There’s something sketchy afoot in the world of high finance. Following the collapse of Silicon Valley Bank, the most likely first contagion bank would have been First Republic Bank; both California banks carried similar vulnerabilities. However, once the Treasury Dept agreed to cover all deposits, even those unsecured deposits over the $250k FDIC insurance protection, suddenly First Republic Bank survived.
After the FDIC announcement, a group of 11 larger banks lent First Republic a tranche of money ($30 billion) to secure its holdings and help stabilize it. Approximately six weeks passed, suspiciously perhaps the burn rate for the tranche in combination with risk averse exits says I, and suddenly First Republic starts destabilizing again. [Insert Suspicious Cat here]
The First Republic stock value collapsed further last week, and the FDIC is now trying to get a takeover bid secured before government regulators are forced into a position of receivership. I’m not dialed in to the banking industry, but it looks to me like the six-week interim phase was an agreement to give the illusion of stability and afford time for highly exposed, ¹likely well connected, stakeholders to exit.
With the Treasury taking the prior SVB position, thereby securing all deposits regardless of scope, the FDIC is now on the hook if the collapse includes a govt takeover. The FDIC seems to be playing hot potato and looking for a buyer. Additionally, the FDIC is asking JP Morgan-Chase if they are interested. JPMorgan holds more than 10% of all deposit funds in U.S. banking. From a regulatory position, JPM cannot legally take any more institutional deposits. So, what gives? It is all sketchy, all of it.
(Bloomberg) — The Federal Deposit Insurance Corp. has asked banks including JPMorgan Chase & Co., PNC Financial Services Group Inc., US Bancorp and Bank of America Corp. to submit final bids for First Republic Bank by Sunday after gauging initial interest earlier in the week, according to people with knowledge of the matter.
The regulator reached out to some banks late Thursday seeking indications of interest, including a proposed price and an estimated cost to the agency’s deposit insurance fund. Based on submissions received Friday, the regulator invited some of those firms and others to the next step in the bidding process, the people said, asking not to be named discussing the confidential talks.
Spokespeople for JPMorgan, PNC, US Bancorp, Bank of America and the FDIC declined to comment. Bank of America is considering whether to proceed with a formal offer, one of the people said. Citizens Financial Group Inc. is also involved in the bidding, Reuters reported, citing people with knowledge of the matter.
The bidding process kick-started by regulators — after weeks of fruitless talks among banks and their advisers — could pave the way for a tidier sale of First Republic than the drawn-out auctions that followed the failures of Silicon Valley Bank and Signature Bank last month. Authorities are stepping in after a particularly precipitous drop in the company’s stock over the past week, which is now down 97% this year.
Unclear to some involved in the process is whether regulators might use a bid for a so-called open-market solution that avoids formally declaring First Republic a failure and seizing it. The stock’s drop — leaving the company with a $650 million market value — has made such a takeover at least somewhat more feasible.
[…] A group of 11 banks that deposited $30 billion into First Republic last month — giving it time to find a private-sector solution — have proved reluctant to band together on making a joint investment. A few proposals that surfaced in recent days called for a consortium of stronger banks to buy assets from First Republic for more than their market value. But no agreement materialized.
Instead, some stronger firms have been waiting for the government to offer aid or put the bank in receivership, a resolution they view as cleaner — and potentially ending with a sale of the bank or its pieces at attractive prices.
But receivership is an outcome the FDIC would prefer to avoid in part because of the prospect it will inflict a multibillion-dollar hit to its own deposit insurance fund. The agency is already planning to impose a special assessment on the industry to cover the cost of SVB and Signature Bank’s failures last month. (more)
¹This is pure speculation on my part, but if you were a well-connected California big fish and you had exposure in FRB, after the SVB collapse you might ask the govt to construct an exit plan to assist you.
$11 billion flows in, you make your quiet withdrawals, and after exit the delayed outcome proceeds accordingly.
