Today's Post - https://bahnsen.co/3TAGcni

All that matters today is what the Fed did and said. And what they did was raise rates a quarter point. And what they said was that “financial conditions have tightened” (well, there you go). And he said that these tighter financial conditions and tougher lending criteria from banks will “factor into their policy decisions” (phew).

As for a First Republic deal – the bank whose depositors basically now have a backstop from the FDIC but has now seen enough deposit withdrawals to warrant a deal with a bigger back to shore up its capital strength – the issue appears now to be what government backstop or assistance will be a part of any deal (something I predicted last week … any buyer in a position of strength knows the issue is systemic risk, and therefore has the leverage to ask for some sweeteners to come with the deal). Some of the items being discussed (per reports) are liability protection and/or relief on capital requirements and/or other regulatory relaxations. Keep your popcorn handy.

Links mentioned in this episode: