First Republic RIP

[phaster]

First Republic, where I was banking for many years,… sadly failed (and is now a part of Chase)

https://www.benzinga.com/news/23/05/32232154/american-bankers-association-calls-on-sec-to-probe-short-selling-abusive-practices

My own reading of the tea leaves is First Republic ultimately failed because of a chain reaction of events,… the spark being the failure of Silvergate (headquartered in La Jolla) and specialized in “crypto” banking

The powder-keg charge which blew apart First Republic was the increased interest rates (by the federal reserve) which makes existing bonds worth-less than before AND the powder-keg was supercharged because of the way the system of fractional reserve banking is setup

Looking at the bigger picture, was never a fan of TRUMP because looking at his business history he ran things into the ground (i.e. TRUMP airlines, TRUMP casino(s), TRUMP university, etc.) AND when things failed TRUMP sought to blame others

Having said that TRUMP on occasion does point out issues than need to be addressed like the mis-management of the dollar (then again when TRUMP does point out issues than need to be addressed, conspiracy fans and theories pop up)

Thought I’d mention TRUMP because he like the crypto market (w/ a market cap right now of over a trillion dollars), are two other powder-keg charges which I worry about going off (and causing un-necessary economic harm)

FWIW here is a PDF of the TTS script (that shows verifiable sources) I put together (to create the Doodly video)

https://drive.google.com/file/d/17GqGoUp19TzgTNLStlGLJK4SBjWCwdDo/view?usp=share_link

 

 

 

 
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[barnaby33]

What about it blowing up and causing necessary economic harm?

Josh

[phaster]

What about it blowing up and causing necessary economic harm?

As a client of First Republic (for over a decade), thought their customer service and business model was solid,… what I neglected to factor in is poor planing and panic (by others)

Basically was careful to structure my own deposit accounts so things were covered by FDIC insurance (but seems 2/3 of First Republic deposits were NOT covered by FDIC insurance)

The other thing I found out is unlike many other First Republic clients, I actually paid down the mortgage principal,… whereas from what I gather a great majority of other First Republic clients structured their mortgages as interest only (the reason being most people wanted to max out cash on hand AND/OR were not planning keeping their properties more than seven years,… so why pay down a loan when the RE market is going UP & your planning to flip into something else)

Long story short First Republic was a regional bank that worked to accommodate people in unique financial situations (e.g. the “Eagle Community home loan program”)

https://www.creditkarma.com/home-loans/i/first-republic-bank-mortgage-review

…which is something I didn’t see at Chase (full disclosure I have business accounts at both Chase AND First Republic and of over a decade have been using them both in parallel,… during the period of essentially zero interest rates)

https://www.macrotrends.net/2015/fed-funds-rate-historical-chart

Actually when news broke (in march 2023) that FRC was dramatically down and various banks put together a 30 billion dollar unsecured lifeline

https://www.wsj.com/articles/jpmorgan-morgan-stanley-and-others-in-talks-to-bolster-first-republic-4f9eeb76

…figured that was a good sign, so bought shares of FRC @29 (thinking it was a bargain)

What I didn’t factor in and only realized after the fact that bonds various banks (have on their balance sheets) have lost 600+ billion in market value (AND is the explosive debt charge that just needs a spark to set things off)

I lost some money betting that FRC was a fluke,… sad truth is, it wasn’t’!!!

 

 

 
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[phaster]

A silver lining to banking w/ First Republic  is, I’ve learned I should not take various banks “money savings management” as gospel truth

After First Republic, people are waking up to where they should really be parking cash

Apple’s new 4.15% savings account, which according to Forbes attracted nearly $1 billion in its first four days despite being open only to Apple credit card holders, is a sign that Americans are finally waking up to the fact that they can earn a lot more on their cash than what the big banks are paying.

Another sign: After soaring in 2020 and 2021, U.S. bank deposits began falling in April 2022, shortly after the Federal Reserve launched the first of 10 consecutive rate hikes. They took an even sharper tumble following the failures of Silicon Valley, Signature and First Republic banks.

Savers have been flocking to better-paying alternatives such as money market funds, which are yielding up to 5%, Treasury bills and the government’s inflation-linked savings bonds.

Some online and lesser-known banks and credit unions have been attracting customers with high-yield savings accounts — at least 30 are yielding more than Apple’s 4.15% according to Depositaccounts.com, a banking research website. By comparison, Wells Fargo, Citi, Bank of America and Chase are paying between 0.01% and 0.35% on their basic savings accounts.

The Federal Reserve raised the short-term federal funds rate on Wednesday by a quarter point to between 5% and 5.25%, a 16-year high. 

Although it’s pretty easy to earn more than 4% with almost no risk these days, a recent Bankrate survey found that only 22% of savers are earning 3% or more.

https://www.sfchronicle.com/bayarea/article/savings-interest-high-yield-accounts-18077521.php

Bottom line if you’re keeping less than $250,000 in AppleSavings, the only risk is opportunity cost and inflation,… AND is much better than just letting money sit in brick and mortar bank account like in Chase or First Republic

Said another way you cannot lose money using non traditional investment vehicles like AppleSavings unless there’s a way bigger crisis happening that probably makes those dollars in a traditional bank worthless anyways (like a complete collapse of the US government).

(Looking at the big picture) as I read the tea leaves, seems Apple is putting together necessary hardware/software for a rival “credit card” payment network based on iPhone technology that will take on the traditional big four networks of American Express, Discover, Mastercard and Visa

Why Banks Need to Build a Mobile Wallet Strategy to Defend Against Apple

https://seekingalpha.com/article/4602159-is-apple-the-future-of-finance

 

 
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