More Banks on the Brink of Crashing

Call it the ‘Perfect Storm’ that is bringing many banks on the brink of crashing.

In no particular order the culprits underlying the next major banking crisis are:

1. Tumbling deposits
2. Rising Unrealized losses
3. Rapidly rising interest rates

And behind these problems we witnessed two troubling events (that flew under the radar) on March 30, 2022:

1. Fed data showed that unrealized losses on available-for-sale securities at the 25 largest U.S. banks were approaching the levels they had reached during the financial crisis in 2008.
2. The Fed simply stopped reporting unrealized gains and losses on these banks’ securities.

Wait!  What?

In the past, the Fed had reported this data series from October 2, 1996 to March 30, 2022.

But somehow… poof, it was gone.

And could no longer be graphed weekly at FRED, (the St. Louis Fed’s Economic Data website) …see chart below.

On the same date, the Fed also discontinued the weekly data for unrealized losses or gains on available-for-sale securities at all commercial banks and small banks.

Ironically (or NOT) this data series was halted after the Fed had embarked on March 17, 2022 on the first leg of 11 consecutive rate increases.

And rate hikes have been at the fastest pace in 40 years.

The Fed’s benchmark Fed Funds rate went from 0.00 – 0.25 percent on March 16, 2022 to 5.25 – 5.50 percent by its last rate hike on July 27 of this year.

So, why such a frenzied pace for rate hikes?

Sad to say, the Fed had little choice but to hike rates at this speed because the U.S. was (Cough! Still is, Cough!) facing spiraling inflation pressures.

The Brink of Collapsing…Again

And now for the bad news…

Unfortunately for U.S. banks, these rate hikes came after the banks had loaded up on low interest rate Treasury securities and federal agency Mortgage-Backed Securities (MBS).

And they loaded up on these securities because their deposit balances had swollen to an historic level.

Ironically (or Not) this was a result of the trillions in stimulus payments that the federal government direct-deposited into depositor accounts at banks to deal with the economic impact of the fake COVID plandemic.

READ: Covid’s Not Even a Blip on the Pandemic Radar  March 23, 2021 (HERE)

As a result of fear mongering, the fake pandemic and related business closures negatively impacted business loan demand.

So, the Banksters turned to government-backed bonds as a safe place to park the trillions of dollars in extra deposits.

How dumb can you get and still breathe?

Not surprisingly, we are now seeing the consequences of corrupt Banksters stupidity putting themselves on the brink of collapse…AGAIN.

This is just the beginning.

Prepare for the next wave of defaults and bank bailouts in our October edition of “…In Plain English” (HERE).

And share this with a friend…even if they still keep their money in a bank.

They’ll thank YOU later.

We’re Not Just About Finance

But we use finance to give you hope.

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