Posted on 05/02/2023 7:14:22 AM PDT by george76
there are no banking rules/laws in the Biden Fed/Treasury system.
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The Dodd-Frank laws are still on the books, but the FDIC decision to insure all deposits, regardless of size, now means those laws, rules and regulations are not required to be followed. Additionally, as a result of JPMorgan gaining another $100+/- billion in deposit assets, the law(s) surrounding the 10% U.S. deposit maximum, within too big to fail banks, no longer exists. Noted in the announcement, “JPMorgan Chase is assuming all deposits – insured and uninsured.”
JPMorgan is also assuming assets consisting of $173 billion in loans and approximately $30 billion in securities. The FDIC is going to assume risk (with a risk sharing agreement) for current First Republic Bank mortgage and commercial loans acquired by JPMorgan, guaranteeing JPMorgan a 5-year fed fixed rate on $50 billion in mortgage bonds.
The Federal Deposit Insurance Corporation (FDIC) rule requiring the holding of 1.5% of deposits for all depositors up to $250k in all institutions is now essentially moot. If the FDIC is guaranteeing all deposits, there’s no way for the insurance corporation to capture or hold $1.5% of all banking deposits. The law is in conflict with the outcome action of the Fed/Treasury and ultimately the FDIC, ergo the law is nulled by the ignoring of it.
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JPMorgan states, “no systemic risk exception was required” in the deal. This means the FDIC is completely free-range with the agreement, they are not even trying to justify why they would make a too big to fail bank even bigger
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The only reason the FDIC violated its own rules and banking regulations, was because the FDIC didn’t, likely -almost certainly- couldn’t, take the financial hit from a full takeover of First Republic Bank against the backdrop of the prior terms for Silicon Valley Bank (SVB).
When the FDIC made the (SVB) decision to guarantee all deposits regardless of size, they put themselves in a position of an insurance declaration they could never fulfill. The FDIC cannot structurally guarantee all of the First Republic Bank (FRB) deposits; they need a structure to avoid the government regulators absorbing the bank. This reality is also why the FDIC violated their own laws, rules and regulations in allowing JPM to exceed the legal U.S. deposits maximum.
FDIC is saying is they cannot maintain the premise of their charter without the big banks helping them. The biggest banks now control all of the leverage, with JPMorgan Chase and Jamie Dimon now controlling more financial power than the government that is supposed to regulate them.
FUBAR… All of it. Everything Biden touches turns to shit.
This is going to be a major hot mess now for Main Street investment and borrowing needs. The economy is going to feel the ramifications of this in less financing available to maintain domestic investment.
Last point. Look at the big picture, there’s no intervention protocol the legislative branch can trigger as a security against the reckless decisions of the FDIC (Fed and Treasury), without creating even bigger issues that could collapse the banking system. If the legislative branch forced the FDIC to follow the laws currently on the books, the domino of banks starts to collapse.
I bet the democrat law makers cleaned up
The Fed is playing a dangerous game.
They get one bank, JP Morgan Chase in this instance, to ‘buy’ the failed bank(s) that pop up.
That does not ‘fix’ the problem, it merely take sit off the front pages and TV screens of America, and John Q. Public thinks ‘All is well!’.
But it’s not.
They have simply taken a poison pill and put it into a healthy bank.
The bad loans that the failed bank made are still there, the depositors’ and investors money is still gone, and the Government is still on the hook................
“The law is in conflict with the outcome action of the Fed/Treasury and ultimately the FDIC, ergo the law is nulled by the ignoring of it.”
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We have crossed the Rubicon.
“I bet the democrat law makers cleaned up”
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At the very least THEIR friends were protected.
We have become The Aristocracy of Pull..................
Where’s Warren?
“FUBAR… All of it. Everything Biden touches turns to shit.”
You noticed? Stunning but true! You’d really have to work hard to be wrong 100% of the time. Even the 3 Stooges got a few things right occasionally... And the stakes were much lower for them.
Yes Antonio we have!
And the tax payer has to pay billions on the deal
The ultimate back-stop is Fed.gov budget, which is the sinkhole for all leftist social-engineering and central planning schemes. Its the backstop of the backstop.
Right now, Fed.gov are at $1.4 trillion deficit for 2023, and rising next year.
The question then is - how long can $1.5 - $2 trillion deficits be sustained?
We crossed the Rubicon when Obama screwed GM bond and secured debt and gave it to the unions. Secured debt and bond holders were supposed to be paid first.
We crossed the Rubicon when Obama screwed GM bond and secured debt and gave it to the unions. Secured debt and bond holders were supposed to be paid first.
Congress is content to let the executive branch run amuck.
JPMorgan is getting backstop from the FDIC on First Republic’s real estate portfolio.
They know commercial real estate is the next domino to fall.
PacWest Bancorp has been halted with the stock is down 17% today.
$PACW is down 67% since January 1st and nearly 40% over the last week.
One year ago, PacWest was worth nearly $10 billion.
The stock is now worth just $1 billion as the banking crisis continues.
“They know commercial real estate is the next domino to fall.”
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I would love to know what ALL the Fed is doing to prop things up. It would be interesting to look behind the curtain.
IAT -6.5% today.
First Republic Bank gave Mark Zuckerberg a 1.05% mortgage rate in 2012, when the average 30-year rate was 3.5%
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