Re:Big Banks Agree to Historic $30B Deposit Injection in Fir...
by AnimalMuppet on Friday March 17, 2023 @09:44AM
(#35196964)
> "We, JPMorgan, are willing to bet $5bn that First Direct does not fail, with no upside to us if they do not" is a rather powerful statement.
It is. But perhaps less so than it appears.
First, there may be downside to JPMorgan if First Republic fails, and especially if dominoes continue to fall after that. So JPMorgan has the upside of avoiding the downside, at least.
Second, JPMorgan is officially recognized as a systemically-important bank. They will not be allowed to fail. So their risk from this move is the risk of some loss, but not the risk of collapse/destruction.
Still a bold move, and one that, as you said, talks quite loudly.
It is. But perhaps less so than it appears.
First, there may be downside to JPMorgan if First Republic fails, and especially if dominoes continue to fall after that. So JPMorgan has the upside of avoiding the downside, at least.
Second, JPMorgan is officially recognized as a systemically-important bank. They will not be allowed to fail. So their risk from this move is the risk of some loss, but not the risk of collapse/destruction.
Still a bold move, and one that, as you said, talks quite loudly.