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IPFS News Link • Central Banks/Banking

Republic First Bank of Pennsylvania Collapsed - Hundreds More Regional Banks Predicted to Follow

• Need To Know

Republic First Bank in Pennsylvania is a small regional bank that fell. The FDIC guarantees deposits up to $250,000, accounts with more than that amount are not guaranteed/ insured. The FDIC has only $121.8 billion to cover $10 trillion in insured deposits in US banks. There is an additional $7.5 trillion in uninsured deposits, for a total of $17.5 trillion in US deposits. 

The first video explains that the FDIC appears to be covering wealthy uninsured depositors who have more than $250,000 in their accounts at Republic First as the FDIC will cover $667 million in liabilities at this bank. Therefore, the actions of the FDIC essentially declared this bank "too big to fail". No one is stopping it. This is a systemic risk to the banking system that is a house of cards. Uninsured depositors can cause 'contagion' and bank runs at other banks. The situation can cascade into a systemic problem. 

High interest rates and low bond yields are damaging regional banks.

The second video explains how regional banks are set up to fail and fuel the big banks that will become massive institutions. Regional banks issued 80% of loans on commercial real estate and in many cases, more is owed than the property is worth. The properties will be sold at a loss, which will harm regional banks that won't be able to recoup the money. Regional banks fund loans to small businesses that will fail without loans. Between 2025 and 2026, 42% of the commercial real estate sector's debt of almost $2 trillion will come due. John Williams predicted that regional banks will begin to fall and people will pull their money out in a bank run causing more regional bank failures.