Dining in the Dark

Good morning and I hope your day is going well so far. I’m at a conference as I write so this week’s post will be brief. This is the first in-person conference I’ve been to in a few years for obvious reasons and it’s good to be back at it again.

This time it’s the Financial Planning Association Retreat and I hope to bring you some notes from my time here in the weeks ahead.

One tidbit was the opening session last night, Dining in the Dark. Attendees were led to dinner in groups of ten standing in a tight line, with one hand on the shoulder in front of you, because we were blindfolded! I had no idea we’d be doing something like this. I thought the name implied dining by candlelight, or some other “dark” culinary experience, whatever that might be. Instead, it was three courses over what had to have been at least 45 minutes in utter darkness. Apparently about 20% of the room had to remove their blindfolds for various reasons, while your humble financial planner was able to stick it out. I think I cleaned my plates, but I know I didn’t spill anything into my lap, so that’s good.

All this was a prelude to the opening keynote talk about perseverance, optimism, gratitude, and kindness, presented by a blind person. I’ve been to a bunch of these talks over the years and the speaker’s bios are meant to impress, but this speaker was one of the most impressive people I’ve heard by far. Corporate executives ascending high peaks a world away takes planning and fortitude and is certainly an impressive feat. But losing your site as a young adult and then intentionally planning and executing a fruitful life in the decades since has the weekend warrior climbers beat, hands down. Frankly, most of us have no idea what true adversity is and we’re lucky for it. It’s good to be reminded of that from time to time, and to add some more blocks to our gratitude foundation. It’s also good to be reminded of all that is possible if/when we get out of our own way.

Otherwise, I wanted to share a few notes on recent events in the banking sector. As you’re likely aware, this past weekend saw another shotgun banking marriage, except this time it was brokered by the FDIC between JPMorgan and First Republic Bank. JPMorgan, the largest bank in the country (by deposits) was allowed to get bigger by acquiring the deposits and most of the assets of First Republic, the SF-based institution that catered primarily to well off and entrepreneurial clients. I say allowed because JPMorgan’s too-big-too-fail size had technically precluded it from buying another bank, but the bank received special permission to do this deal. Frankly, the mega bank seems to be making out like a bandit here, but that’s just my opinion.

So what does this mean for First Republic depositors? This is a fast-moving situation, but JPMorgan says that all First Republic branches are open for business, the website still works, and current terms of deposits and loans should remain that way for at least a while. JPMorgan executives were understandably nonspecific about many details when speaking to the press yesterday, but this seems like pretty decent news overall for First Republic customers. (I think common stockholders get nothing, by the way.) The alternative was a full takeover and liquidation by the FDIC, which creates a lot of headaches for regular people trying to access their cash.

I mention all this because of what a non-event this seemed to be for the markets and the banking sector as a whole. (That was yesterday - markets are down a bit as I write this morning.) There are other banks with problems like First Republic but, at least at this point, none of them seem poised to tank the financial system or otherwise cause a ton of market volatility as they work through it. This is a good sign for the rest of us in that the banking sector has been able to absorb these issues without creating contagion like during the Great Financial Crisis. Let’s all be grateful for that!

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