Banking Crisis imminent: First Republic Bank collapse.

Banking Crisis imminent: First Republic Bank collapse.

When the Banking Crisis of 2023 started up in March, many people were wondering, who could be next? Which bank could fall? After the previous ones, Silicon Valley Bank, Signature Bank, and Credit Suisse collapsed because of a combination of risking intertest rates by the FED, poor mismanagement, and just general incompetency.

But as many of us in the financial industry knows, the FED flooded money to these regional banks (mainly in California) to stop them from collapsing, a wide variety of multinational banks such as Chase, Bank of America, and Goldman Sachs, did the same thing. Stopping the banking crisis from getting any worse. And it worked, temporarily of course, since First Republic bank is beginning to have major underlying problems with deposit numbers, customers, and the massive drop of its stock price.



Let me take you back to the beginning. On Monday of this week, about an hour after the market closes at 4 pm EST, F.R.B’s earnings were due, examining the data, it all seemed rather well. The revenue was up, First republic was handing out loans which is always a positive development for a bank. But there was one major problem, the deposits value. The deposits are measured by the amount of money people have stored at a bank, so of course the higher the number the better it is since people trust that bank enough, as to keep and store their money there.


But, going over the numbers, FRB missed their deposits estimate by 32 billion dollars, a huge miss if you’re wondering the significance. And to put that into more perspective, since the end of 2022, up until now, so about 5 months, they’ve lost 76 billion dollars in deposits. An absolute monumental amount. This indicates that even when all the major banks like Chase, TD Bank, Goldman sachs, etc. agreed to deposit their own money into first republic. It still was not enough because your average person and small business did not have the confidence and trust to store their money in the bank.


And of course as you can imagine the stock of the price tanked and has been tanking for 2 days now, the blue arrow represents when the earnings and deposits number came out for First republic. Started at 15 dollars Monday morning and had been climbing for a couple of days before that. But now, 2 days later, has fallen to 6.5 dollars. A staggering collapse which has probably resulted in hundreds of millions of losses for stockholders and hedge funds.




Now this article isn’t just here to talk about First Republic, but about the broader trend of our economy, and the banking sector specifically. How, even when the Federal reserve came to “the rescue” for many of these regional banks suffering from the fallout of Silicon Valley Bank collapsing in March 2023, it still was not enough, even with the major banks donating and depositing billions in these banks, it still is not enough.

I have been thinking and saying this since 2008, our economy isn’t and has not been the same since that year. We have effectively put a bandage over a gun wound. On the surface the bleeding has stopped, but down below the wound is still there, never healing, always staying the same. And to explain this a bit further, we have had effectively a zero interest rate policy since 2008, for 15 years banks did not have to worry about giving out loans to people with crap credit scores, mass buy treasury bonds by the millions, and lend out mortgages.


But all of that has changed since last year when the FED has raised the interest rate, now the banks have to sell off these bonds on a loss instead of a profit, they have to stop lending out loans to people who they know cannot pay it back, and even to those people who are trustworthy and financially well off. Loans are the lifeblood of the US economy, when less loans are given out, it’s a signal that the US economy is contracting and slowing down. We have to understand, the effects of the Fed interest rate hike is not felt in the general economy until 6-9 months later. So while the base interest rate right now is 5%, what we are feeling at the moment is no more than 3%. And there is no sign of the Fed stopping their rate hikes.


So while to many people First Republic bank collapsing may not seem like a big deal to the average person since they are not involved in the banking sector, it very much affects all of us. This collapse is a façade of what is going to come next, and the Fed coming in to “help out” is a mirage, it’s almost as if they know this won’t do anything but they always have to keep up the image of the USA economy doing “well’“. And I am afraid that once the recession hits, a deep recession, comparable to 2008, possibly even the great depression of 1929. Many people will point the fingers and scapegoat Jerome Powell as the main guy who caused their suffering, and while it is true he is part of that “group” or clique, he is not the main guy pulling the strings and orchestrating this, it is a kabal of people that have been screwing and gutting our country for decades now.


Now the ship is finally sinking and the people at the top know this and that’s why they’re jumping on the lifeboats while they tell the rest of us that the ship is not sinking and everything will be fine. Whatever comes after the ship has fully submerged is anyone’s best guess.


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