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Shares of First Republic Bank remain in a death spiral amid reports of uncertainty about whether the lender could see a rescue deal.
First Republic's stock tumbled as much as 50% in midday trading. The bank’s share value has already plummeted roughly 96% year to date and just more than 70% the last month amid federal discussions with banks and even private equity groups over a rescue solution for the distressed lender.
Bank failures are just getting started. The fact is that there is far too much debt that cannot be serviced.
I think the problem is that there's a lot of debt that can be serviced - at very low interest rates.
If you have a security backed by mortgages with a 3% interest rate issued a few years ago, and you can buy 10 year treasuries at 3%+, those mortgages get much harder to resell.
.........................So what made SVB different?
1. The FDIC decided not to sell off SVB to a suiter. The Chairman of the FDIC is a partisan far-left ideologue who hates big banks and did not want to see a potential buyer get even larger as a result.
2. SVB's executives are powerful donors to Democrats.
3. SVB's clientele - Venture Capitalists - are powerful source of campaign contributions to Democrats.
4 Silicon Valley is source of campaign contributions to Democrats.
5. High Tech Company employees are power sources of campaign contributions to Democrats.
6. California has 55 Electoral Votes.
7. We are now in the election cycle.
Your totally right, except SVB was NOT a small bank. It was the 18th largest bank according to WSJ prior to going into default.
But then Wilbur.org said....
" Silicon Valley Bank had $213 billion in assets and was, at the time of its closure, the 16th largest bank in the country. Silicon Valley Bank experienced rapid asset growth of 215% between year-end 2019 and 2022"
President Biden's policy is that large, well connected banks like SVB will have the Federal government protect its depositors.
If your a small bank, the depositors are on their own.
Last couple of weeks there has been a run on local banks as the Biden Administration has decided they will ONLY protect large banks.
Only 1 bank failed during the "Great Recession", and now 3 have failed.
One only has to go back in time, and remember the fallout from Washington Mutual; to see we're in real trouble.
Just like 2007, they will not own the crises until...lol
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