Reply to SVB Bank Run: Fed Calling Emergency Meeting

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]First Republic stock is down 75% in a day and has been halted.

Western Alliance's  down 84%, while PacWest Bancorp and Zions Bank Corporation has declined more than 40%. Regional banks are getting hammered over concerns of a contagion.

This ain't over.[/quote]

It’s not contagion. It’s the very rationale realization that these equities were grossly overvalued last week in light of these banks’ large unrealized losses. They won’t go bust, but they will only eek out meager profits as they wait for their UST and MBS portfolios to run off. [/quote]

Lol.  Losing 85% in total market cap overnight  is way more than just a correction due to being overvalued. It is literally speculation that First Republic and Western Alliance are now in trouble too. If they go kaput, it means contagion because that will be 4 banks going under.[/quote]

Shorts are doubling and tripling down to try to spook depositors. These banks have much stickier retail deposits than SVB. The average uninsured SVB account held $4.3M….that’s insane. Anyways, the Fed’s liquidity backstop makes the deposit run pretty moot at this point (at least for the next year).

You can drive the equity price of First Republic down to $1 and it will still be able to operate as a boring bank and remain well capitalized. Bank capital is based on the “paid in” amount, not the market value.

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