Do I have this right? In this deal, JP Morgan paid $10.6B in exchange for assets totaling $203B in the form of loans and securities along with $120B of liabilities in the form of deposits and FHLB advances. That adds up to a $70.4B profit for JPM the moment the deal was signed. Is that correct? Meanwhile, the Fed has to take a $13B loss and equity is getting wiped out entirely (market cap of about $120B as of March 1)? That can't be right. What am I missing?
Do I have this right? In this deal, JP Morgan paid $10.6B in exchange for assets totaling $203B in the form of loans and securities along with $120B of liabilities in the form of deposits and FHLB advances. That adds up to a $70.4B profit for JPM the moment the deal was signed. Is that correct? Meanwhile, the Fed has to take a $13B loss and equity is getting wiped out entirely (market cap of about $120B as of March 1)? That can't be right. What am I missing?
Exactly what I was wondering. Jamie ain’t no fool.
Best analysis of First Republic Ive seen so far. Well done and thank you.