3 ms·

I find it funny that people take money out of First Republic and deposit into the big banks. The big banks then proceeds to return the money to First Republic.

I find it funny that people take money out of First Republic and deposit into the big banks. The big banks then proceeds to return the money to First Republic. They call it a bank run but ultimately there's really no place to run.

nickff 4y ago
People are taking money out of banks which may be permitted to fail, and putting it into banks that are "too big to fail".
- TheBlight 4y ago
  Right and they're in turn depositing it back into the small banks. See: https://www.wsj.com/articles/jpmorgan-morgan-stanley-and-others-in-talks-to-bolster-first-republic-4f9eeb76 https://www.wsj.com/articles/jpmorgan-morgan-stanley-and-oth...
  - codyb 4y ago
    Yea, they're depositing capital so that the small banks can meet depositor demand. It's a liquidity infusion. A lot of times the big banks don't want more small depositors anyways.
  - twblalock 4y ago
    Yes but as an individual depositor, if you moved money this would not impact your decision. You got the safety you wanted.
- MuffinFlavored 4y ago
  SVB is (was?) 16 and First Republic is 14th "largest commercial banks" based on this report (not sure what it is measuring? assets at the Fed?) as per this December 2022 (probably outdated) report: https://www.federalreserve.gov/releases/lbr/current/ https://www.federalreserve.gov/releases/lbr/current/
  - nonethewiser 4y ago
    And JPMorgan Chase?
  - wskinner 4y ago
    The term “too big to fail” is actually well defined. It refers to a Systemically Important Bank, either globally or domestically. See https://en.wikipedia.org/wiki/List_of_systemically_important_banks https://en.wikipedia.org/wiki/List_of_systemically_important...
jt2190 4y ago
Cash deposits in banks are supposed to be “low risk, low reward”, but at First Republic they’ve suddenly become “more risk, low reward”. Individuals will decide for themselves if this causes their portfolio to be unbalanced (and apparently for many of them the answer is “yes my funds in First Republic are too risky, I must rebalance.”) Large banks have different portfolios and may have funds available to assign to these (now riskier) investments.

nickff 4y ago

People are taking money out of banks which may be permitted to fail, and putting it into banks that are "too big to fail".

TheBlight 4y ago
Right and they're in turn depositing it back into the small banks. See: https://www.wsj.com/articles/jpmorgan-morgan-stanley-and-others-in-talks-to-bolster-first-republic-4f9eeb76 https://www.wsj.com/articles/jpmorgan-morgan-stanley-and-oth...
- codyb 4y ago
  Yea, they're depositing capital so that the small banks can meet depositor demand. It's a liquidity infusion. A lot of times the big banks don't want more small depositors anyways.
- twblalock 4y ago
  Yes but as an individual depositor, if you moved money this would not impact your decision. You got the safety you wanted.
MuffinFlavored 4y ago
SVB is (was?) 16 and First Republic is 14th "largest commercial banks" based on this report (not sure what it is measuring? assets at the Fed?) as per this December 2022 (probably outdated) report: https://www.federalreserve.gov/releases/lbr/current/ https://www.federalreserve.gov/releases/lbr/current/
- nonethewiser 4y ago
  And JPMorgan Chase?
- wskinner 4y ago
  The term “too big to fail” is actually well defined. It refers to a Systemically Important Bank, either globally or domestically. See https://en.wikipedia.org/wiki/List_of_systemically_important_banks https://en.wikipedia.org/wiki/List_of_systemically_important...

jt2190 4y ago

Cash deposits in banks are supposed to be “low risk, low reward”, but at First Republic they’ve suddenly become “more risk, low reward”. Individuals will decide for themselves if this causes their portfolio to be unbalanced (and apparently for many of them the answer is “yes my funds in First Republic are too risky, I must rebalance.”) Large banks have different portfolios and may have funds available to assign to these (now riskier) investments.