Is it just me, or did SVB, Signature Bank, First Republic, and now, quite possibly PacWest all buy into the same Tik Tok challenge? 

I sure hope not. 

But I can well imagine some twenty-year-old intern describing it with a glitzy camera filter. You know, the kind that gives you whiskers and cat ears: 

“Heeeey upper management! Let me tell you about the 2023 Bank Meltdown Challenge. All my followers are asking about it. I’ve done it, and it’s a lot easier than you think. 

First, lend long… I mean really long. Commercial real estate. A few interest-only mortgages for billionaires in Malibu ought to do it. 

Next, borrow short. 

Then, (this is the fun part) watch your government crank up inflation by going on a spending binge while hiking interest rates at the same time! Pretty crazy, right?  

Now, relax. Kick your feet up. Hang out in the Bahamas with a crypto whiz. Take your staff to that synergy-building ski trip you’ve been itching to try. Whatever you do, don’t think about exposure, your depositors, or those short-term interest fluctuations that might destroy your safe bond portfolio. 

Okay. Ready? 

Your depositors should be fleeing. Your stock prices should be falling faster than a deflated spy balloon (ahem: UFO). If you’re on CNN, and if you’ve got the White House or J.P. Morgan on the other line… then congratulations. You did it! 

“Now share this challenge with ten more banks.”

Not sure about you, but with news on the banking front this interesting, all I can do is take a deep breath… and then breathe out again. 

One, two, three, four, five. 

Memes of the day

Why It’s Not Good

We kid, we mock… and oh how we meme. 

But I’m not cheering if another bank goes ass over teakettle. I’m not celebrating the fact that we’re down to 4,000 banks in the whole country—from around 10,000 a few decades ago. Banking, like factoring, is no small thread in our economic fabric. Thanks to community banking, the country grew prosperous, and we all learned we could trust each other. Seeing that trust fracture, calve, and slip into the water like a hunk of glacier is no trifle. 

It’s not good for banks.

Whatever happens—and for starters, less risk taking means less business creation—it won’t be good for the country and SMEs

What Does It Mean?

For factors, a massive credit slowdown brings both good and bad. Will inboxes start filling up with referrals? Will the phones ring with people who can’t get the capital they need from credit-strapped banks? 

Probably. 

But if more applications mean more deals and more factoring, they also mean newer circumstances to navigate. Add in some heavy, misinformed disclosure regulations, and we’ve unlocked a whole new level.  

So what’s our compass? 

Sticking with the basics. Building reasonable trust with the same old, lindy principles that the US banking system used to operate on—lending on collateral, based on performance and expertise. That is, and with no substitutes: due diligence, competence, radical transparency, and a kind of humility that is slowly eroding with each passing crisis.  

Broadly speaking—and unless J.P. Morgan has some plan to buy every bank in the U.S.—those principles that have worked for thousands of years are our best hope for what’s coming down the pipeline. Whatever it is, the Hero’s Journey reminds us that they’ll still apply because we’ve seen, and weathered it, all before.

White Label Partnership?

We’ve got it. 

Dare Capital offers Back Room Services, underwriting, portfolio management, and a fifty-fifty split in risks and rewards that you won’t find anywhere else. 

If that sounds like a slam dunk, and if trust and responsibility are the qualities you’re looking for in a White Label partnership, then don’t be shy. 

Give the Dare team a call.

Until next time,