We identify as hungry!
Posted on 03/15/2023 5:01:27 PM PDT by rxsid
They will shut that baby down, if owners’ equity won’t look like it will cover the loss on the sales of its assets.
Already has.
Hundreds of rice paddy acres out on I-5 north of sacramento. Owner by a CCP approved company
Lots of chinese nationals coming into to san jose and buying up the land, the houses and staying in china.
Most people I know, who rent houses, have chinese land lords who live in china.
Bet it’s the same elsewhere in the state too.
I just looked and saw THIS:
About
firstrepublic.com
First Republic Bank is an American full-service bank and wealth management company offering personal banking, business banking, trust, and wealth management services, catering to low-risk, high net-worth clientele, and focusing on providing personalized customer experience. Wikipedia
They will try to limp into the market close on Friday. Then they will spend all weekend talking to the FDIC. If it is this bad....they won’t open again.
A lot of these banks would be fine if they were able to hold their assets to maturity. The problem is that they have to maintain reserves...and the bonds they bought dropped in “marked to market” value.
So, whoever takes over the bank will “front” the money and just wait for the bonds to mature. Since they will be valued at market price for the sale the value will increase. In a year or so the values will start to increase because rates will start to tick down. Big Banks and the government have the funds to do this, but a smaller bank doesn’t.
These guys (and the Fed) got themselves into a box that they cannot get out of.
They are supposed to hedge the rates... but apparently didn’t. So yeah, depending on length of the bonds they could be looking at 10% or more drop in market value. And as depositors make a run on cash they have to sell them at a big loss. I don’t know if there are requirements as to which types of bonds they have to hold but if it were me, I’d have them in 30-60-90 day so they constantly can be rolled over or liquidated as needed; and then re-invested if rates rose. I guess they expected rates to be near zero forever.
Be sure to contact me when deflation arrives. I like to eat
Will be taken over by FDIC this weekend is my outlook.
Deflation is okay if you have a steady income, you can buy more with your money.
But otherwise deflation leads to BK.
Bank collapse spreading fast as deposits dry up | Redacted with Clayton Morris & Kevin Demeritt
Well yeah. Why leave extra cash in a no interest bank account if you can get 3%-5% on a short term treasury? Makes you also wonder why the banks themselves put their reserves into long-term low-yield bonds instead of short term bonds to protect their liquidity and hedge against bond yields rising? If they held shorter term notes they could have rolled them over every 30 days to get better returns as interest rates rose. And if rates didn’t rise, rolling them over wouldn’t have mattered. Banks putting cash reserves into 10 or 30 year bonds makes no sense.
Now you got people pulling money out of the banks - either to buy bonds, or, because they are at a small regional bank and fear its demise. So the Fed had to coerce the top 10 banks to park their own cash over at First Republic to protect its liquidity. First Republic had apparently loaned out too much cash, probably at decent rates to real estate borrowers, but didn’t have enough reserves to meet withdrawals. So Bank of America and JP Morgan et al essentially just “opened” cash accounts at First Republic; which may be ironic because it could very well be the same cash that depositors took out of there and moved to the big banks. There is probably an agreement that the fed will guarantee that money. I would guess that First Republic has a decent performing portfolio just not enough liquidity otherwise they would have been shut down (or, fear that if they were shut down the problem would cascade to many regional banks). We’ll see if the States or FDIC shuts down any banks this weekend.
Meanwhile, Credit Suisse has plenty of its own problems, needed $54 billion from the Swiss National Bank but their problems go beyond liquidity. They lost $8 billion in their operations so of course people are moving money out of there. The $54 billion may just cover their depositors it’s an open question whether they can get any business or do any investment banking and actually turn their business around. CS has run into this same situation many times in the past. Switzerland wants to keep the bank from closing obviously.
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