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First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

ir.firstrepublic.com

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Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#151

Post by gault8121 »

dannyw wrote: post #79
resource0x wrote: post #71

Earlier quoted context omitted.

> If there was a bank run, First Republic probably would not be able to meet all depositors. If everyone knows this, why keep your money there? Tech exposure has nothing to do with it. "In a bank run, he who runs first, runs best".

Tech businesses tend to have more direct access to information (e.g. Twitter, emails), and listen to VCs and investors. Regular people and businesses don't hear about these things. Today, only 1 other person in my friend group of 6 heard about SVB.

There are three articles about this on the front page of the New York Times right now. It’s going to be widespread knowledge very soon.

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#152

Post by peyton »

mdorazio wrote: post #48

I'd really like to know where people are withdrawing their money from these banks to . They're not taking suitcases of cash, so it must be flowing to some other financial institutions. Is it going to traditional big banks (BofA, Wells, Chase, etc.)?

Big 4 and TD

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#153

Post by [deleted] »

dannyw wrote: post #79
resource0x wrote: post #71

Earlier quoted context omitted.

> If there was a bank run, First Republic probably would not be able to meet all depositors. If everyone knows this, why keep your money there? Tech exposure has nothing to do with it. "In a bank run, he who runs first, runs best".

Tech businesses tend to have more direct access to information (e.g. Twitter, emails), and listen to VCs and investors. Regular people and businesses don't hear about these things. Today, only 1 other person in my friend group of 6 heard about SVB.

[deleted]

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#154

Post by digitaltrees »

twblalock wrote: post #95
digitaltrees wrote: post #90

Earlier quoted context omitted.

The bankruptcy code provides guidance for a 90 day look back period from the date of insolvency where transactions can be clawed back or must be repaid. The FDIC will talk to the recipient bank and get a court order to deposit the funds in to a trustee account so that all available assets can be distributed evenly and fairly.

They are very unlikely to do that to normal individual account holders. It would undermine the purpose of providing the deposit insurance in the first place.

I would bet many accounts had balances well over the $250k cap and had larger withdrawals that, if left completed, would reward the first movers in the run on SVB to benefit to a greater extent than account holders that waited.

I agree that people below the threshold won’t see claw backs.

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#155

Post by digitaltrees »

alex_young wrote: post #129
digitaltrees wrote: post #85

Earlier quoted context omitted.

Not really the money can and will be clawed back if a bank is placed into bankruptcy or receivership. The legal system disincentivizes runs on the bank by enforcing a 90 day look back period where withdrawals have to be repaid so that funds can be distributed more broadly and fairly.

A bit of a technical point - in the US banks cannot go into bankruptcy.

The correct term is receivership but that is confusing for most people and the general principle is the same. When you go bust, the court/trustee/receiver combs through transactions and claws back assets as part of gathering/selling all assets to pay creditors

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#156

Post by ericjmorey »

donedeals wrote: post #144
ThrustVectoring wrote: post #138

Earlier quoted context omitted.

The mortgage is one of the assets seized by the FDIC and sold off to meet bank liabilities. On your end little should change in the short term, and you may have a different owner for the mortgage at some point (and as I understand it, your mortgage changing ownership is a fairly common occurrence in general). As far as payment and servicing goes, there should be continuity in how that is handled. In short, you'll sti…

I have a line of credit from them - will that terminate. The line of credit rate is dependent on me making deposits there and a min deposit.

Your deposits are insured by the FDIC, your money is safe. Your line of credit could be closed, but that is very unlikely.

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#157

Post by zamnos »

nemo44x wrote: post #37
whatever1 wrote: post #18

Hopefully the panic will not spread. Multiple people were calling me to ask whether they should get their money out of their bank. But keep in mind that people also went through a pandemic, where panic was the go-to option.

> Multiple people were calling me to ask whether they should get their money out of their bank Should we? At minimum keep as close to $250k or less spread across however many banks as practical, right now.

If you have significantly more than $250k, you should keep it in a sweep account, which spreads it across banks for you.

https://accountopening.fidelity.com/ftgw/aong/aongapp/fdicBa...

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#158

Post by zamnos »

fanzhang wrote: post #58
mdorazio wrote: post #48

I'd really like to know where people are withdrawing their money from these banks to . They're not taking suitcases of cash, so it must be flowing to some other financial institutions. Is it going to traditional big banks (BofA, Wells, Chase, etc.)?

Yes -- all the people I know withdrawing from small banks are going to Chase or Morgan Stanley. These largest banks have to mark-to-market their losses and have a lot of cash (short duration) assets, and are literally too big to fail.

Confusingly, the two banks you named are JP Morgan Chase, and Morgan Stanley. JP Morgan Chase is the biggest bank there is, but Morgan Stanley is far smaller (but still ginormious) and doesn't rank in the top 10 banks. The top 3 banks are JP Morgan Chase, Bank of America, and Citigroup.

https://www.insiderintelligence.com/insights/largest-banks-u...

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#159

Post by eastbound »

prottog wrote: post #84
digitaltrees wrote: post #81

Earlier quoted context omitted.

Why would they sell the mortgages now? Why not just hold them. When they originated and funded the loan they did it with deposits or fed funds, why not just hold and collect the payments? If there is a run, then selling is actually the worst thing to do because theoretical losses become irreversible actually losses. It’s highly likely interest rates will go down in a year or two but.

> Why not just hold them > If there is a run If there is a run, they become forced sellers, because they don't have enough cash on hand to meet withdrawals. That's the whole story. They must prevent a bank run.

Can’t they just not honor the run, so that they can honor it in the long term, rather than selling at a loss and not being able to honor 20% of them?

Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%

#160

Post by eastbound »

WanderPanda wrote: post #118
V-eHGsd_ wrote: post #100

Earlier quoted context omitted.

matt levine has a tongue in cheek post from ... march 2020 (jesus, nearly 3 years ago to the day) that the markets should only be open for 30 minutes. do your research in the other 23 hours and 30 minutes, and trade in the small window. ( https://www.bloomberg.com/opinion/articles/2020-03-12/the-bu... the section is called "thirty minutes")

Why 30 minutes if you could just have a single auction per day?

Won’t we see “24hrs platforms to prepare trading” where transactions would get ranked and bet upon, until the auction-of-the-day, so, the platforms would act as the stock exchange and the actual auction be relegated to clerk approval of existing transactions?
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