First Republic Bank (FRCB)

[tigerpac]

Some people were posting great articles over the weekend explaining how the common stock holders will get wiped out here.

The mistake they made was borrowing short term money to buy long term treasuries. Every increase in interest rates decreases the mark to market values and the bank essentially has a negative net worth. The executives are either really dumb as this is Banking 101 or they made a huge bet in the wrong direction thinking that rates would never go above 2% again.

I think the speculators don’t understand this and that is why you are seeing attempts at catching a falling knife.

The ONLY way out of this is for the FED to stop increasing interest rates and actually start decreasing them again. But that is an obvious manipulation of the markets.