Have you seen the recent headline from The Telegraph?
It’s a jawdropper.
“Half of America’s banks are potentially insolvent – this is how a credit crunch begins.”
With the recent failure of First Republic Bank – a bank with nearly $230 billion in assets last month, more than the Silicon Valley Bank collapse – the fragility of our banking system is back front and center.
Here’s the gist of it…
The American banking system is sitting on a ticking time bomb of uninsured deposits worth a staggering $9 trillion.
The US is currently experiencing back-to-back bank failures, the second and third largest in the country’s history. But the government wants us to believe that these failures are just “idiosyncratic.”
Are they trying to downplay the severity of the situation?
To make matters worse, almost half of the 4,800 banks in the US are on the verge of collapse, burning through their capital buffers.
While US accounting rules allow them to avoid marking all losses to market, that doesn’t change the fact that they’re in deep trouble. The inevitable losses will have to be shouldered by someone, and that someone could be you.
It’s time to face the grim reality: the US banking system is in dire straits, and the consequences could be catastrophic. Will the government take action before it’s too late, or are we on the brink of an economic meltdown?
Only time will tell but here’s a troubling timeline of the American banking crisis so far. You be the judge.
MARCH 8 – Silvergate Capital, a cryptocurrency-focused bank, ceases operations after a bank run.
Silicon Valley Bank needs to shore up its balance sheet and raise capital – is forced to sell a bond portfolio at a $1.8 billion loss.
MARCH 9 – Billionaire investor Bill Ackman calls for a bailout of Silicon Valley Bank. Stock plummets 60 percent.
MARCH 10 – SVB fails after a run on deposits – the largest bank crash since the 2008 financial crisis, putting nearly $175 billion in customer deposits under the regulator’s control.
Investors dump bank stocks, including First Republic, Signature Bank and Western Alliance.
MARCH 12 – To prevent the spread of banking contagion, regulators seized Signature Bank.
The Federal Reserve, the Treasury Department and the F.D.I.C. make a joint announcement that “depositors will have access to all of their money..”
The first safety measure they won’t call a bailout…
F.D.I.C. invokes a “systemic risk exception,” which allows the government to pay back uninsured depositors and the Fed announces they would set up an emergency lending program for eligible banks.
MARCH 13 – President Biden says the U.S. banking system was safe, but regional bank stocks plunge, with First Republic sinking 60%.
MARCH 15 – Shares of Credit Suisse tumble 24 percent. The Swiss National Bank, Switzerland’s central bank, says it would step in to provide financial support.
MARCH 16 – First Republic Bank receives $30 billion in deposits from nearly a dozen big US banks including JPMorgan Chase, Wells Fargo and Morgan Stanley.
Credit Suisse said it would borrow $54 billion from Switzerland’s central bank.
MARCH 19 – Switzerland’s largest bank, UBS, agrees to take over Credit Suisse for $3.2 billion. The bank was worth $17 billion the prior week.
The Federal Reserve and five other central banks ensure dollars would remain readily available in a move intended to ease the strain in the global financial system. Is that another bailout?
MARCH 24 – Shares of German lender Deutsche Bank sink due to a spike in credit default swaps, as concerns about the stability of European banks persist.
MARCH 27 – Federal regulators give First Citizens a $16.5 billion discount for taking over Silicon Valley Bank.
Fast forward to today, and now First Republic Bank has been seized and sold off to JP Morgan Chase.
What’s next for the economy?
Are more banks headed for trouble?
Keep your eyes peeled, because this could just be the beginning.