Hi, my name is Ed Moy, and I served as director of the United States Mint from 2006 to 2011. I'm also the senior IRA strategist for U.S. Money Reserve. Regulators have closed First Republic Bank last week. It's a small regional lender in the northeast. It's notable because it's the first bank closure of 2024.
Republic First has been struggling for a few years for a variety of reasons. Increasing vacancy rates due to the after effects of Covid have had a negative impact on their commercial real estate loans, which are a larger part of a regional bank's portfolio than large national banks.
Borrowers get less rental income and have more trouble paying back their loans, and the resulting falling commercial real estate values make refinancing those loans a challenge. When a bank's troubles start to linger, depositors start getting scared and they move their money to other banks they perceive as being safer. This causes the troubled bank to have to sell assets, usually at a loss, to raise money to return to the departing depositors.
It's important to know that there will be no direct negative financial impact on the depositors of Republic First. State and federal regulators quickly made a deal with Fulton Bank to buy Republic First assets, and the Federal Deposit Insurance Corporation injected $667 million to make sure that all depositors would be made whole, up to $250,000 of their deposits.
So what does this mean for you? Well, while Republic First is the first bank failure this year, it probably won't be the last. Even in a strong economy, banks go out of business for various reasons. For example, there are almost 300 small regional banks like Republic First, that are at some degree of risk from small to greater, showing that there are still some problems in the banking sector that we experienced last year. While most of these banks will not fail, and when they do, the federal government's safety net will protect most depositors it is prudent to make sure that not all depositors eggs are in the same basket.
This is especially true for retirement savings. The time tested way to protect retirement savings is to diversify, and one way to diversify is to consider having part of your retirement in an asset that is outside the banking system. Gold is one such example, and one of the easiest ways to diversify your retirement with gold is with a gold IRA. It not only has a portion of your retirement saved outside the banking system, but gold is also an asset that holds its value and in many cases, increases in value during a banking crisis. Mine is from U.S. Money Reserve.
