This Banking Thing

A Quick Note on First Republic

I’ve been a customer for years and have all my personal accounts and loans with them. We also run our entire business at Metros Capital there. They house all of our operating accounts and have about 75% of our construction loans. When it comes to service, there’s literally no better bank in the world. It’s not even close. From the big things like getting commercial real estate construction loans to the small things like executing a basic wire transaction, FRB treats you like a real person instead of just a number behind a computer screen.

Will they survive? I think so. It’s a super positive and interesting data point that a bunch of the bigger banks rallied last week to essentially become customers of FRB themselves and deposit $30B with the bank. I think this speaks volumes about their reputation in the industry. At Metros Capital, we’ve been staying in close contact with our representatives at FRB and it has been business as usual. We are getting our wires processed, loan draws funded and even getting new loan quotes on some of our acquisition targets. All good signs.

For any of our friends at FRB who read this newsletter just know that we are pulling for you!

More on this “banking thing” 

Sharon Stone was in the news the other day for breaking down into tears on stage. She claimed to have lost half her fortune in the past week as a result of this “banking thing,” which is interesting because all the deposits have been guaranteed! This must mean she held a big chunk of stock in SVB and other banks or maybe some AT1 bonds of Credit Suisse:

Bitcoin is having a moment right now because of this “banking thing” as well. This is as it should be considering the whole project was a reaction to the potential problems of fractional reserve banking:

Finally, let’s rewind the clock a few weeks and remember what was going-on before the banking crisis. Basically, the Fed was trying to engineer a recession to stop inflation and despite what the headline numbers were suggesting, it was working:

Even still, the Fed was on a path to raise short-term rates to maybe 6% or 7%. Now, the game is up and it’s more likely that the rate hiking cycle is close to done if not done. Why? Banking crises are incredibly deflationary:

If inflation is about “too much money chasing too few goods and services,” when the engines of money creation (i.e. the banks) are in mortal peril, the money supply side of this equation tends to get crushed:

New Seeds of Contemplation

One of the things that I absolutely love to do is volunteer during library time at my son’s school. As a parent, not only do you get to hang out with your kid during school—which is cool in and of itself—you also get to participate in story time with the class and help students find and check-out books. There’s something so special about it all. The kids have this authenticity about them. They are not trying to be one thing or another. They are just in the moment and embracing their curiosity in an unbridled, unchecked kind of way. I find that just being around that kind of energy makes me feel more alive.

Anyway, I’ve been doing this regularly and have developed a friendship with my son’s teacher Stephanie. She’s an amazing educator and librarian and a true lover of books. We realized recently that we’ve both been spending a lot of time deep in the rabbit hole of mystical writings. Today, I wanted to share a beautiful quote from a book she recently recommended. It’s an answer to a question I’ve been thinking about for years now. What does it mean to do the will of God?

Here's what Thomas Merton had to say about this in “New Seeds of Contemplation”:

“[T]he very nature of each situation usually bears written into itself some indication of God’s will. For whatever is demanded by truth, by justice, by mercy, or by love must surely be taken to be willed by God. To consent to His will is, then, to consent to be true, or to speak truth, or at least seek it. To obey Him is to respond to His will expressed in the need of another person, or at least to respect the rights of others.”

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