Nothing will go bankrupt in Japan at this point!

Hyperinflation and decline of living standards will remain.

-3 ( +1 / -4 )

If the banks could back up every dollar stored there, this would never be a problem. But instead, they are allowed to take your money, tell you it is safe, and then go spend or invest it. It's a bad system.

Well they typically don’t “spend or invest” it; they take your money yes, but lend it to someone else who ideally is going to pay the bank a higher rate of interest, than the bank will pay you in interest for your deposit.

That is banking.

If one thinks it a bad system indeed one can put one’s money elsewhere.

I personally keep minimum money in Japanese banks.

-1 ( +0 / -1 )

Clay,how could a post here possibly start a bank run, the average American do not visit JT,or have money in a Japanese bank,I have access to liquid cash,in the thousands, without the need for a bank,I am really concerned about my friend that work in that bank,lots of them are not colleges graduate but do a damn good job transactions of bank business,I also underwrite a lottery ticket with them bi weekly,when I visit one their co worker,I have not mentioned the condition of the bank they work at,they could be laid off anytime, through consolidation,this bank has only a commercial loan bank in Houston,,which is dumb, Houston has almost 200000 millionaires and other multi billion dollars bank they compete with,my friends branch is not in Houston,but a city with no major industries,

-4 ( +0 / -4 )

Fxgai,get an American bank account,most Americans branches in Tokyo pay 5 percent

-3 ( +0 / -3 )

Lots of you people should have enough cash for at least 3 months,if the US default,lots of Japanese banks depend on the US Treasury for liquidity,which they can only achieve,with the US government

-3 ( +0 / -3 )

What a question. lol

But let’s solve the case like detectives. Where there’s one, there’s probably more. But where there are three, there’s surely a whole nest.

0 ( +0 / -0 )

The barn is burning..

0 ( +0 / -0 )

Yrral: Man, you have very little understanding of how they world works. You know how many times the US has been close to it's debt ceiling?

0 ( +0 / -0 )

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