Hey guys, it's Sasha. A few minutes ago, the FDIC officially shut down First Republic Bank making it the second biggest retail bank collapse in history. And of course, immediately after being shut down, First Republic Bank is being immediately handed over to JP Morgan Chase and a massive discount with JP Morgan Taking none of the risk and getting paid 13 billion dollars on Top This Means JPMorgan Chase will now hold over 10 percent of the total deposits in the United States, which is technically illegal. More on that later.

The biggest ever Bank collapse was Washington Mutual in the financial crisis in 2008 and the third and fourth biggest collapses happened just a few weeks ago oh, Silicon Valley Bank and Signature Banks collapsing one right after another. So we're very much seeing a banking crisis that is on par with the biggest out there in history and we now have three banks that have collapsed in the space of just a few weeks. All through last week, First Republic Bank was apparently trying to do whatever they could to survive, but the share price was indicating that the bank is in Dire Straits and there's no way out trading at 147 dollars just three months ago shares a First Republic Bank collapse to 3.51 as the markets closed on Friday and they're now down below two dollars heading towards zero. As I'm recording this video on Friday, the FDIC told big banks that there would be an auction for First Republic Bank and bids had to be submitted by the end of Sunday.

Eerily reminiscent of what happened with Silicon Valley just a few weeks ago. On Sunday night, we heard news that a few of the banks were thinking of carving up First Republic Bank. There was a lot of discussions taking place who wanted which bit, but that sounds like our load of hard work and we all know that no regulator wants to do hard work. And literally three hours into Monday in Washington DC According to Washington DC's time, which is where the FDIC is based, we get news that JP Morgan is going to acquire the whole thing.

It sounds like the Regulator really went to town and seriously taking the time to review all the bids and weigh up all the pros and cons because the decision was made so fast, it would be physically impossible for a single member of the FDIC to actually read the submitted bid documents, let alone make a decision on the back of it. But I am sure there is absolutely no corruption. no backdoor deals involved whatsoever. No, that would be bad, right? Because there is a law in the United States the days back to the 1993-1994 financial crisis commonly known as the Rego Neo in State Banking and Branching Efficiency Act, you can look it up just like I did just now this morning and under Section 101 Part A2B it says Nationwide concentration limits The board may not approve an application pursuant to paragraph 1A if the applicant, including all insured depository institutions which are Affiliates of the applicant, controls, or upon consummation of the acquisition for which such application is filed, would control more than 10 of the total amount of deposits of insured depository institutions in the United States.

And this bid references paragraph 1A and paragraph 1A talks about acquisition of tanks which is exactly what's happening right here. So the law says that no Bank can take over another bank in the United States if after the Takeover, they would control over 10 percent of all insured deposits in the United States is to stop monopolies and to stop abuse. JP Morgan has 2.3 trillion dollars in depositors at the end of Q1 this year, and the latest data from FDIC suggests that this means JP Morgan is already at the 10 Mark roughly. Which means that according to this law from 1994, they should not be allowed to acquire First Republic Bank at all.

And apparently other Banks including Bank of America were interested as well. But the FDIC made this decision an approximately 10 seconds because that is exactly how long it takes to do proper due diligence in the second biggest bank collapse in history. And this morning on Monday May 1st, all branches of First Republic Bank will reopen as JP Morgan. Now there is a funny Clause further down in that same law which is I am guessing what allows this acquisition to technically happen because Paragraph Two subparent graph D does say that sometimes an exception can be made and it gives two reasons why the regulator might let a bank go over the 10 Mark.

The first seems to be a technical reason that I don't think applies, but the second says the deal can be approved if the acquisition is approved by the appropriate State Bank supervisors of such State and the standard on which such approvals base does not have the effect of discriminating against out-of-state blanks, blah blah blah. So basically, the rule says no bank is allowed to go over the 10 of total deposits to prevent a monopoly. Good, but the regulator or whoever can just arbitrarily decide that this law does not apply in this specific case and allow a takeover anyway, which in no way whatsoever massively encourages a disgusting degree of corruption and bad intent. So in this case, the regulator thought long and hard for about three hours in the middle of the night on Sunday and decided that this is exactly the sort of scenario where JP Morgan should be allowed to break the law and acquire First Republic Bank without any due diligence being done whatsoever.

The interesting question is how good is this deal for JP Morgan Because here is a statement from the FDIC about this acquisition and it says blah blah blah JP Morgan will acquire First Republic Bank in all its assets and all 84 branches in eight states will reopen as branches of JP Morgan Chase This morning, all depositors of First Republic Bank will become depositors of JPMorgan Chase Bank. There is a total of 229 billion dollars in assets and 103.9 billion dollars in deposits. But look down here: the FDIC and JPMorgan Chase Bank National Association are also entering into a lost share transaction on single-family residential and Commercial loans have purchased of the former First Republic Bank the FDIC as a receiver and JP Morgan Chase Bank National Association will share in the losses and potential recoveries on the loans covered by the loss share agreement. So the FDIC will share in the losses that JP Morgan might incur after buying First Republic Bank which is pretty nifty for JP Morgan because they're clearly buying the assets for cents on the dollar already because the bank is distressed, the share price is basically a zero, and the regulator is using a legal loophole to allow JP Morgan to buy the bank even though it is technically illegal.

