Reports of Problems at First Republic Bank But Could Shorts

First Republic Bank (FRC.N) and Western Alliance (WAL.N) said on Friday their liquidity and deposits remained strong, aiming to calm investors worried of a spill-over of risks from troubled startup focused-bank SVB Financial Group.

BREAKING UPDATE : The US Government will cover the deposits 100% and funds will be available Monday. Any losses will be recovered from other banks later.

First Republic is about the same size bank as Silicon Valley Bank. First Republic was a $30-50 billion bank in 2021 and up until a few weeks ago was over $20 billion.

First Republic is the 14th biggest bank in the USA.

The reports of problems at First Republic Bank could be made by people who are betting on the bank stocks failing. The shorts could be inciting bank runs. Billionaire Peter Thiel could have accelerated and helped the SVB bank run because he funded replacement digital banks.

Banks and financial institutions have bonds and mortgages with long maturities. They have a fixed interest rate for many years. The increase in US interest rates means that if any bank or fund was forced to sell those bonds or mortgages then they would get far less than the principal value. If the financial company just holds those assets to maturity then things are fine.

Another TARP program is needed. TARP guaranteed over $400 billion in bad assets in 2008.

1 thought on “Reports of Problems at First Republic Bank But Could Shorts”

  1. There is no cure. A generation of bone headed bankers gambled and lost their customers’ deposits on 1.6% USTreasury bonds while hyper inflation was 20%/year. The money is gone. The USTreasury does not have $20 Trillion to make good customers’ deposits. The only way to win is to be first in line at the bank on Monday morning. You may tap a teller machine on Sunday.

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