It appears that the people running our system have decided that it is time for a wave of consolidation in the banking industry. A key program that was keeping U.S. banks afloat was allowed to expire last month, and everyone knew what that would mean. On Friday, the FDIC quietly announced that Republic Bank had been seized and a sale to Fulton Bank had already been arranged. Have you noticed that they often try to announce bad news like this on Friday? By the time news of the failure of Republic Bank broke, many people had already started their weekends. And the FDIC probably assumes that most people will have forgotten all about this by the time Monday morning rolls around. But this was a big deal, and it is inevitable that more dominoes will soon start to fall.
At the time it was seized, Republic Bank had 32 branches in New Jersey, Pennsylvania and New York. The following comes directly from the FDIC announcement that was issued on Friday…
Philadelphia-based Republic First Bank (doing business as Republic Bank) was closed today by the Pennsylvania Department of Banking and Securities, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect depositors, the FDIC entered into an agreement with Fulton Bank, National Association of Lancaster, Pennsylvania to assume substantially all of the deposits and purchase substantially all of the assets of Republic Bank.
Republic Bank’s 32 branches in New Jersey, Pennsylvania and New York will reopen as branches of Fulton Bank on Saturday (for branches with normal Saturday hours) or on Monday during normal business hours. This evening and over the weekend, depositors of Republic Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on Republic Bank will continue to be processed and loan customers should continue to make their payments as usual.
I think that a pattern is emerging that we will likely continue to see for future bank failures.
Before this seizure was even announced, an agreement had already been made for a larger bank to swallow up the assets of Republic Bank.
Of course taxpayers didn’t exactly get off scot-free in this deal. According to the FDIC, this agreement is going to cost the Deposit Insurance Fund 667 million dollars…
As of January 31, 2024, Republic Bank had approximately $6 billion in total assets and $4 billion in total deposits. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) related to the failure of Republic Bank will be $667 million. The FDIC determined that compared to other alternatives, Fulton Bank’s acquisition of Republic Bank is the least costly resolution for the DIF, an insurance fund created by Congress in 1933 and managed by the FDIC to protect the deposits at the nation’s banks.
If only a few banks fail this year, the Deposit Insurance Fund will be able to handle it.
But what is going to happen if dozens of banks start to fail?
It has been clear for a long time that Republic Bank was in trouble.
They were sitting on “$262 million of unrealized losses on bonds”, and Republic’s stock price had fallen all the way down to 1 cent…
The bank’s stock price has tumbled from just over $2 at the start of the year to about 1 cent on April 26, leaving it with a market capitalisation below $2 million. Its shares were delisted from the Nasdaq in August and now trade over the counter.
Moving forward, we will want to keep an eye on other banks that are currently on shaky ground.
For example, New York Community Bank would have completely collapsed already if a group of investors had not been convinced to pump a billion dollars into that troubled institution…
Recently, New York Community Bank saw wild swings in its stock price as customers began pulling their cash from the regional lender after it said it had identified “material weakness” in the company’s controls. The bank got a $1 billion equity investment lifeline from investors, including former Treasury Secretary Steven Mnuchin’s firm, Liberty Strategic Capital, in March.
Of course it isn’t just New York Community Bank that is treading on thin ice.
Kevin O’Leary of Shark Tank fame is convinced that thousands of U.S. banks will fail during the years ahead…
In the next three to five years, thousands more regional institutions will fail. That’s why I don’t have a dime saved or invested in a single one.
One of the primary reasons why so many banks are on the brink of disaster is because we are facing a commercial real estate collapse of historic proportions.
In St. Louis, the tallest office building recently sold for 98 percent less than what it sold for in 2006…
Take, St Louis’s largest office building – its 44-story AT&T tower – for example. In 2006 this prime real estate sold for $205 million.
But that same now vacant skyscraper recently sold for around $3.5 million – a shocking 98 percent drop in value in less than two decades, the outlet reported.
The Railway Exchange Building, once the crown jewel of downtown St. Louis with its Famous Barr department store and sprawling offices, is also now an empty relic with peeling paint.
All over the nation, commercial real estate property values have fallen dramatically, and our small and mid-size banks are sitting on mountains of commercial real estate loans.
This story is not going to end well, and anyone that suggests otherwise is simply being delusional.
Meanwhile, more signs continue to emerge that the overall economy is rapidly heading in the wrong direction.
For example, Walmart just announced that it is closing two more stores…
Walmart is shutting another two stores next month – bringing the total closures announced this year to eight.
Bosses said the two stores – in California and Wisconsin – were not making enough money.
Walmart, which has already shut six in 2024, is among several major retailers to announce closures.
If bright economic times were ahead, Walmart wouldn’t be shutting stores down.
Just like everyone else, they can see what is coming.
Of course Joe Biden and his minions insist that everything is just great.
They are telling us that the economy is booming and that the unemployment rate is low.
But that is not the truth.
The Ludwig Institute For Shared Economic Prosperity analyzes the data provided by the federal government in order to calculate a “true rate of unemployment”…
Using data compiled by the federal government’s Bureau of Labor Statistics, the True Rate of Unemployment tracks the percentage of the U.S. labor force that does not have a full-time job (35+ hours a week) but wants one, has no job, or does not earn a living wage, conservatively pegged at $25,000 annually before taxes.