Yes… regulators bought some time for their special interests… probably time also needed by USG…. I predict many more failures… buckle up!
Not only did the bank officers fail, the state bank examiners failed, the federal regulators failed and the bank auditors failed. Nobody is accountable. Same thing is going to happen when our economy collapses.
Fractional banking is the recepie for failure.
Maybe the regulators and auditors weren’t merely as incompetent as they would like us to believe, but doing exactly what they were put there to do. Then the last thing they would want to see is another Billionaire do-gooder to swoop in like Elon has been doing over at Twitter.
Exactly. None of this is incompetence. Everything happening is by design, has been carefully planned. One digital currency, one world government, no travel allowed, 15 minute cities, eat bugs and other shiite…
Great comment, but don’t leave out the inevitable next big war.
Naw not yet. Too much more to come……
it’s California did you really expect something different?
“to give the illusion of stability and afford time for highly exposed, ¹likely well connected, stakeholders to exit.”
the corruption in gov’t, finance, media, culture…. is enough to make one sick
Excellent analysis isn’t it. It reminds me how Rush Limbaugh could analyze anything important in real time. Sundance has that now. The Lord giveth and the Lord taketh away.
I’ll be at the Tree-house every time something important goes down.
Tucker has it now, too
And Neil Oliver.
Tucker may be stymied for a couple of months, any longer than that will extend to the election.
It hurts to hear the name of Rush Limbaugh as how I crave to hear what he would be saying these days! God bless those who can carry that torch!
I still tear up when I hear his voice or read something he’s written, even now. I didn’t know he meant so much to my sense of… order until he passed away.
i’m relatively sure of one damn thing-he’s rolling over in his grave with those to Soyboys clay and Buck taking his slot. I have two beagles that are smarter than both of them.
Not a day goes by that I don’t miss that man’s voice.
that would be every day then.
Yep. Now that’s what I’m talking about Willis.
MEDICINE PHARMACY Do not let them off the hook after all the murders.
does this seem to indicate we are better off with local banks and credit unions versus the large national ones.
Yes this is a question
Yes.
In 2008 In the banking sector it was Too Big To Fail. Today it is EVEN BIGGER THAN TOO BIG TO FAIL.
It’s not the banks that are too big to fail, it’s the priveleged clientele.
It’s like our local news.
They are ALL run buy the same overlords no matter a “local” or not.
Funny there is a difference between West and East side of South Dakota news–Not much but one can really tell that Eastern South Dakota, especially Sioux Falls is really blue
I think this is what most miss, they are all ultimately tied together. There is no longer a dividing line between government and banks and among banks its the same FDIC.
People like Catherine Austin Fitts [https://home.solari.com/] and John Titus [https://bestevidence.substack.com/] say definitely yes!
“Know your banker; know your farmer; know your sheriff; know where your money is.”
The bank I’ve been with 60+ years I’m pulling everything out of, and moving my cash into two small town local banks that check out very well as healthy and effectively-run.
First Horizon is merging with TD Banks–which is Toronto-Dominion Bank, the one that froze the accounts last year of people who donated to support the Canadian truckers. The newly merged bank will be the 6th largest bank in the U.S. It proclaims and practices ESG, and is thus a threat to the communities it serves, if it begins holding local businesses to ESG standards as its loan policy.
Go to big banks or go home
Why would you choose a big bank over a local credit union?
Large regional bank stocks have collapsed over the last couple of years. I know, I follow them on the market.
My wife worked for one and when she left it’s stock was over $60 It closed Friday at $32.68 We retired and sold it right before the fall
God was looking out for your retirement.
Remember when they put the principals of Enron in prison for malfeasance? That will never happen again, ever, unless said person is conservative or somehow otherwise non-communist.
If it wasn’t for corruption, this illegitimate administration wouldn’t have an identity.
To big to fail bailouts are still in full swing using our money on the U.S. credit card.
Let them all fail and investigate everyone running the financial scheme.
