US regulators were working into the night to resolve First Republic Bank crisis late Sunday after midday deadline passed for submitting final bids to take over struggling lender.
The Federal Deposit Insurance Corp. had asked banks including JPMorgan Chase & Co., PNC Financial Services Group Inc., and Citizens Financial Group Inc. to submit offers, according to people with knowledge of the matter. Bank of America Corp. and US Bancorp were also invited but decided against bidding, according to the people, who asked not to be identified discussing confidential talks.
If no agreement is reached, regulators would have the option of seizing First Republic and taking ownership of the bank.
Spokespeople for JPMorgan, PNC, Citizens Financial, US Bancorp, Bank of America and the FDIC declined to comment.
Based on reports from multiple sources, the sale of First Republic Bank, $FRC, should have already happened.
However, futures opened and Asian markets are trading but no deal has been announced.
US markets open in 13 hours and the FDIC is completely silent.
What is happening?
— The Kobeissi Letter (@KobeissiLetter) May 1, 2023
Morning update @FDICgov: To protect depositors, we entered into an agreement with JP Morgan Chase Bank to purchase and assume all deposits and assets of First Republic Bank.
3 out of the 4 largest bank failures in history have occurred in the last two months.
Proceeding as planned?
That’s what I was just thinking. This is how somebody takes over all the world’s banks.
Agree.
I had read that fair value of FRC would be negative $14B so maybe that is an issue.
I worked on one bid where our client put in a negative bid on a financial institution, that is, assets were less than liabilities, you pay us to take it over. Eye opener for the seller.
“What is happening”-even FDIC is horrified about writing a huge cheque to the “successful” bidder. The US taxpayer gets screwed again. Janet Yellen bails out the San Francisco rich.
F*ck Joe Biden, and his devastation of the economy.
Vulture capitalism…distress smaller banks and then larger players pick up pieces on the taxpayer dime.
Bank bailouts for the rich, what could possibly go wrong?
Cheers
Hans Rupprecht, Commander in Chief
1st St Nicolaas Army
Army Group “True North”
“What is happening”? Took them 13 hours to put the Powerpoint presentation together.
First Republic being taken out by JP Morgan for $10.6B from JP and $50B from FDIC in the form of 5 year fixed-rate loan.
First Republic has dropped to $1.87 in the pre-market.
It’s being described as a “self-limiting mess”.
I read this morning that FDIC estimates $13 billion loss. It is guaranteeing some of the assets so it could get bigger.
Remember FDIC has funds of 0.6% of deposit base. It has taken $22 billion hits previously and $13+ billion on this one. FDIC draws off other banks. JPM can only pay so much fees. US Gov will lend money to FDIC but if the failures get too big, its a lost cause. If you keep charging the surviving banks for the failing banks, it could wreck them all.
Canada is same way: CDIC has funds at about 0.6% of deposit base; no gov back stop; charge survivors for failures.
Charlie Munger is warning about US Banks with large commercial real estate mortgage portfolios as many of these commercial mortgages are coming due this year and the value of commercial real estate may have dropped by more than 50% (don’t know because nobody is buying it). Silicon Valley would be one trouble area.
No0body can figure out what FRC is actually worth, since a lot of their “assets” are in Interest Only Mortgages on rich people properties, which may or may not be worth what the stated value is
My son’s Silicon Valley real estate investment firm had $20m in First Republic assets and loan guarantees. With the spike in interest rates … his extremely well capitalized privately-held company is being forced to SELL some of their largest properties.
And his ultra conservative company was NOT over-leveraged … but the dominos are gonna start tumbling. When HIS company is forced to sell assets? Look out below!
But are there buyers in this market?
Yes, but they only speak Chinese …
We’re talking about 350 unit multi-family housing projects … not single family homes
There is a two tier system now, one for the Democrats ( and cronies ) , and one for everyone else. Guess which side will eat the losses.
“3 out of the 4 largest bank failures in history have occurred in the last two months.”
Likely complete BS if it’s not in constant dollar values.
When inflation adjusted to 2021, 3 of the 4 largest bank failures took place in … 2023.
https://en.wikipedia.org/wiki/List_of_largest_bank_failures_in_the_United_States
The largest bankruptcy took place in 2008. Washington Mutual. Then you have to go back to the 1980s. So not a good year for banks.
I guess everything is OK then, CGH?
It will no longer matter when a digital currency is the only thing available. Inflation will be meaningless as 1s and 0s can be expanded to infinity to cover debt and your loaf of bread. Does anyone have functioning brain anymore? It also can be changed with a keystroke.
The debasing of our currency occurred with nary a whimper.
Penny – copper until 1997 (lightened in 1978, 1980, 1982); zinc for a couple years then steel now evaporated; melt value of copper pennies 3-4 cents; 25 years for $C to lose 70% of its value
Nickels – nickel until 1982 then copper-nickel until 2000 became steel; melt value of nickel nickels 14 cents; 40 years for $C to lose 65% of its value
Dimes, quarters – silver until 1968 then copper-nickel until 2000 became steel; melt value of silver coinage 10 cents worth $2; 55 years for $C to lose 95% of its value
Steel currency is at least scrap metal. Paper currency is at least fuel. Plastic currency is at least insulation. Digital currency is nothing.
“JPMorgan Chase Acquires First Republic Bank with FDIC Backstopping Deal While Ignoring Current Banking Laws
May 1, 2023 | Sundance | 207 Comments
The topline story from the announcement by JPMorgan Chase [SEE HERE] there are no banking rules/laws in the Biden Fed/Treasury system.”
https://theconservativetreehouse.com/blog/2023/05/01/jpmorgan-chase-acquires-first-republic-bank-with-fdic-backstopping-deal-while-ignoring-current-banking-laws/
Before a banking crisis it is best to have deposits in the weakest banks. They fail early and FDIC/CDIC pay you back with money from “strong” banks. By the time the “strong” banks start failing there is no one left to backstop.