People lining up to pull money out of First Republic Bank in Brentwood, LA this weekend.
Wealthy neighbourhood with many uninsured accounts over $250,000.
The banks stock is down 33% in the last week.
Is this what the start of a bank run looks like?
This was not a bailout. During the GFC, the gov’t injected taxpayer money in the form of preferred stock into banks. Bondholders were protected and shareholders were diluted to varying degrees. Taxpayer money was put at great risk. Many people who screwed up suffered minimal to no consequences. Those were bailouts.
Here, shareholders and bond holders have been wiped out. The @FDICgov insurance fund capitalized by premiums paid by banks will absorb any losses. The fund will recoup any losses by assessing more premiums on the banks.
Had the @FDICgov@USTreasury and @federalreserve not intervened today, we would have had a 1930s bank run continuing first thing Monday causing enormous economic damage and hardship to millions.
More banks will likely fail despite the intervention, but we now have a clear roadmap for how the gov’t will manage them.
Bank boards and managements have received a massive wake up call. Being a director or CEO of a bank that fails is no fun: years of litigation, regulatory investigations, personal liability, potential civil and criminal charges, and enormous reputational damage.
Our gov’t did the right thing. This was not a bailout in any form. The people who screwed up will bear the consequences. The investors who didn’t adequately oversee their banks will be zeroed out and the bondholders will suffer a similar fate.
Importantly, our gov’t has sent a message that depositors can trust the banking system. Without this confidence, we are left with three or possibly four too-big-to-fail banks where the taxpayer is explicitly on the hook, and our national system of community and regional banks is toast.
Our government did the right thing for the country. We are very fortunate it did so.
I admired Dr. Martin Luther King Jr. as he was a principled man with great principles. The couple that stick in my mind at this time are:
1. Hate cannot drive out hate; only love can do that.
"How is it possible that the benchmark S&P 500 index has rebounded nicely from the March lows (recovered around 50% of the drop) and is currently at similar levels to where it was in mid-2019 when things were clearly looking much better?"
Oman ✅
Abu Dhabi ✅
Dubai ✅
And now Chad.
We are living in changing times as Israel opens & rekindles relationships.
These are the ones that are open, I wonder who’s still behind the scenes
Love or hate @netanyahu he’s making things move on the international playing ground.
My friend Ari Fuld (w/ me in photo) an American/Israeli patriot was murdered in cold blood today by young Palestinian terrorist who stabbed Ari IN THE BACK. Despite being stabbed, Ari chased and shot the coward, who lived. Ari died. I was with Ari in July in Efrat. #heartbroken
A tale of two people.
Rabin Square and the Kotel.
Both pictures taken at the same time last night.
Our challenge - and the only way for the goals of both groups to be met: Finding a platform for conversation and compromise to enable us to move forward as ONE PEOPLE.