Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

ir.firstrepublic.com

Post reply on HN
Print view View original

111–120 of 237 posts

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

#111

Post by bombcar »

ptero wrote: post #67
sroussey wrote: post #54

Earlier quoted context omitted.

If people don’t get their access to their cash by Monday (or a week later at latest), then any rumor of liquidity issues at any bank will lead to a bank run. Once you know / experience it, bank runs feel like a legit thing to do.

FDIC insures $250k per account, so most retail clients have no reason to bolt, which provides a lot of stability for traditional banks.

These issues are all going to be at business banks (and even larger banks that do both business and normal are often actually separate entities).

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

#112

Post by breck »

mtlmtlmtlmtl wrote: post #70
breck wrote: post #52

Earlier quoted context omitted.

OMG. If anyone wants to fund it I could build a far better Tree language to replace this XML junk that they are using.

Sure you can. I'm sure you'll do integrations with 9001 different legacy systems and the other endless bullshit that comes with software dev in the public sector. All by yourself. Let there be no doubt that you had it all planned out in your head already in the 10 seconds it took you to think up that comment. Because you're that good .

1. I don't have much to gain from such a thing, but someone in the know might have tremendous amount to gain. Hence the `if anyone wants to fund it`. It would have to be worth my while.

2. Yes, I am that good and could certainly build it. My tech is magic. I can turn any complex domain into the simplest form possible.

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

#113

Post by vineyardmike »

ptero wrote: post #67
sroussey wrote: post #54

Earlier quoted context omitted.

If people don’t get their access to their cash by Monday (or a week later at latest), then any rumor of liquidity issues at any bank will lead to a bank run. Once you know / experience it, bank runs feel like a legit thing to do.

FDIC insures $250k per account, so most retail clients have no reason to bolt, which provides a lot of stability for traditional banks.

True, but can you imagine having rent money in your account when the bank collapses...

edit: apparently getting your money is fast and easy

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

#114

Post by gonehome »

naijaboiler wrote: post #108
csomar wrote: post #61

Earlier quoted context omitted.

> It didn’t take a genius to predict interest rates were going to rise. Locking cash away for 10yrs in very low % return vehicles seems stupid? Everyone is a genius in hindsight. You could have made millions out of a few thousands if you were able to predict an interest rate regime change. But where are your millions?

you don't need a to be a genius to have known that the 2.4% interest rate won't last for ever. Everyone in america with a mortgage knew that and rushed to re-finance. So why did bank managers not know. i think its more like, they had no other good options to park their cash. So they took the best of a bunch of bad options

Of course, the actual best bad option would have been to just wait and lower interest rates if they must in the mean time.

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

#115

Post by cortesoft »

digitaltrees wrote: post #81
metacritic12 wrote: post #53

Counterpoint: This WSJ Article [1] and their latest 10Ks confirm that: - Their actual assets market-to-market (sold on the fair market) is about $26 bln less than the amount they're carried at on their books. This is as of year end 2022, probably more today. - This would wipe out all their equity, loans, and start hitting depositors. - If there was a bank run, First Republic probably would not be able to meet all dep…

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.

As rates go up, those mortgages will become less valuable (because they pay a lower interest rate than new loans will). At the same time, rates going up means the bank is going to have to pay more in interest to depositors, meaning they will need to offload assets to maintain their margin requirements.

This is why commercial banks tend to not hold on to the loans they originate any more, and instead sell them to funds. There is correlated risks for the banks, where their assets become less valuable at the exact time they need to sell them. Banks don’t like to hold mortgages for this reason.

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

#116

Post by bombcar »

dannyw wrote: post #103
sroussey wrote: post #60

Earlier quoted context omitted.

I thinks lots of small companies with a sudden $4m influx of cash are not in a good position to open accounts at 16 banks. Now that said, there are hot money managers that will do this for you.

Open an account at one of the biggest banks (JPM Chase, Wells Fargo, etc). You don't need 16 banks when you can bank with a "too big to fail".

Or open at two of the 2big2fail - the chance that both go t-bills up at the same time is very low (and the one that doesn’t go bankrupt can provide the liquidity until the other resolves).

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

#117

Post by WanderPanda »

dannyw wrote: post #89
fairity wrote: post #77

Earlier quoted context omitted.

All true, but they have a $60b debt facility to draw down on before they'd consider liquidating their HTM bond portfolio. Given that they have $120b in uninsured deposits diversified across a disparate client portfolio, it seems like they're truly in a much stronger position than SVB. I feel like a very likely outcome on Monday is that the FDIC announces a buyer, SVB depositors realize they're going to be made whole,…

SVB was only able to borrow $15B from their FHLB debt facility, before they got cut off. The FHLB total capacity is ~$60 billion. Is First Republic stating actual numbers they are guaranteed to have access to? Their shareholders are already panic selling (FRC down 36%), their bonds appear to be sinking, and few private parties wants to throw good money after bad. When you have to put out an emergency statement to rea…

Can't they claim the money back if you withdrew shortly before the insolvency anyways?

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

#118

Post by WanderPanda »

V-eHGsd_ wrote: post #100
hackernewds wrote: post #49

Earlier quoted context omitted.

The 2-day shutdown is hence critical for the functioning of the financial system. Same for reporting earnings afterhours. Those calling for 24/7 trading are aloof of how entrenched systems need change management

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?

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

#119

Post by cortesoft »

twblalock wrote: post #93
metacritic12 wrote: post #53

Counterpoint: This WSJ Article [1] and their latest 10Ks confirm that: - Their actual assets market-to-market (sold on the fair market) is about $26 bln less than the amount they're carried at on their books. This is as of year end 2022, probably more today. - This would wipe out all their equity, loans, and start hitting depositors. - If there was a bank run, First Republic probably would not be able to meet all dep…

> - If there was a bank run, First Republic probably would not be able to meet all depositors. That's true for all banks, even JP Morgan Chase. Every single one of them has some withdrawal limit, past which they are screwed. And that limit is definitely lower than 100% of deposits.

Of course it is lower than 100%. Our whole modern banking system is built on this fact.

https://en.wikipedia.org/wiki/Fractional-reserve_banking

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

#120

Post by vkou »

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.

That's not why there's a tech bank run. The reason there's a tech bank run is because VCs, and the companies they own are like geese. They fly in a triangle.

Thiel tells his startups to bank-run SVB, and they bank-run SVB, and all the other VC start telling their firms to follow suit. It's all herd mentality among an undiversified group of customers (startups all of which are hit hard by raising interest rates), which is perfect for a bank run.

Post reply on HN