Aaaannd, it's gone!

As the week came to close on Friday evening, I read a report that surprised exactly no one; 1st Republic Bank is being taken over. This will start a week of new headlines highlighting how tenuous the banks are and how focused everyone should be on the "quality" of their bank and the "safety" of their money. The fact is that with interest rates at 5% all banks are toast and they know it. Now it's simply a question of whether enough depositors will "know it" and drain banks of all deposits leaving gaping holes in their balance sheets. The first details of the bail-out-in-every which way deal are still coming in but it looks like CHASE and Citi get the filet assets and all the crappy debt goes to the taxpayers because we don't throw parties for the wise-guys in charge of the checkbook.

FRC was trading at $120 at the start of March... and now it's trading close to $1.20...

Shares collapsed to a $1 handle in the after hours trading, down 70% on the day..

Aaaaaannnd, it's gone!

"And so JPM, which is already the largest US bank is about to get even bigger, by scooping up all the good FRC assets while leaving US taxpayer holdings on to the toxic ones.
That said, it wasn't immediately clear whether the $30 billion in deposits funneled by JPM and other banks into FRC will be treated as insured funds (why should they should be insured?), nor was it clear how a wipe-out of this capital, which would spark a systemic crisis simply because the Fed is now running policy of "monetary tightening through bank collapse", having failed to contain inflation and tighten policy using conventional means."

If the Federal Reserve were firefighters and your house was the banks:

"So Federal Reserve regulators screwed up - again - and you know what the solution is? Make up more regulations, and give more power to those same Fed regulators."

"Asking the Fed to regulate banks is like asking a kid to regulate his parents. It’s not in their nature."

Understandably, credit is tight right now because loan initiation is nothing more than risk assessment by the lender. Commercial lenders right now can observe quite a bit of risk added to the equation now as small businesses deal with a perfect storm of lower/declining volumes, higher capital costs with less availability and an extremely tight labor market for qualified workers.

For those business owners who depend on retail sales I can tell you from a lenders' perspective that we are adjusting our expectations for revenues downward in most retail situations. Construction / housing / contractor work is getting a "haircut" in amounts approved and terms are shorter reflecting higher risk profiles.

Unfortunately, the institutions we depend on to protect us have let us down and now, small business owners and all the vendors they depend on and who also depend on them all left to try and figure this whole mess out ourselves. The fix is coming but it's not going to be a fix at all. What is coming is digital (virtual) money and the elimination of all privacy in commerce.

Right now, wires are going out every single day and most requests are getting offers for working capital - Have a great week and God Bless!

‍

‍

‍

See how much you qualify for

Start here
nick@mycapaccess.com
+1 727-863-1950