Regulators have seized First Republic Bank and sold its assets to JPMorgan Chase & Co in a deal to resolve the largest U.S. bank failure since the 2008 financial crisis and draw a line under a lingering banking turmoil. First Republic was among regional U.S. lenders most battered by a crisis in confidence in the banking sector in March, when depositors fled en masse from smaller banks to giants like JPMorgan as they panicked over the collapse of two other mid-sized U.S. banks.
In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.
They discuss comments from JPMorgan Chase CEO Jamie Dimon, who said that the crisis that led to the downfall of three regional U.S. banks in recent weeks is largely over after the resolution of First Republic.
Chris and Saied look at a warning from billionaire investor Charlie Munger, vice Chairman of Berkshire Hathaway, who sees trouble ahead for the U.S. financial system because American banks are "full of... bad loans" due to falling property prices in the country in a situation that seems very similar to what caused the banking crisis in 2008.
They also offer some thoughts on recently-released economic data showing that inflation rose again in March, despite a year’s worth of interest rate increases. This is data that the Federal Reserve watches very closely.
Join Chris and Saied for this fascinating and informative conversation.
What You’ll Learn in this Show:
- Why you can’t compare the large global banks to regional community banks.
- Why the Federal Deposit Insurance Corporation (FDIC) will share losses with JP Morgan on First Republic loans.
- What other banks are doing to prepare for a possible rate hike.
- Why banks are not doing loans right now.
- And so much more...
"Australia’s central bank hikes rates by 25 basis points; Asia-Pacific markets mixed" (CNBC)
"Jamie Dimon says ‘this part of the crisis is over’ after JPMorgan Chase buys First Republic" (CNBC)
"Key inflation gauge for the Fed rose 0.3% in March as expected" (CNBC)
"Charlie Munger says the U.S. commercial property market is in trouble: FT report" (CNBC)
"Big banks including JPMorgan Chase, Bank of America asked for final bids on First Republic" (CNBC)
"The U.S. could hit the debt ceiling by June 1, much sooner than expected, Yellen warns" (CNBC)
"Charlie Munger Sounds The Alarm on Issue That Could Bring Down the U.S. Economy" (TheStreet)
"Warren Buffett might help rescue the banks again - but he'll probably make less money this time around" (Markets Insider)
"Renting is still far less expensive in Dallas-Fort Worth than in other metros" (The Dallas Morning News)
"Regulators seize First Republic Bank, sell assets to JPMorgan" (Reuters)
"Ranked: The U.S. Banks With the Most Uninsured Deposits" (Visual Capitalist)
"A Tax Loophole Makes EV Leasing a No-Brainer in the US" (Bloomberg)
"First Republic Bank Is Seized, Sold to JPMorgan in Second-Largest U.S. Bank Failure" (The Wall Street Journal)
"The Building Boom Is Prolonging Market Pain" (The Wall Street Journal)
"Why First Republic Bank Collapsed" (The Wall Street Journal)