I’m not savvy enough to understand all the facets of this…. but I’m smart enough to know that, as a taxpayer, I’ll be involuntarily helping to bail them out.
Just look up the photo of the current FRB CEO and President and you’ll get your answer. Google Michael J Roffler…….WEIRD!
There is nothing wrong with this man’s picture or looks.
Not photogenic, if he were in any other profession I would be disinclined to judge the book by the cover, but, he does remind a bit of Pee Wee Herman.
Weird eyes.
It’s all kabuki. Collapse all the banks until the government, by default, winds up in charge. Then it’s CBDC and social credit.
No not the government Facism is more effecient then that they will fail.all but 5 or 10 then they simply control the leadership of those.
Everybody but the Serfs do well.
FJB F them all
That’s how they can get it done in the next 6 to 18 months. The process is well started, now, how do they keep from spooking the sheep until they are finished?
I have a question about CBDC. Don’t our representatives in Congress have to vote on what is legal tender or not? Wouldn’t they have to declare Federal Reserve Notes are no longer legal tender in order to force everyone to use CBDC money?
Since when have we needed a vote to make something legal? We use executive orders and judicial fiat now.
Took me a while to actually change to 2 different credit unions in fl. Had been with Suntrust (now truist) since moving to fl. 25 years ago. B. Have you ever listened to the crap that comes out of Moynihans mouth. (Bac. ) And most of the other majors ,Citigroup,Smells Fargo, JPM , have all gone ESG compliant, contributing large sums to the lefts cause it the day ( BLM, etc. G. Gone are the days of any type of relationship and customer loyalty that existed less than 10 short years ago. W. Will take some the mid size credit unions where they at least are friendly and actually offer better rates and make you feel much more welcome. That has been my experience in swfl.anyway. b. Pray and help others
If they collapse, do I have to pay back my mortgage?
Yes because they are going to force us plebes into 15 minute cities, by forcing us into foreclosure, if they get that far.
The transition will cost all of us a pretty penny unless we are illegal or on welfare.
Consider that if we do not pull out of the WHO, we and all signatory nations will be under their authority for any edict considered health related.
Now say that the next “pandemic” is a virus that is passed by hand-object-hand contact, like some kind of monkeypox that promises facial scarring or something else horrific to everyone.
The WHO declares that currency and credit cards are potential carriers of the disease, so their use must be locked down.
Under such a scenario the introduction of CBDCs will appear as salvation, literally enabling a rightfully frightened public to purchase food by QR-code or phone app initially. Then, after the pandemic is controlled by the next round of mRNA jabs, we are offered a subcutaneous chip that will enable us to return to “normalcy.”
There would not be 5 voices in all of Congress requesting their say in the matter. Nearly every elected official would gladly yield responsibility.
And we MAGAs don’t like hearing this, but President Donald Trump got rolled by the same process, okaying the mass poisoning of much of the world’s population via mRNA vax products. Further reason to recognize that only God is powerful enough to intervene against this global evil, and only by praying for that intervention can we effect the outcome.
Yikes
Fauci, Gates, Schwab and Pfizer did a bait and switch on President Trump. The MRNA vaccine was all ready to go, and they faked the safety data. Nobody saw it coming.
Those four and Moderna and J&J knew. I also think Pompeo knew.
They might try another lock down, but I don’t think it will stick in the US. Sons and daughters of the original colonies are known to be a bit on the stubborn side naturally.
There is a movement under way to get us out of the WHO. Let’s pray it succeeds, meanwhile call your congress critters.
Kicking the can once more. Gotta be tiring hearing old fuddy duddies like me preach. But this will come to an end you can’t defy the laws of physics forever. What goes up must come down. Yeah they cleverly manipulated with their tricks (reserve currency). It simply depends on whether it will happen on their schedule, our schedule (we can if we choose), or God’s?
