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That’s some value destruction there

Shares in First Republic plunged by as much as half on Friday, slashing its market value to around $600m (£477m). The bank was valued at $27bn at the beginning of February.

Actually, more than that, as the shares fell after hours too.

As I said elsewhere:

First Republic Bank’s, FRC, rescue plan is amusing – actually, laughable

3 thoughts on “That’s some value destruction there”

  1. Firstly, why are banks allowed to have two sets of books? The Marked to market assets and the non-marked to market? If the assets are there to balance the deposits (loans being assets, deposits being liabilities) why are they not all marked to market constantly? Surely in a falling asset situation, you need to know what the real picture is, not hide it with dodgy accounting practices?

    Secondly does the example of First Republic and the other US banks that have gone under recently) not prove that fractional reserve banking doesn’t work? The bank is bust because everyone wants their money, and its not there. Its a fiction that everyone can stick their money in a bank and that they can all get it out again. They can’t, if enough happen to want it at once. And this fiction is causing society massive disruption and losses. Its high time it was abolished for all but the most able to take the inevitable losses. And the masses should not be forced to pay for the losses of the wealthy.

  2. Allowed, why, because the Accounting rules specifically say that they can for certain classes of assets. It may be a fiddle, but it is one connived and specifically permitted by the regulators. It may have been done to make it easier to sell certain classes of government debt to banks, but it is there.

  3. I suppose because it’s a scam hallowed by time Jim.

    Bullshit does tend to become legal once it’s become traditional.

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