Bank Failures....

[GG Allin]

How does this play out? I have a CD with First Republic. Thought I'd get me some of that 5+ %. It was supposed to mature in July. It seems they won't make it.

[Chocaholic]

Is it FDIC insured?

Edit: Just found this…

First Republic Bank is a member of the Federal Deposit Insurance Corporation (FDIC), an independent agency of the U.S. government that protects bank depositors against the loss of their insured deposits.

The standard FDIC insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.

[GG Allin]

It is insured, but I still have no clue how it plays out. Is it seamless? I bought the CD through Etrade. Will I still get my 5.1% between now and July. Does FDIC drag their feet before paying out? Lots of questions. I've also read that some assets could just transfer to other banks.

[KFC911]

What Choco said....

It will likely "play out" (their demise) without you even knowing other than the "news" .... your anticipated interest and the amount of the CD will be paid in full.

Don't worry!

[javadog]

A couple banks are trying to buy them this weekend.

[jyl]

Depositor with under $250,000 will be unaffected. FRC will continue operating under federal control until it is bought or closed down, when account will move to another bank, slight confusion/inconvenience possible then but not much or long. For a CD, it’ll simply be paid back on time with no issues.

Federal Reserve/FDIC is experienced and effective at winding down failing banks. They move in like Delta Force, take control overnight (usually on a weekend), their #1 priority is protecting depositors.

SIVB and SBNY showed weaknesses in Fed’s supervision of some banks. Partly political (bank regulation was rolled back by Congress in 2018, prior Fed vice-chair for regulation was a “friend of the bank industry”), partly resources (there are way too many banks in the US, something like 5,000, and budget + pandemic stretched Federal Reserve bank supervision staff), partly normal human complacency after a decade with no major bank failures, partly rapid/poorly understood changes (NY Fed staff had never seen a crypto bank before).

Banks are going to feel rapidly toughening supervision, even before tighter regulations get through the rule-making process. Some will squeal like pigs about it. Banks benefit from a huge amount of government protection and support, including almost unlimited borrowing in times of need. They’re used to being able to leverage that support to make a lot of money. It’s called having your cake and eating it too. They fight any little bit of cake being taken away (which is why the regulations for regional banks were rolled back). A huge lobbyist force in D.C.

[GG Allin]

Looks like Chase has taken over. This is a portion of my 15 yo's college money. I guess I can continue to sleep well.

https://www.usatoday.com/story/money/2023/05/01/first-republic-bank-seized-jpmorgan-chase-buys/70168723007/

[dennis in se pa]

When banks fail the investors lose, the management gets rich, and the rescuing bank gets even richer. I believe these failures are planned.

[berettafan]

Nothing good about giant banks getting more gianter.

[javadog]

Originally Posted by dennis in se pa

When banks fail the investors lose, the management gets rich, and the rescuing bank gets even richer. I believe these failures are planned.

Ask yourself who they rescued with that infusion of cash, before they let it go completely?

[javadog]

I would really like to see the next bar in the graph…

[javadog]

Originally Posted by dennis in se pa

When banks fail the investors lose, the management gets rich, and the rescuing bank gets even richer. I believe these failures are planned.

SBF, SVB, Signature… definitely…

Part of the Fed’s war against Davos and the EU…

[KFC911]

Originally Posted by berettafan

Nothing good about giant banks getting more gianter.

It began with the banking deregulation in the mid-80s (started in FL) and with every aspect of removing the regs that had worked for decades, it just gets biglier worse fasterer .

Greed ....

[jyl]

There were supposedly multiple banks bidding, but JPM won. That's interesting because JPM already has over 10% of the country's deposits and is prohibited from getting larger (in deposits) without special permission. Something caused the Fed/FDIC to grant that special permission. Either JPM's bid was much better than the other bids (could be price bid, or scope of what JPM was willing to take), or other banks saw something that caused them to drop out, or there is something tricky enough here that Fed wanted the strongest bank in the country to deal with it.

[javadog]

[Paul T]

Originally Posted by javadog

SBF, SVB, Signature… definitely…

Part of the Fed’s war against Davos and the EU…

That is ridiculous. The is no grand conspiracy here. Banks owned long duration assets that declined in value with the sharp rise in rates. Depositer's got spooked with the MTM (mark to market) losses and took their cash elsewhere. It's a simple bank run. Should banks have hedged interest rate risk better? Sure, but unless you are going to regulate that, these things will happen. There is no "there" there...it's stunningly simple.

[javadog]

[javadog]

Originally Posted by Paul T

That is ridiculous. The is no grand conspiracy here. Banks owned long duration assets that declined in value with the sharp rise in rates. Depositer's got spooked with the MTM (mark to market) losses and took their cash elsewhere. It's a simple bank run. Should banks have hedged interest rate risk better? Sure, but unless you are going to regulate that, these things will happen. There is no "there" there...it's stunningly simple.

My friend, you don’t have a clue as to what’s going on in the bigger picture. I have three words for you.

Offshore.
Dollar.
Market.

[javadog]

Three more bonus words for Paul.

Shadow.
Banking.
System.

[Arizona_928]