They took a 40% hit to deposits. What do you want them to do? It’s not survivable. This is just how our banking system works.
I don't like to recommend podcasts, but in of his podcast [0] he had a really interesting walkthrough of his perspective on the regulators working to shut down his bank. For me it was the most powerful advertisement for cryptocurrency I've heard to date. An opinion that would probably annoy Schiff.
Even if you don't believe in any particular bank, in a 0 interest rate environment a full reserve bank would have been competitive. If you don't get money anyway, avoiding the inevitable crash when rates rose would have been a nice selling point.
[0] https://schiffradio.com/ Ep. 887
This article has some speculations, but nothing definitive: https://www.chicagobooth.edu/review/safest-bank-fed-wont-san...
It doesn't quite make sense why the Feds don't want narrow banks, except that they might compete with traditional banks (and those banks' deep reaches into the Fed's policy decision makers are forcing out potential competition before they take root).
I've heard this before and I very much doubt that is the full story. Does anyone have the _regulators_ side of this argument?
IIUC, the regulator's argument is that people are incredibly interested at putting their money in a narrow bank (aka Pass-Through Investment Entities) such that few people would want to store money not at a PTIE and it would screw over liquidity in the financial market.
https://www.bloomberg.com/opinion/articles/2019-03-08/the-fe...
https://www.federalregister.gov/documents/2019/03/12/2019-04...
You're making it sound like people taking out their money out were those in the wrong, causing the failure of the bank.
That's not what happened. People taking their money out were in the right.
The root cause is bankers at FRB miscalculating risk. And they are those who were wrong.
Of course, then the super-rich and their millions might stay away. But perhaps that's the most stable course after you have too many "over the FDIC limit" account balances.
That's just how business works. Many businesses would have a hard time surviving losing 40% of their business in a short period of time.
this really feels like a setup to let a big bank buy a little bank for nothing
if we are really talking about people fleeing banks in "trouble", they would all close tomorrow...and don't tell me about stress-tests, those don't incorporate things like a broad collapse in commercial RE (which ALL the banks will be hit by)
…reporting First Republic’s balance sheet losses and falling stock and bond prices.
> feels like a setup to let a big bank buy a little bank for nothing
It’s not. That JPMorgan wound up buying it means literally nobody else submitted a valid bid, because the OCC and FDIC would have much preferred to not waive rules in making this happen. (Remember, too, the $30bn the big guys deposited with First Republic in March [1].)
[1] https://www.cnbc.com/2023/03/16/group-of-financial-instituti...
https://www.federalreserve.gov/publications/2023-Stress-Test...
I think financial regulators are a bit too soft-touched, but they aren't so incompetent that they would neglect real estate, of all things, in stress test scenarios in this post GFC world.