SVB bailout allowed mega depositors to withdraw safely now big finance buys the Large banks and the small banks are allowed to fail. On to Crypto.
This ‘bank stuff’ is more fear porn. They are trying to manipulate the People once again to act in such a way that the gov can arrive on the scene as superman and save the day (or was that ‘mighty mouse’). They will convince the masses that the only way to save their money from collapse is to allow them to dish out CBDC’s so that they can monitor everything and then everyone’s money will be ‘safe’.
Use cash whenever possible. Don’t freak out and start withdrawing your money and stuffing your mattress. Using cash is our best defense. Sticking with banks that invest in conservative things are the safest (avoid ‘woke’ banks), and banks where most of their customers have no more than 250K invested in any particular bank (less likely to get a bank run with those). Remember the old saying: “Don’t put your eggs all in one basket”. Example: If you have one million dollars, then use 4 separate conservative banks with customers who hold no more than 250k at the bank. Now is the time to buy hard assets, too. If you’ve been putting off buying that new sump pump, etc., get it now. Put your money into practical necessary items. Even buy two so you have a back-up if one breaks. That my $.02 for what it’s worth. 🙂
Your advice is right on target, Jude. If I may add to it, invest in relationships. Be the one who watches out for and takes care of others, knowing that one day it will likely be your turn to need someone’s care or assistance.
Also, consider yourself among those trustworthy relationships–invest in yourself. What skills or abilities do you have? Dust off some old ones and bring yourself back up to speed, so that you’ll have something intrinsic with which to barter.
Got some dental work or surgery you’ve been putting off? Schedule it now. It’s not going to get any cheaper or more convenient than today. Think practical. Maybe even dig a well that can be shared by neighbors.
Agree… my problem is that I’m in my 70th yr. so pretty tapped out at this point after working two jobs and raising 4 kids on my own with NO support. But thankfully my kids are starting to pick up some slack and I do have a couple of good neighbors left (had a total of 12 die on me over 3 1/2 yrs. so that thinned out my circle quite a bit). But for those who can, GREAT advice! Oh…and just had a thorough dentist job done this past week. 🙂
That’s tragic losing that many good neighbors that fast. Nobody gets to 70 with all the original equipment in prime working order.
LOL! So true. I was discussing with my eldest bro the topic of getting old. Thankfully, we somehow ended up with pretty much the same perspective even though he is 8 yrs. my senior. To each of us, it is a new adventure. It’s something we’ve never done before. So…something old becomes something new. 🙂
Correct me if I’m wrong, but isn’t 250k the cutt-off point dividing which banks are insured by the Government and which ones are not?
Deposits of 250k or more mean that the government insures the bank.
And by “insured by the government” I mean the government basically controls them now.
Correct. The FDIC is cut off at 250K…that is, of course, unless your woke, rich, and Left connected as the folks that got bailed out at the bank in CA.
Yes, but if a lot of banks fail, the last bank’s customers are holding zeroes. The size of the FDIC funds are miniscule compared to the amount of deposits at risk.
I agree 100 with this! All kabuki theatre. Pray without ceasing,
“I depend on God alone; I put my hope in him. He alone protects and saves me; he is my defender, and I shall never be defeated. My salvation and honor depend on God; he is my strong protector; he is my shelter.”
Psalm 62:5-7 (GNT)
As if this wasn’t planned, as part of collapsing the banking industry down to the biggies (TBTF), so the Fed can roll out the CBDC, to prevent “future instability and vulnerabilities of smaller banks, YADA, YADA.
I think I’m gonna “reduce my exposure “ with PNC,again. They obviously don’t need my money
I work for them, and I pulled all my money out, closed all three account and put it in a smaller community bank. And it is true, they don’t need your money.
