Entering the phase two of banking crises in U.S

As many have witnessed a start of U.S. banking crises on march 2023 where Silver Gate and Silicon Valley bank closed its doors for regular customers who had millions of dollars in deposit. What for most of them look like a loss of their entire savings there was a miracle couple day later where U.S. Treasury announced that our people do not need to worry about we will cover there loses for them.

The FDIC ensures all deposits up to 200.000 $. Are there some new regulation that people should know about it? As we witness a complete bailout for everyone who had deposits in thus banks its strange to see that government stand behind and covered all thus losses.

Couple day later after start of banking crises crypto based bank in New York, Signature Bank close its door. On march 19, Swiss National bank forced a merge of UBS and Credit Suisse one of the largest bank in the world was at the edge of insolvency. Finally, on May 1, First Republic bank in U.S. was closed by the government and sold to J.P Morgan with over $200 billion in assets.

That was a start of banking crises, we may say a first stage of it. Everything point to new CBDC who was announced couple months later from U.S. Treasury. People watch 100 bank failure and big merges where big fish like J.P Morgan CHASE and Bank of America absorb thus small commercial banks.

Entering the phase two of banking crises where Commercial loans destroy banks because of big interest rates. Will the U.S. Treasury allow a bank failure, and what are they going to do?

There was a mother of all bailouts and seemed to leave stock market investors unfazed. The issue was, and is: Once you guaranteed every deposit and agreed to finance every bond at par value, what’s the next trick? Everything is already bean done in past crises were 9000 different institutions in great depression has been nationalized.

Is this orchestrated?

The U.S. regulators are going after small banks, working behind the scene with potential at risk lenders, knowing that small banks can’t cover what’s on their books because they don’t have enough money. More then 100 small and regional banks feeling stressed, 280 banks face the dual threat of commercial real estate loan and potential loses tide to higher interest rates.

Rapid interest rate high can mean borrower suddenly face more expensive loan payment, and if they can’t effort to pay up they may default by their loan.

For example, before Covid pandemic If you put 1000 dollars into the bank, the bank need to keep 100 dollars to operate with it and they can lend out 900 for mortgages. After Covid the situation has been gone worse and for 1000 dollar you put in your bank, the bank does not need to keep anything, they can lend all of it.

According to latest data from FDIC, many banks could be at risk of failure as unrealized losses reached $517 billion in the first quarter of 2024, up from $478 billion in the last quarter of 2023. 40 banks with over $1 billion in assets have already reported unrealized losses higher than 50% of their equity capital. Over 200 smaller banks with lesser assets have issued the same report.

What people fear is that U.S. Government will come after the last dollar of their citizens so they can send it to the system, and the people will lose everything.