Now a fourth bank, First Republic Bank (FRB), collapsed earlier this past week and was seized by the Federal Deposit Insurance Corporation (FDIC). The good assets have since been swooped up by megabanks JPMorgan-Chase and PNC, leaving the toxic assets behind for the taxpayers to deal with.
This crash came after Moody’s – “a global integrated risk assessment firm” – downgraded 11 banks to start the week off, indicating that more banks were in potential trouble or were not as stable as they were before. FRB was one of them, with the other 10 being:
- U.S. Bancorp
- Zion Bancorporation
- Bank of Hawaii Corp.
- Western Alliance Corp.
- Associated Banc-Corp
- Comerica
- First Hawaiian Inc
- Intrust Financial Corp
- Washington Federal Inc
- Financial Corp
FRB was already walking on eggshells since SVB’s fall, with the Federal Reserve and larger megabanks shelling out billions and even trillions of dollars to allegedly “rescue” FRB and other smaller institutions for a collapse. In truth, it was never really a rescue but rather a way for banks like FRB to cover the serious number of withdrawals and outflows from the smaller institutions.
The WinePress had pointed out this phenomena on several occasions, calling the media’s bluff on this:
SEE: Smaller Banks Begin To Crash And Face Banks Runs As Flight Of Deposits Flow Into Megabanks
Federal Reserve To Pump $2 Trillion Of Liquidity Into Economy To Keep The Ship Barely Afloat
Americans Have Withdrawn Around $120 Billion In Deposits From Small Banks Amidst Crisis
ZeroHedge reported on Friday that FRB was trading at $120 a share in March, and has now been reduced down to $1 and some change.
ZeroHedge wrote:
As the weekend begins, the WSJ reports late on Friday that big banks including JPMorgan and PNC are set to buy First Republic Bank but not in a private, market-arranged deal but rather in a transaction that would follow a government seizure of the troubled lender. A seizure and sale of First Republic, which would wipe out the equity of FRC and potentially impose losses on creditors, could come as soon as this weekend, the WSJ sources said.
And so JPM, which is already the largest US bank is about to get even bigger, by scooping up all the good FRC assets while leaving US taxpayer holdings on to the toxic ones.
That said, it wasn’t immediately clear whether the $30 billion in deposits funneled by JPM and other banks into FRC will be treated as insured funds (why should they should be insured?), nor was it clear how a wipeout of this capital, which would spark a systemic crisis simply because the Fed is now running policy of “monetary tightening through bank collapse”, having failed to contain inflation and tighten policy using conventional means.
Moreover, The WP has also reported that hundreds more banks are purportedly on the verge of collapse and face the potential to suffer the same fate as Silicon Valley Bank has.
AUTHOR COMMENTARY
A good man sheweth favour, and lendeth: he will guide his affairs with discretion.
Psalm 112:5
Continue to use discretion, my friends. As I have warned, the banking crisis is far from over: it has just gotten started, and SVB was the first domino to fall in a long, snaking line of more to come… The media wants you to believe everything is peachy: it’s not.
Pay attention and monitor want’s going on. Don’t be negligent.
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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