I suggest that anyone who has capital in any bank or credit union to take a look at their institutions’ recent financial statements. Pay particular attention to the line – “change in net unrealized holding gains”. If the institution has no “gains”then the posted result is in parentheses. Here’s an example: First Trust is a regional Philadelphia area bank that has been around for years. It’s 2022 statement lists it’s net unrealized gains as (57,074) in ‘22 and (7,382) in ‘21. That’s a negative slide in one year of 773%. And that impacts the bank’s equity. This is what happened to SVB. It had lots of Treasury bills and notes and bonds at nil interest. So when rates began to climb these holdings lost their face value and were sold at losses the bank could not contend with. All banks face the same risk. Depositors will always be left standing line with no recourse.
Don’t be surprised to see an increase in the Reverse Repo Program totals. The elites will head there to weather the upcoming storm and buy the weathered assets for 5 cents on the dollar. The elites will then pay themselves enormous bonuses and write books about their financial acumen.
If you are one of the tens of thousands of bureaucrats who have access to the electronic communications between related parties, it is like shooting fish in a barrel… or having your wife as speaker of the house.
That leads to the question of why Powell was giving inside dope to Zelensky (and Quisling). I guess he was greasing the wheels of progressive progress. I’m sure Powell told Zelensky et al only what he told other elites with an inside track.
It sucks to be poor…
The federal reserve has been operating at an operation deficit since late last year – how are they paying their operating expenses??
From an article by Brian S. Wesbury – Chief Economist Robert Stein, CFA – Deputy Chief Economist
On the balance sheet problem – the $1.1 trillion hole – the Fed need not worry about solvency because it is not an institution that needs to mark its portfolio to market. It can hold its securities until maturity and no regulatory agency will come in and shut it down.
But that still leaves a major cash flow problem. The Federal Reserve has been remitting revenue to the Treasury since its inception, and up until recently, it had never experienced negative net income. But by September of last year there was nothing more at most reserve banks to send the Treasury, and losses started to accumulate. These accumulated losses show up as a deferred asset on the Feds balance sheet and will only be paid off when the Fed starts to make a profit again down the road. At the end of 2022, that deferred asset was worth $16.6 billion. Through March 29, 2023 that deferred asset was $44.2 billion, an increase already of $27.6 billion since the start of the year.
I don’t understand the banking industry well enough to understand many of the details. But, from what I can see, your construct is as plausible as any. Here we go towards another round of print and spend Government Banking lunacy, I guess.
One thing the Bureaucratic State understands is they don’t want a repeat of the panic that caused the depression of 1929-1932. Beyond that was the Roosevelt Big Government economy that extended the depression and the need to call the whole house of cards “The Great Depression” and ended by WWII, of course. In any event, we are living in a dangerous era..
All of the BANKS in the ISDA system are over leveraged and INSOLVENT. How we navigate this situation remains to be seen, it will resolve itself through a complete decoupling from the DOLLAR or in WWIII. Neither is ideal, but it is going to happen, FIAT currency has run its course, prepare accordingly……
Or take the Tom Luongo Theory of Everything approach: Jay Powell is raising rates to crush the Eurodollar system that sustains and enriches the WEF crowd, and they are feeling extreme pain. Next, banks are like people: some are woke globalist (SVB, Signature, probably FRB, deep into crypto and offshore money laundering) others are not woke (JP Morgan). The woke banks ignored the declining value of their holdings as interest rates rose, thinking Powell would cave and pivot – the Fed Put- to save them. Wrong. Dead wrong. Cheer the demise of the woke banks. Time for America First in banking too. SOFR is final in June, bye bye LIBOR.
Tom Luongo is not credible.
Please explain. I realize he is not IN banking, but those who are rarely provide us peons with analysis.
I have belonged to a credit union my whole life. But I also have an online savings account because their interest rate is so much better. Are online banks just as vulnerable as regular banks?
Just stay within the FDIC limits for each bank.
Even that is not 100% sure, but it increases the odds of one holding some of your funds being solvent.
Also consider that money market funds and credit unions are offering “market interest rates” on accounts of 3.5 and more! Banks are not, a huge cause of lost of deposits.