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Is Jamie Dimon using First Republic Bank investment as a ploy for government guarantee on FDIC bank deposits?
Credit Suisse Wipes Out $17 billion Of Value from Bondholders.
Here is what we will be getting into today:
Jamie Dimon’s Involvement With First Republic Bank.
Credit Suisse's CoCo bondholders left empty-handed in UBS takeover.
Restoring Economic and Moral Leadership: The Path to a Brighter Future.
Let's Dive In!
Website: Wall Street On Parade
Title: At Year End, JPMorgan Chase Held Over $1 Trillion in Uninsured Deposits Versus $119 Billion at First Republic
Here are the key highlights:
Jamie Dimon, CEO of JPMorgan Chase, has been promoting himself as a financial wizard who can save regional bank, First Republic Bank, instead of focusing on addressing the issues at JPMorgan Chase, the largest and riskiest bank in the US according to regulators. Dimon has lined up eleven banks, including JPMorgan Chase, to place $30 billion in uninsured deposits into First Republic Bank, $5 billion per bank.
The decision to invest $5 billion of shareholders' money into a regional bank experiencing a decline was not well received by the stock market. On the day following the deal's announcement, First Republic Bank's shares fell by 32%. S&P Global has lowered First Republic's credit rating for the second time in a week to an even deeper junk status. Year-to-date, the bank has lost 90 percent of its market value. Is there even anything left to save at this point?
Jamie Dimon's interest in First Republic Bank may be a tactic to push for a government guarantee on all deposits at FDIC banks. This may be more palatable if it is framed as a rescue of regional banks instead of a bailout for Wall Street mega banks. A large percentage of First Republic Bank and JPMorgan Chase's deposits were uninsured at year end. There is also a conflict of interest when Treasury Secretary Janet Yellen speaks on this matter due to her collecting speaking fees from Wall Street banks.
Website: Wolf Street
Title: Total Wipeout of $17 billion in Credit Suisse AT1 CoCo Bonds Shocked Because No One Reads Clauses Anymore?
Here are the key highlights:
Credit Suisse has been plagued by scandals for years, resulting in significant financial losses and record-low share prices. Despite repeated attempts to raise capital, new investors were left empty-handed as their investments disappeared due to a culture of risk-taking and shady deals that remained unchanged under various CEOs. Despite rhetoric to the contrary, these CEOs may have been more focused on boosting the share price than addressing the underlying issues. Although regulators and the SNB did not allow Credit Suisse to collapse, taking action earlier may have prevented losses to Swiss investors and the public.
UBS's takeover of Credit Suisse has caused controversy over the subordination of bondholders to shareholders in the writing off of CHF 16 billion ($17.3 billion) of CoCo bonds.
Contingent convertible capital instruments (CoCos) were created in Europe in response to the financial crisis as a way to boost bank capital without diluting existing shareholders. They provide a capital buffer and are considered equity capital for regulatory purposes but are bailed in when the bank gets into trouble by converting them into nearly worthless shares, or by writing them down to zero.
Shareholders of Credit Suisse received a small amount in exchange for their shares, with CoCo bondholders expecting to receive some return after shareholders. However, they received nothing, causing outrage among regulators in the EU. Credit Suisse issued $2.5 billion in CoCos that are similarly structured, but are counted as Tier 2 capital, rather than Tier 1 capital. It remains to be seen if these AT2 bonds will also be written down.
Title: Repost: The Darkness.
Here are the key highlights:
The world is in danger of plunging back into the horrors of the early 20th century, with rising authoritarianism and illiberalism threatening democracy and pluralism. The US, once a leader in promoting liberalism and democracy, is sliding towards authoritarianism, as shown by the rejection of electoral democracy by the dominant faction of the Republican Party.
If the GOP does not change its tune and agree that the rules by which Americans choose their leaders are legitimate, the next decade could be one of rolling constitutional crises or worse. We must remember our responsibility to help fix what we broke and build a world where countries don't invade other countries. It's time to rise up and fight against the darkness creeping over our world.
The world is experiencing a dark period as the United States' power declines, creating a power vacuum that breeds fear and uncertainty. The decline of America's economic and moral leadership, coupled with the rise of China, has left countries without a clear hegemonic power to turn to for protection and guidance.
Fear of war, genocide, and economic devastation has led many to turn to strongman politicians, ruthless military, or ethno-nationalist movements. As the world faces similar challenges as those faced in the 1930s, we must recognize that fear is the root cause of this darkness.
We cannot allow fear to dictate our actions, but must instead find strength in unity and cooperation. Only then can we emerge from this dark period and create a brighter future for ourselves and for generations to come. While valiant, protests alone will not be enough. The United States and India must step up and restore both economic and moral leadership.
This means dominating cutting-edge knowledge industries, dishing out money for scientific research, and continuing to attract top technical talent. It also means improving infrastructure, tackling the problem of rising costs in the health and construction sectors, and reducing inequality and poverty.
Moreover, the US must offer moral leadership by leading efforts to address climate change and racial inequities, as well as by addressing its own democracy deficit. The US needs to rediscover the idea of democracy as an ideology, emphasizing inclusion and participation in all social institutions to increase society's respect for the individual. FDR conceived of democracy in a similar manner, and it was the only ideology that defeated totalitarianism instead of morphing into it. The US has done this before, and it's time to do it again.
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