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First Republic Bank down 44%
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<blockquote data-quote="epags" data-source="post: 2807611" data-attributes="member: 105138"><p>A somewhat simplified explanation is that First Republic's (a small bank) depositors started to withdrew their money they had on deposit and the bank did not have enough cash to give them. The bank then needed to borrow money at a high interest rate, killing their profits. Stockholders get worried and start selling their shares in the company which in turn creates the headline which cause depositors to withdraw even more of their deposits. </p><p>Itn this case, he world is not coming to an end but that (small) bank may be coming to an end. In theory, bigger banks tend to be more conservative and have enough cash to cover similar withdrawls. </p><p>Canadian banks, for example, are forced to have larger reserves (dictated by their government) and depositors feel more secure and don't cause a 'run on the bank'.</p><p>The moral of this story is don't put your money where you are 'guaranteed' a high rate of return.....if it is too good to be true...well you know the rest.</p></blockquote><p></p>
[QUOTE="epags, post: 2807611, member: 105138"] A somewhat simplified explanation is that First Republic's (a small bank) depositors started to withdrew their money they had on deposit and the bank did not have enough cash to give them. The bank then needed to borrow money at a high interest rate, killing their profits. Stockholders get worried and start selling their shares in the company which in turn creates the headline which cause depositors to withdraw even more of their deposits. Itn this case, he world is not coming to an end but that (small) bank may be coming to an end. In theory, bigger banks tend to be more conservative and have enough cash to cover similar withdrawls. Canadian banks, for example, are forced to have larger reserves (dictated by their government) and depositors feel more secure and don't cause a 'run on the bank'. The moral of this story is don't put your money where you are 'guaranteed' a high rate of return.....if it is too good to be true...well you know the rest. [/QUOTE]
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First Republic Bank down 44%
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