Another bank has failed, been seized, and was sold to a larger bank. What does this mean to you?

Question

front2back · Accepted Answer

History does not repeat, it rhymes.

In an effort to keep the economy alive when it should have faltered in April 2020 we flooded the market with money, it did work but resulted in inflation as well as massive asset gains especially in real estate and the stock market.

Well now the cows have come home to roost, to take inflation money is being pulled out of the market and the economy of cheap debt no longer exists as debt gets more expensive. Many of these banks were over-everaged in bad investments and not enough capital on hand. So when the borrowing could not longer be afforded, deposits crashed as businesses couldn't turn as much revenue due to inflation and crashing demand.

So now you have an economy crawling to a halt, asset prices at record highs, and money being deflated from the market by the central bank.

The tune sounds a lot like the 2008 GFC but the effects of it might be much worse in some ways and much more manageable in others. Will be interesting to see how it plays out but I can guarantee the job losses are coming, more banks are going to go under, and there won't be many options to glue it all back together.

KrakenAttackin · Accepted Answer

Sounds like 2008 shit all over again.

lightbulb27 · Answer

I heard more were coming. is no problem until they start doing "bail ins" and only a few. It had wealthy depositors, can't blame the depositors for pulling $ out, but why they have it there in the first place over 250k?

it is a problem in that JPM keeps getting bigger and it cannot fail. It's an investment shop... this is a huge win for them.

The fed lowering rates and raising them fast... wrecking havoc.

"This part of the banking crisis is over"... e. g. there's more to come. Commercial real estate is crumbling fast and I hear some investors. whom is holding the bag is the question?

I wonder the impacts to wealthy people... but it appears they are well protected by the govt at the moment.

FilmGuy93 · Answer

What concerns me about these banks closing is that I"m not seeing any particularly alarming mismanagement type of behaviors. Typically, when a bank fails, there's a fairly obvious chain of decisions that you look at and think "oh shit, you guys really fumbled the ball," but I'm not really seeing that here. I'm not sure what to make of that...

Of course, lots of people want to add to new regs to the banking industry in response. I'm not necessarily opposed to that idea, but I want to see a more rational connection between insufficient regulation and the collapses. How would stricter rules prevent this from happening again?

RealMarek · Answer

To me, it just shows how inept our leaders are. One of the “fixes” after the 2008 financial crisis was to require banks to carry “safe” assets like US treasuries in reserve. At the same time, a zero interest rate policy was enacted by the Fed through quantitative easing. Because long-term bond pricing is sensitive and inversely proportionate to interest rates, it would not have taken much thinking to recognize the trap. As soon as inflation forced the Fed to raise rates, the value of long-term bonds (those “safe” assets held by the banks) dropped precipitously. Even though the banks are allowed mark these bonds to maturity instead of market, there are enough smart investors that this caused scrutiny of the bank balance sheets. The banks with the riskiest holdings and business models are in immediate trouble, but many banks are vulnerable.

exitseven · Answer

I just reviewed my finances. My financial guy told me they do not invest in ESG companies for that very reason. I also double ch we credit to make sure the savings account I had was insured since it is in a credit union and not abank.

OfMiceandMen · Answer

It is a strange concept to us that banks can be sold or even fail? We've had the same main three/four banks in Canada since I can remember. They seem to be regulated more here.

goaded · Answer

As long as the owners of the bank lose their money (and possibly freedom) and depositors don't, it's OK. But I haven't looked into it.

WhiteSteve · Answer

Nothing really to me. One of my hockey teammates from this past season is a branch manager of one though, so hopefully he doesn’t end up out of a job.

richardcory · Answer

Concerning. We need better regulations to make banks more immune to economic downturns

TooHot2Care · Answer

It means you better have a skill that pays past 100k per year or your ass is in danger.

Anonymous · Answer

Global one world banking is getting closer to complete

NathanDavis · Answer

that's what sharks are for...

Anonymous · Answer

Omg terrible

Another bank has failed, been seized, and was sold to a larger bank. What does this mean to you?

Most Helpful Opinions

Most Helpful Opinions

What Girls & Guys Said

With four banks that have closed and kept customers 💰 are you afraid this might happen to you and your money?

Another bank has failed, been seized, and was sold to a larger bank. What does this mean to you?

Most Helpful Opinions

Most Helpful Opinions

What Girls & Guys Said

With four banks that have closed and kept customers 💰 are you afraid this might happen to you and your money?

We're glad to see you liked this post.