There is a large gap in First Republics loan book and deposits. They have effectively subsumed all their equity on their balance sheet, if they are forced to mark their assets at market value. The same situation that happened to SVB is true right now at First Republic. However, the Fed and JPM believe that depositors won’t run on the bank if their is sufficient liquidity with these actions. So, no they weren’t in a good place, but they’re a little more stable now. Still somewhat risky however given there is a large effective gap in liabilities and assets.
back
1 comments
Monday will be interesting in America, will it be a re-run of 2008/09 or not?
It shouldn’t be. These banks are not sitting on toxic assets the same way large financial institutions were in 2008. The existing programs and powers of the Federal Reserve and Treasury should be more than sufficient to eliminate a widespread financial crisis.