Financials
Effectively insolvent - Neeraj Monga does not believe that the so-called deposit lifeline changes the underlying economic reality of the bank. Interest expense will rise exponentially, while the liquidity problem is further compounded by an asset-liability mismatch of immense proportions. Moreover, 90% of the loan book of $148bn is dedicated to real estate, of which non-amortizing single-family loans are $51bn and multi-family loans are $11bn. Thus, 43% of FRC’s book of loans is to a sector under intense pressure with the Fed trying to control inflation. FRC is a living and currently breathing Murphy’s Law in action; anything that can go wrong will go wrong, and at the worst possible time.
Edition: 158
- 14 April, 2023