JPMorgan: ‘Crisis at First Republic is not an isolated incident’

The entire banking industry

In fact, according to Michele, the problems at First Republic are not limited to the bank itself, but can hurt the entire banking industry. “I think both First Republic and the banking industry have a problem. It would be naive to say it is limited to First Republic,” said the JPMorgan executive.

Inflation also plays an important role in the problems at First Republic Bank, according to Michele. According to Michele, the “high price of everything” weighs on people with lower salaries who had to withdraw all their assets from the banks to survive.

Most people’s deposits are still lower than they were before the COVID-19 pandemic, according to Michele. But if a solution is not found soon, many regional banks could run into problems, Michele thinks, because they rely heavily on the FDIC and FHLB.

Substantial loans

In the last quarter of 2022, both Signature Bank and Silvergate Bank received billions from 11 regional banks that make up the FHLB. In total, it would be 10 and 3.6 billion for Signature and Silvergate. However, despite that financial support, both banks did not make it.

Ryan Selkis, the CEO of blockchain research firm Messari, suggests in a tweet that the government should recognize that it’s all because of Federal Reserve policy and not crypto. If they don’t recognize that, according to Selkis, even more banks could get into trouble.

For the common people it is to be hoped that the misery at the banks will soon be over. The more banks get into trouble, the more the economy starts to shake. The Bitcoin price may benefit from this, but of course it is not worth it if people have to lose their savings and jobs.

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