Filed under “shutting the barn door after the horse has bolted”. First it was Silicon Valley Bank now it’s San Francisco-based First Republic Bank taking a hit.
Like Silicon Valley Bank, First Republic is another bank catering to “free-money” startups specializing in GREEN ENERGY “stuff”.
Investing bank deposits in long dated bonds in a rising rate environment is a plan destined to fail.
The Fed increasing rates 500 basis points in a year was and is folly.
First Republic’s shares are now down 86% from their peak in November of 2021. And yet, it remained rated a still-respectable A- by S&P Global Ratings up until this week.
This comes after the collapse of SVB Financial, which was rated “investment grade” by both S&P and Moody’s until the day it collapsed.
What are rating agencies rating worth? Asking for a friend…
(Chart from wolfstreet.com)