How are those bank bailouts working so far? If you are First Republic Bank, maybe not as well as expected.
The alleged purpose of the emergency loans was to reassure depositors that their money was not at risk and that that there was no need to withdraw it. It seems that depositors have declared, “Thank you very much, but I’m taking my money out anyway.”
Yesterday, when discussing the First Republic Bank Q1 earnings, we said that while the collapse in deposits (which plunged from $170BN to $70BN excluding the $30BN emergency deposit injection by a bank consortium) was scary, the potential saving grace is that FRC still had $170BN in loans, i.e., assets… loans which as Bloomberg previously reported were collateralized largely by largely money-good Hamptons real estate.
Following yesterday’s earnings, where the investing public focused on the bank’s collapsing deposits while ignoring the potential capital that the $170BN in loans could generated, First Republic fell as much as 30%. Meanwhile, the shorts are piling on and according to S3 Partners, some 33% of the float is now short.
A government that can suddenly, illegally, and without any prior notification … RESCUE depositors $$B’s because Janet Yellen’s political minders tell her to … can easily make all those deposits disappear … just as capriciously
Stocks crashed when the word on First National came out early to the afternoon. Investors hold bonds and gold shares did OK.
Canadian banks got kicked around too. Love it.
any Bets on which Too Big to Fail organization will buy their loans?