First Republic Bank was forced into a take over by J.P. Morgan Chase, and was yet another Californian victim of bad banking risk management. My bias was that First Republic was not large enough to worry about, so I cannot offer any insights into the event. My main complaint is that this appears to be another bank that blew itself up with interest rate risk, which makes my life of writing a banking primer more difficult. I had always made allowances for bad bank risk management in the United States, but I had underestimated how large an incompetent bank can get.
Is there a point at which the other side of the hedges starts to squeal? After all the now low paying securities aren't going anywhere and there is over a decade of them in the system. Somebody has to be left holding the baby.
Is there a point at which the other side of the hedges starts to squeal? After all the now low paying securities aren't going anywhere and there is over a decade of them in the system. Somebody has to be left holding the baby.