March Madness hasn’t been just for basketball. Nope. March madness has spread to the banking sector.
At the beginning of every March, almost everyone in the country begins filling out college basketball tournament brackets. Of course the chances of picking the ultimate winner (the top team in college basketball) is futile. No one ever wins. Even Warren Buffet has been offering a $1B prize since 2014 to anyone picking “the perfect bracket.” No one has EVER won.
Certainly this year’s basketball tournament has been even crazier. Final Four……..San Diego State, UConn, U of Miami and Florida Atlantic……..REALLY? Well that’s nothing compared to the banks.
The start of the month began with the financial (banking) sector sound and safe. At least according to Treasury Secretary Janet Yellen. Folks filling out their “banking brackets” could bet that JPMorgan Chase would probably be crowned the winner again. But just like in the basketball tournament, upsets began.
Starting with the round of 16 (the Sweet Sixteen), the “16th seed” (Silicon Valley Bank….16th largest US bank) got knocked out. Upset by a losing balance sheet. The “14th seed” (First Republic……14th largest US bank) is in a double overtime game and fighting for survival. More “upsets” to come?
Fast forward to the banking Final Four. The “too big to lose” group. There can’t be a winner in this group, but positions may change. The “number 1 seed” (JPMorgan Chase) is involved in a possible investment to rescue the #14 seed (First Republic). Will that weaken JPM? Will they still be #1? Will a slew of other smaller regional banks with “capital-challenged balance sheets” need financial assistance? Will that change the odds of which bank may be #1? All possible.
Now one big difference between basketball and banking. The ultimate winner in basketball is determined by a fair game. The banking winner is determined (fixed) by the FED based on a totally unfair set of rules. In other words, the banking bracket is totally “pre-determined.”
Remember, both March Madness tournaments are still going on. A whole lot can still change in both brackets. Obviously the Fed will pick the banking winner(s). I also hear the Fed “likes” San Diego State in the basketball bracket. Just saying.