Barron’s also had an article on B of A, which was not complementary, to be kind. Clearly depositors have become better informed over the past decade.
From Barron’s, “” First Republic Bank on Monday revealed the extent of deposit flight during the panic, and exactly how much support it needed to cover its books. Investors are far from impressed. The problem now isn’t having enough money to cover deposits—it’s paying the interest on those loans it needed to get through the storm.
Different problems, but fears of more bank runs are a potential risk on both sides of the Atlantic. Herd psychology is the worry. Once a bank’s customers see everyone else withdrawing their money, it’s perfectly rational for them to try to get their money out as well. Electronic banking and social media ensure it happens much faster than in the past. But the process itself is the same as ever.
Banks and regulators now have to make absolutely sure the initial loss of confidence that can trigger ever-increasing outflows is prevented. Easier said than done. While the March jitters may have passed, the concern is that there will be a fresh bout of nerves over the next few months.“”
It goes from bad to worse. First Republic handed out billions in ultra-low-rate mortgages to the wealthy. It backfired horribly.