The Banking Collapse of 2023 Is Now Officially Bigger Than the Banking Collapse of 2008 Was

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The Banking Collapse of 2023 Is Now Officially Bigger Than the Banking Collapse of 2008 Was
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Collectively, the three big banks that have collapsed in 2023 had more assets than all 25 banks that collapsed in 2008 did.  Unfortunately, the banking collapse of 2023 is far from over.  We still have eight more months to go before this year is done, and many more banks are currently teetering on the brink of disaster.

JPMorgan is getting about $92 billion in deposits in the deal, which includes the $30 billion that it and other large banks put into First Republic last month. The bank is taking on $173 billion in loans and $30 billion in securities as well.

The Federal Deposit Insurance Corporation agreed to absorb most of the losses on mortgages and commercial loans that JPMorgan is getting, and also provided it with a $50 billion credit line.

The bank is booking a one-time gain of about $2.6 billion and expects to spend about $2 billion on integration costs over the next 18 months.

Furthermore, the acquisition will add over $500 million of profit annually to JPMorgan, excluding the one-time costs. As part of the transaction, JPMorgan said it was making a payment of $10.6 billion to the FDIC.

The FDIC estimates that the cost to the Deposit Insurance Fund will be about $13 billion. This is an estimate and the final cost will be determined when the FDIC terminates the receivership.

Stockholders got bailed in and wiped out. They’d already been mostly wiped out by Friday evening in one of the most spectacular stock plunges ever.

Holders of the unsecured subordinated bank notes got bailed in and wiped out just about entirely. This is a form of preferred stock. There were two issues, totaling $800 million. For example, the 4.625% bank notes, issued in 2017, traded at less than 2 cents on the dollar this morning, another spectacular plunge.

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