WSJ: Two Hundred Banks at Risk of Bankruptcy
What in the world was she thinking? When a bailout was hastily arranged for uninsured depositors at Silicon Valley Bank and Signature Bank, the implication was that the same thing would be done for uninsured depositors at any other banks that failed. But now U.S. Treasury Secretary Janet Yellen is telling us that is not actually what will happen. She just admitted that depositors at a failed bank will only be protected if officials determine that a “failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences”. So that means that depositors at big banks are likely to be protected and that depositors at small banks are much less likely to be protected. In other words, Janet Yellen just poured lighter fluid on every small bank in America.
Why would anyone keep more than $250,000 in a small bank at this point when there is a very real risk of losing all of the uninsured money if the bank suddenly fails?
Nolte: Janet Yellen Admits Government Choosing Bank Bailout Winners and Losers
Dozens of US banks at risk of repeating SVB collapse – study
Many other lenders are also sitting on unrealized losses caused by the rapid rise in interest rates
This has to be the most blatant example of malignant policy I've seen so far.
How does Yellen *NOT* understand "moral hazard" or "incentives?" She does, of course.
Free deposit insurance only for the Big Banks? What could go right?
Remember, three times is #EnemyAction https://t.co/4axjIvvBcV
— Chris "Early Treatment" Martenson, PhD (@chrismartenson) March 17, 2023
If the Fed does not contain the regional bank collapse, there will be another great depression.
Small/medium banks account for 50% of US commercial and industrial lending, 60% of residential real estate lending, 80% of commercial real estate lending, and 45% of consumer lending pic.twitter.com/wzTMHxSnXI
— zerohedge (@zerohedge) March 18, 2023
Bannon is correct on this…the government is trying to Nationalize the banking system BEHIND CLOSED DOORS!! EYES WIDE OPEN AMERICA!! pic.twitter.com/5owbKIRVSL
— Gina M. Shiffert (@ShiftiGina) March 17, 2023
Dozens of Banks May Have Risks Similar to Silicon Valley Bank, Economists Find
Silicon Valley Bank failed after rising interest rates reduced the value of its assets and worried customers scrambled to withdraw uninsured deposits. In a new study, economists said they found 186 banks that may be prone to similar risks.
In a paper posted this week to the Social Science Research Network, the economists estimated how much market value individual U.S. banks’ asset books have lost during the Fed’s rapid rate-increasing campaign. The value of such assets, which often include as Treasury notes and mortgage loans, can fall when new bonds have higher rates.
The economists also examined the proportion of banks’ funding that comes from uninsured depositors, or accounts with more than $250,000. They estimated that there are 186 U.S. banks where, if half of uninsured depositors quickly withdrew their funds, even insured depositors could face impairments because the bank wouldn’t have enough assets to make all depositors whole, potentially forcing the FDIC to step in.
The research carries an important caveat: It does not take into account hedging, which may help protect many banks against rising interest rates.
“Our calculations suggest these banks are certainly at a potential risk of a run, absent other government intervention or recapitalization,” the economists wrote.
Nolte: Janet Yellen Admits Government Choosing Bank Bailout Winners and Losers
Treasure Secretary Janet Yellen admitted to the U.S. Senate Thursday that the government is choosing winners and losers in the rigged bank bailout lottery. And wouldn’t you know it, the losers sure look like the smaller community banks the big banks (and Democrats) would love to see eliminated.
Will the deposits in every community bank in Oklahoma, regardless of their size, be fully insured now? Are they fully covered, every bank, every community bank in Oklahoma, regardless of the size of the deposit? Will they get the same treatment that SVBP [Silicon Valley Bank] just got or Signature Bank just got?
Please look very closely at Yellen’s terrifying answer:
A bank only gets that treatment if a majority of the FDIC board, a super majority of the Fed board and I, in consultation with the president, determine that the failure to protect uninsured depositors, would create systemic risk and significant economic and financial consequences.
In other words, if the FDIC likes your bank, the depositors are insured. If not, the depositors are not insured over $250,000, which means what?
It means that people will withdraw their money from community banks and hand those deposits over to a handful of fascist giant banks that not only own almost all the banking but will refuse to do business with you if you hold certain political opinions they find offensive… Oh, and you can bet those political opinions they find offensive will always-always-always be conservative opinions.
Lankford understands what these corrupt crony capitalists are up to and follows up with this:
“So what is your plan to keep large depositors from moving their funds out of community banks into the big banks?” Lankford asked. “We have seen the mergers of banks over the past decade, and I’m concerned you’re about to accelerate that by encouraging anyone who has a large deposit in a community bank to say, ‘We’re not gonna make you whole, but if you go to one of our preferred banks, we will make you whole at that point.’