But that is not enough for greedy bankster. So of course, the FDIC will also foot the bill for any losses from this acquisition going forward so that JP Morgan carries no risk whatsoever. Only upside: What? The actual? The resolution of First Republic Bank involved a high, highly competitive bidding process and resulted in a transaction consistent with the least cost requirements of the Federal Deposit Insurance act. This is complete.

I'm sorry the highly competitive bidding process could not possibly have been properly concluded with any level of reasonable due diligence. In a time frame measured in minutes, it would be physically impossible to hold any sort of assessment of the bid, to actually read the bids with any sort of analysis, or actual due diligence of any kind in the space of just a few hours on a Sunday night. But wait for it. Here is the kicker: The FDIC estimates that the cost of the deposit Insurance Fund will be about 13 billion dollars.

This is an estimate and the final cost will be determined when the FDIC terminates the receivership. So the FDIC is going to literally pay up 13 billion dollars to cover the losses and the deposits in the bank. This will be standard procedure if the bank was, you know, going under. that's what the FDIC is there for and not being rescued.

But here it is being rescued. It is literally being acquired. It is being handed on a silver platter to JP Morgan And on top of that, the FDIC is going to pay 13 billion dollars indirectly. But pretty much the JP Morgan.

The bank is acquiring 103.9 billion dollars in deposits and is getting a 13 bonus on top from the taxpayer. And yes, yes, Fdsc money is the taxpayer. Before the inevitable comments pointing in the technically, it's not the taxpayer because you know FDIC is an insurance policy that protects you as deposits and is funded by regular contributions from the banks. I Do know, and where do you think do the banks get the money that they then hand over to pay for these insurance payments from the Magic Money Tree No, the money comes from the fees and charges that the banks charge their customers.

So yes, regular everyday people paying their monthly fee for their bank accounts are literally paying JP Morgan 13 billion dollars as a bonus to congratulate them for buying First Republic Bank I Guess there was no possible way that FDIC could have spent maybe just a little bit more than a few minutes thinking about this and seeing if perhaps they didn't actually need to hand over a fuckload of money on a silver platter to the biggest bank in the country while selling them a distressed asset at a discount already. Now you might remember that on March 16th, a load of the biggest banks in the US deposited 30 billion dollars into First Republic Bank apparently to try and prop it up. So out of the 229 billion dollars of assets and 103 billion dollars in deposits, 30 billion is literally sitting there as deposits from the big Banks including 5 billion from JP Morgan themselves because they put in their own money. And so did Bank of America Citigroup and Wells Fargo Goldman Sachs and Morgan Stanley put in another two and a half billion dollars and a bunch of others put in one billion each.

So what? The actual happened in six weeks? Apparently First Republic Bank lost a hundred billion dollars since the start of the banking crisis because depositors saw Silicon Valley Bank collapse and Signature Bank collapse and decided to withdraw their money. It doesn't help, but First Republic Bank is another clown. Bank the tailors to a very narrow High net worth clientele. which basically means the bank run is way more likely because there is absolutely no balance to the asset portfolio.

There's a very small, concentrated number of clients, and Flight Risk of capital is excessively high. People who keep millions or billions of dollars in a bank are more likely to move the money than a regular person with 200 bucks sitting in their checking account. But I guess the regulator up once again. and once again, there will be no accountability.

There's nobody to blame. Nobody will have to answer any questions as to how this was allowed to happen. How banks are allowed to have massively risky commercial strategies that can blow up very fast because of massive imbalances in their portfolios? How is it that these banks are regulated and the regulator should know of this risk and understand it? And yet there's exactly nothing until the game is up again. The bank could have been placed in receivership and the FDIC could have taken actual time to do their due diligence, but that would invite scrutiny.

It would invite people to actually look at what's happening. It would mean the process has to be somewhat public, but here a dirty deal can be done behind closed doors late on a Sunday night and nobody has to know how the decision was made. But of course we already knew that this is exactly how it was going to go down because remember: Washington Mutual The biggest bank to ever collapse in 2008. Well, you're gonna love this Just before the collapse in 2008 JP Morgan Chase was apparently looking to acquire Washington Mutual I know what a coincidence.

So JP Morgan was looking to acquire Washington Mutual as part of their project West but Along Comes the financial crisis and it would be incredibly stupid not to take ridiculous advantage of a financial crisis, right? So we get an orchestrated Bank Run on Washington Mutual Then they have the IC steps in and shuts the bank down and you know what happened then I bet you do. Well, the FDIC immediately handed everything over to JP Morgan Chase of all the people. Well, everything except unsecured debt and Equity claims because you know if those things actually have risk. Hmm.

funny how exactly the same thing happened today after this happened. Washington Mutual actually filed a lawsuit against FDIC for alleged unjustified seizure and unfair low sale price to JPMorgan Chase because of course JP Morgan Chase Back then bought the bank at a massive of discount while taking on none of the risk in very murky circumstances. But JPMorgan Chase promptly filed a counter claim and this case was basically buried. never to see the actual light of day and in the 15 years since nobody has said anything.

So the FDIC and JP Morgan thought about it and said why don't we do this again And here we are.