JPMorgan gobbles up First Republic Bank
This is America's 3rd major bank failure in the last 2 months.
Hello Financial Healers,
Yesterday the FDIC put out a press release. First Republic Bank, San Fransisco, California, has been shut down by regulators and purchased by JPMorgan, America’s biggest bank.
FR, which held “approximately… $103.9 billion in total deposits,” floundered “when the Fed began hiking U.S. interest rates to fight inflation.”
Similar to SVB, “Gross unrealized losses in held-to-maturity investment portfolio, mainly government-backed debt, ballooned” to unprecedented amounts.
Which makes me wonder, Did the Fed kill FR?
We all know the Fed wishes they could’ve saved SVB. A report claims, “The Federal Reserve did not appreciate the seriousness of critical deficiencies in the firm’s governance, liquidity, and interest rate risk management. These judgments meant that Silicon Valley Bank remained well-rated, even as conditions deteriorated and significant risk to the firm’s safety and soundness emerged.”
Good news, I guess, is JPMorgan guarantees all of FR’s deposits and has “agreed to purchase substantially all of First Republic Bank’s assets.”
So… crisis averted… for now?
I think we’re going to need a bigger boat…
Not only do we have rampant inflation, low consumer confidence, and a looming recession (expected to hit in July-September), our Fed’s #1 tactic to solve this crisis is killing small to medium-sized banks.
And this makes me wonder, Are we entering a new phase where small banks inevitably get gobbled up by ‘too big to fail’ institutions?
Whatever the answer is, we can rest assured because JPMorgan’s CEO claims, “… the banking system is very stable… everyone should just take a deep breath.”
Thanks, JPMorgan.
I feel so much better now. 🤪
Blessings,
Cory De Silva
About the Author: Cory is a screenwriter based in Pasadena. When he's not writing, he's helping families get out of debt, so they can pursue their dreams full-time and not be beholden to the banks or federal government. You can reach Cory at cory.dustin.desilva@gmail.com