I kept my money in FR even when they were at risk because they have been BY FAR the best financial institution I've ever worked with. They gave me a mortgage rate much better than any other bank was offering. When my appraisal came in a bit lower than was required for my desired loan size, they got an exception. When I need something, I email or text one of the two people there who I know by name and they immediately take care of it. I needed a new ATM card, so I pinged my guy at FR and had a new card the next morning. The web portal is fine - basic but does everything you need and does not bombard you with internal quasi-ads like Bank of America does. When I wanted to set up a particular kind of new account I talked to one of my people there, and they explained how they would do it but basically advised I'd be better off doing it at another bank. They never tried to upsell me or push junk onto me. It's really a nice place to do business.
And in the end, though I have a meaningful amount there, it is within the FDIC limits, so a crash should turn into an inconvenience rather than a financial disaster.
My question is: What now?<p>The feds are stuck trying to tame inflation, and the skyrocketing interest rates are crumbling regional banks. Big banks are a lot more hesitant to lend to small businesses, and many otherwise viable businesses will fail if credit freezes.<p>Big banks are getting even bigger as depositors flee, and concentrating risk (even more) imo.<p>I guess the higher interest rates are doing their job in slowing the economy down, but it's wild that we're stuck with whatever the feds do with their blunt toolset because congress is seemingly dysfunctional.
My fear is not these "small" banks failing. It's that everyone runs to the top 3 large ones and they will get so huge that their failure will be unthinkably bad. Even if they do not fail their power to for example debank people would be a huge problem. Sadly I don't see congress breaking them into small units or adding stronger regulations.
SVB had some idiosyncrasies with its customer base that most banks don't, so I understand why it failed.<p>I didn't think First Republic was big in the startup space, so I'm curious what got them. I know they hold a lot of mortgages on their own books, but other than that, was it just another bank run? Was it exasperated by their customer base becoming very aware of FDIC limits and the potential of failures because SVB was in the same region? The median Fifth Third customer doesn't have $250k, and sees all of this as "rich silicon valley problems."
There is more than one way to tame inflation than jacking up interest rates so quickly.<p>A less discussed way is to raise taxes and cut deficit government spending.<p>Unlike interest rates, the effect is immediate, and can be undone quickly too.<p>It’s hard to do during high unemployment or during a recession, neither of which is currently the case.
Likelihood that uninsured deposits will be made whole? What happened to the billions that larger banks "deposited" into FRB just a few short weeks ago?
What i do not understand is that this happens while the bank still has enough liquidity to cover 50% of deposits. At least from what I understood. Seems like there will be quite a few banks with less than this.
I'm assuming the other big banks that threw $30b in deposits at First Republic in a made-for-TV vote of confidence get all that back.<p>I'll never understand how that wasn't illegal collusion and/or market manipulation.
I'm wondering what is going to happen to the banking sector as the commercial real estate apocalypse starts to manifest in full ... banks have a lot of interest bearing loans for commercial real estate that is going to continue turning into increasing quantities of illiquid pure junk in the very near term as leases end coincident with a mass cost cutting environment and occupancy rates drop even more ... obviously this has been a concern for awhile but seems like we are approaching a real inflection point
An interesting question: how is the FDIC financed?<p>Will <i>they</i> go bankrupt if enough small banks collapse?<p>Or are they sitting on an infinitely deep well of money somehow?
So for FR customers, what does this mean? Is there a risk of funds being inaccessible? I normally only keep enough in that account to cover two months of expenses.
As to be expected, many people on reddit's wallstreetbets made or lost futures as this saga unfolded. I dunno why anyone would invest in bank stocks. Too risky. Index funds offer comparable return but without the tail risk of bank run.
Anyone else notice how First Republic bank was bought a few years ago by Colony Capital co-managed by Thomas Barrack, who was a Senior Advisor to the Trump Campaign before being found guilty of acting as an unregistered foreign agent for UAE? <a href="https://en.wikipedia.org/wiki/Tom_Barrack" rel="nofollow">https://en.wikipedia.org/wiki/Tom_Barrack</a><p>Probably nothing.