According to them, instead of an unemployment rate of “3.8 percent”, the true rate of unemployment is actually 24.2 percent.
Right now, there are countless people that continue to remain unemployed even though they are desperate to find a job.
Sadly, the employment market is only going to get tighter in the months ahead.
I am entirely convinced that global events will become extremely chaotic during the second half of this year, and that is going to have a devastating impact on our economy.
So whatever you need to do, I would encourage you to do it with haste.
Because the pace of events is not going to slow down for anyone, and it is much later than most people think that it is.
Michael’s new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.
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Howdy Y'all,
The long standing pattern of when a Country FALLS typically begins with a series of 'fluctuation failures' such as witnessed a year ago culminating in the failure of PacNor as the ripples of SVB's demise spead out in the financial 'pool'.
Banks typically have debt obligations that link or bind them together at the hip, so to speak, and so when one of the larger ones such as SVB goes down then there is a concatenation of subsequent failures of other - seemingly separate banks - which follows naturally due to the 'interconnectedness' mentioned.
Now, the FDIC is essentially already Bankrupt in the sense that even 20 Billion dollars would scarcely bail out even one mid-sized institution, let alone something the size of PacNor.
The total involved in the debacle which began at SVB and ended with PacNor was in excess of 900 Billion dollars...yes, I said BILLION. Basically the Fed just 'printed' the money to cover that.
If you've wondered why your grocery bill seems so high lately, well NOW you KNOW!
The three legs of the American economy are Treasury Notes, OIL and Gold.
The first two have DIRECT impact on what you and I experience in our day to day lives, the last is significantly less obvious.
In reality, Gold is 'tied' to a WIDE range of things which affect the economy, hence the reason that COMEX and the LBMA have been at such pains to keep PM - generally - price suppressed for the last 30 or more years.
NOTHING terrifies the heads of major banks more than the thought that Gold might one day wake up and skyrocket to $5000/Ounce...or Silver do similarly and shoot up to $200/Ounce.
At the fundament, thier Terror lies in the reaction of the Derivarives Market to any such changes; a market so huge that it is not measured in Billions or even Trillions of Dollars...but instead in Quadrillions of Dollars. FWIW, 1 Quadrillion equals 1000 Trillion dollars.
Care to guess how much is in play currently in THAT market? First go and put on a pair of Depends Adult diapers...that will limit the MESS...
The notional value in the Derivatives Market currently is in excess of 3 QUADRILLION Dollars. For context here, the total GDP of the US is about 19 Trillion dollars/year, while the GDP of the entire planet is just slightly more than 90 Trillion dollars/year. As such then the total GDP of planet Earth - for more than 35 YEARS - would be required to 'pay out the BETS' made by Bankers in that venue - in order to redeem all that debt.
But, but...the market WILL clear itself as each counterparty involved pays out what they OWE, you'll hear frequently.
Ummm, NO!
Remember the debacle back in 2007-2008? I'm SURE you do...
All of that got started when the Chairman of Lehman Bros made a frantic Saturday evening call to the Treasury Secretary screaming, "OMG...our cash balance come the Monday open will put us into receivership; we can't MAKE the open!!"
V'iola! TARP...by Monday morning, no less.
TARP = "Troubled Asset Relocation Program" which is Fed-speak for "We'll buy your troubled segments, then later SELL THEM OFF." The ripples in the pond I alluded to took Bear-Stearns out promptly two weeks later...rinse, repeat, rinse, repeat ad infintum, ad nauseum.
However, THIS time it WILL be 'different', then the US had the entire WORLD enmeshed in the clutches of the SWIFT system...now, so many have left that system that it is highly unlikely that TARP, QE1, QE2 right through QEX will work, AGAIN.
In Financial circles it is already being spoken of of 'Bail-INS' and not 'Bail-OUTS'.
A 'Bail-In' is when the Bank subsumes every depositors Money and strictly regulates any withdrawals thereafter - and worse - think here what happened in Cyprus several years ago for what a 'Bail-In' actually looks like.
I'll give you a hint here; the people of Cypress have YET to get thier entire deposits back...still.
In the 2007-2008 time frame the 'Banksters' realized that the Derivatives Market was 'self clearing' if and ONLY if EVERY counterparty involved paid OFF every other obligation they had incurred in thier business practice. However, if even ONE significant entity FAILED it's payouts then the ENTIRE structure would summarily be vaporized.
Thereafter, they REALIZED that that 'quirk' wasn't a FLAW...instead it was a FEATURE; that construct, COULD at some future point be simply employed to anihilate all the Wealth of the WORLD, down a Rabbit Hole so DEEP that no one could ever track down where it ACTUALLY went.
Naturally though they would long prepare for that eventuallity by buying up Farmland, Farm Tractors, Semi-Trucks, etc, etc.
As things currently sit I really don't think that thier 'shopping list' have very many items left to buy, so...Hasta la Vista Baby!
BUY THINGS...REAL THINGS, things that have REAL utilitarian VALUE...since likely those 'things' are what is going to keep you alive when they DO 'Pull the Rug' out from under us all.
Cheers...JOG
While the illegal/non-American, non-citizens take over American’s homes.
Compliments of Barack Insane Obamination, satan’s co-hort, ruling the country as Joey Biden.