Republic First Goes Bust
On Friday April 26, 2024 Republic First Bank went bust. It is based out of Philadelphia, Pennsylvania. The bank bailouts that started in March of last year and went into November appear to have awoken from hibernation. Is it a bear market for banks?[1][2]
The Federal Deposit Insurance Corporation helped Fulton Bank buy Republic First and bail out the deposit holder. According to the FDIC,[3]
“On Friday, April 26, 2024, Republic First Bank dba Republic Bank (“Republic Bank”) was closed by the Pennsylvania Department of Banking and Securities. The Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed. Fulton Bank, National Association (N.A.), Lancaster, PA, assumed substantially all deposit accounts and substantially all the assets. All shares of stock were owned by the holding company, which was not involved in this transaction.”
The FDIC’s QA reads,[4]
“IS MY MONEY SAFE?
Yes! No one lost any money on deposit as a result of the closure of this bank. All deposits, regardless of dollar amount, were transferred to Fulton Bank, N.A.”
Fulton Bank put out a press release the same day, saying,[5]
“During the transition, Republic Bank depositors will continue to have uninterrupted access to their accounts through online banking or by writing checks, using existing ATMs or debit cards. Republic Bank depositors will become Fulton depositors and do not need to change their banking relationship to retain their federally insured deposit insurance coverage.”
Considering how much the Bank of Japan (BOJ) wants to keep the Yen under ¥160 per $1, it would be a bad time for US banks to need to sell collateral, such as US government bonds, to meet withdrawals.[6]
As the Yen goes higher and risks going above ¥160, imports to Japan get more expensive, since world trade is quoted in dollars. E.g. Imports that cost $1 went from ¥150 to ¥160 in Japan over the past month. That means that the BOJ could sell US government bonds to keep the Yen strong, by using the dollars received from the bond sale to buy Yen on the open market at a lower price, or to simply buy imports with the dollars.
That could be a problem for people who get a paycheque from Uncle Sam, because Uncle Sam is $34 trillion in debt and needs a loan in order to finance everything from Social Security to Medicaid. If 2 of the three biggest buyers of US government debt, Japan and China, are selling, then who is buying the debt? Will the biggest buyer keep buying?[7]
Luckily, the Federal Reserve is the lender of last resort. They’re also the biggest buyer of US debt. They’ll print plenty of money.[8]
Current events: Bank bailouts, money printing, and historic debt.
[2]https://www.hamiltonmobley.com/blog/bank-walks
[3]https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/republicbank.html
[4]https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/republicbank-faq.pdf
[6]https://www.zerohedge.com/markets/yen-yellen-yank-stocks-bonds-dollar-otherwise-quiet-day