Now that Yellen had been exposed and busted, she chose to answer this important question by playing stupid…
“Look, I mean, that’s certainly not something that we’re encouraging,” she said.
Lankford responded with the obvious: “That is happening right now!”
Yellen’s idiot act continued:
That is happening because depositors are concerned about the bank failures that have happened and whether or not other banks could also fail…
Lankford again tried to get her to answer the only question that mattered…
No, it’s happening because you’re fully insured no matter what the amount is if you’re in a big bank. You’re not fully insured if you’re in a community bank.
Watch the full testimony below. It’s only a few minutes…
Must watch. Yellen has no idea how to answer the question and admit they’re arbitrarily making it up as they go. Senator Lankford stays pointed and calls it as it is. Truly terrifying.
— Autism Capital 🧩 (@AutismCapital) March 17, 2023
I hope everyone understands what’s happening here…
By informing the public that their money is only safe in those big banks the Democrat party favors, everyone will deposit their money in the big banks and effectively bankrupt community banks or force them to give up the ghost to the big banks.
That’s just step one.
Step two is worse.
Once the big banks control all the money, they will also control everything else, including what kind of business you can run, what you can and cannot say on social media, and what opinions you can hold…
How would you like to live in a world where a gun store has no place to bank or run a credit card payment?
How would you like to live in a world where a mall owner cannot rent to a gun store?
How would you like to live in a world where your accounts are closed if you tweet a biological fact like, “Trans women are men?”
You might not want to live in that world, but that is the world the Democrat party seeks, so they are in the process of deliberately undermining faith in community banks.
It is always about control through centralized power.
Never let a crisis go to waste.
Dozens of US banks at risk of repeating SVB collapse – study
Many other lenders are also sitting on unrealized losses caused by the rapid rise in interest rates.
Nearly 200 American banks face similar risks to those that led to the implosion and bankruptcy of Silicon Valley Bank (SVB), according to a paper posted this week to the Social Science Research Network. SVB, a major US lender focused on the tech and startup sectors, was shut down by regulators last week after massive deposit outflows.
In the study, four economists from prominent US universities estimated how much market value the assets held by US banks have lost due to recent interest rate hikes.
“From March 07, 2022, to March 6, 2023, the federal funds rate rose sharply from 0.08% to 4.57%, and this increase was accompanied by quantitative tightening. As a result, long-dated assets similar to those held on bank balance sheets experienced significant value declines during the same period,” they wrote.
Although higher interest rates can benefit banks by allowing them to lend at a higher rate, many US banks have parked a significant portion of their excess cash in US Treasuries. This was done when interest rates were at near-zero levels. The value of these bonds has now greatly decreased due to the rate hikes – investors can now simply purchase newly issued bonds that offer a higher interest rate. The decline in the banks’ portfolios is unrealized, meaning the value of the securities has declined but the loss is still only ‘on paper’.
The problem arises when customers request their deposits back and banks are forced to sell their securities – at a significant loss – in order to pay depositors back. In extreme cases, this can lead to a bank becoming insolvent, or as happened with Silicon Valley Bank, the loss of confidence can trigger a bank run.
The report’s authors looked into how the amount of US lenders’ funding that comes from uninsured deposits: the greater the share, the more susceptible a bank is to a run. For instance, at SVB, where 92.5% of deposits were uninsured, the deposit outflow caused the bank to collapse in a span of only two days. The authors of the study calculated that 186 American banks do not have enough assets to pay all customers if even half of uninsured depositors decide to withdraw their money.
“Our calculations suggest these banks are certainly at a potential risk of a run, absent other government intervention or recapitalization… Overall, these calculations suggest that recent declines in bank asset values very significantly increased the fragility of the US banking system to uninsured depositor runs,” the economists concluded, noting that the number of banks at risk could be “significantly” larger if “uninsured deposit withdrawals cause even small fire sales.”
SVB’s failure sent ripples across the entire US banking industry and caused the closure of another lender, Signature Bank. Many other financial institutions have seen their stocks plunge, with the six largest Wall Street banks losing around $165 billion in market capitalization, or some 13% of their combined value. Earlier this week, the ratings agency Moody’s downgraded its outlook for the US banking system from ‘stable’ to ‘negative’, citing the “rapidly deteriorating operating environment.”
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Resources:
https://www.wsj.com/livecoverage/stock-market-news-today-03-17-2023/card/dozens-of-banks-may-have-risks-similar-to-silicon-valley-bank-economists-find-PLIFEYfTTer5HvixzEx6
https://www.breitbart.com/politics/2023/03/17/nolte-janet-yellen-admits-government-choosing-bank-bailout-winners-losers/
https://www.rt.com/business/573181-us-banks-risk-svb-collapse/
