Posted on 08/30/2024 7:14:14 AM PDT by delta7
A new study by Florida Atlantic University believes that 94 separate US banks are facing a significant risk of bank runs. The at risk banks have all reported a 50% or higher ratio of uninsured deposits to total deposits. Basically, they simply do not have the hard currency to shell out in the event of a panic.
Banks currently limit cash withdrawals under the pretense of money laundering and security. They will ask all sorts of questions if you even TRY to withdraw your money. They realize we are on the verge of a crisis in banking on a global scale.
The University’s Liquidity Risk from Exposures to Uninsured Deposits index found that BNY Mellon and John Deere Financial have a 100% ratio of uninsured deposits, followed by State Street Bank (92.6%), Northern Trust (73.9%), Citibank (72.5%), HSBC Bank (69.8%), JP Morgan Chase (51.7%), and U.S. Bank (50.4%).
The Federal Deposit Insurance Corporation (FDIC) has the power to shutdown a bank before a bank run occurs. The FDIC is controlled by Congress and acts as a safety measure to protect insured deposits in the event of bank runs. Deposits over $250,000 are not insured nor are mutual funds, annuities, life insurance, bonds, or stocks. Uninsured depositors have experienced a mere 6% in losses over the past 16 years.
Let’s take a look at the Silicon Valley Bank (SVB) failure of March 2023. The FDIC agreed to make all account holders whole including those with uninsured deposits. SVB has an uninsured deposit ratio of 97% at the time and failing to cover all losses would have created a panic in the banking world. The FDIC invoked the “Systemic Risk Exception” for SVB and Signature Bank that enabled them to protect uninsured depositors when deemed necessary. Two-thirds of the FDIC board voted in favor of the measure and the Fed, Treasury Secretary, and president signed it off.
The FDIC relies on the Deposit Insurance Fund (DIF), which is backed by Washington. Now, what happens when multiple large banks fail? It was easy for the government to write off a few banks to brush the severity of the situation under the rug. If everyone tried to withdraw their accounts at the same time, the government would not have the hard currency to back it. This is one of the major reasons that we will see a conversion from hard currency to digital.
I have stressed that studies in ancient times as well as modern show that during a crisis you head toward DEFLATION as money becomes scarce, the VELOCITY of money collapses, and people HOARD wealth – they do not spend it. The US will experience a period of stagflation as GDP will decline as inflation soars. Banks will begin to fail in Europe before it becomes a global contagion.
Truist is in trouble. Please read ALL your account disclosures, USAA just had some concerning changes in withdrawal “ rules”.
It’s coming.
The biggest reason for the instability is because banks have extended themselves too far with making loans with your money.
“Burdened” by lack of a taxpayer backstop. Truly Orwellian language in use today.
Just in time for the shamlection
Hopefully they can be unburdened by what has been. Values, you know.
The at risk banks have all reported a 50% or higher ratio of uninsured deposits to total deposits. Basically, they simply do not have the hard currency to shell out in the event of a panic.
The two things are totally unrelated. Whether the depositor gets paid or not from deposit insurance has nothing to do with cash on hand.
And didn't the SVB bailout of the tech billionaires show that all deposits are covered if the right person is the depositor.
The plan is to confiscate all of our money.
Sounds like they were trying to protect her from getting scammed. Why does an elderly person with a caretaker need $5,000 cash? Hard to think of any legitimate reason. Street drugs or firearms of questionable origin are the only ones that come to mind for not leaving a paper trail. And for a large cash withdrawal from a small branch, it's probably best to call ahead for a few days. I did do a large cash withdrawal one time. Got to chat with a nice FBI agent about it.
“My 92 year old mother called me yesterday crying….Truist denied her a $5,000 cash withdrawal.”
Any teller should be suspicious of that.
I have checks to pay contractors and suppliers.
I pay property taxes and the fire department dues by bank transfer.
“My mother used to — she would give us a hard time sometimes, and she would say to us, ‘I don’t know what’s wrong with you young people. You think you just fell out of a coconut tree? You exist in the context of all in which you live and what came before you’”
Oh, she must have gotten her oratory ‘skills’ from her dot Indian mom. Uh, I mean black mom. Or something.....
“Basically, they simply do not have the hard currency to shell out in the event of a panic.”
That can’t be true! Mother Government’s printing presses have been running non-stop since about 1980. There’s GOT to be PALLETS of cash just lying around!
*SMIRK*
Bad commercial real estate loans (and in some locales, the popping of the residential real estate bubbles) will drag down some banks. Those were what caused the 2008 crisis. Writing down the loans to the value of the collateral is what hits the reserves.
Yeah, “large” cash withdrawals are usually an issue at most banks/CU’s (advance notice usually required...(they don’t keep as much cash around as you might think they do).
Truist Bank’s policy on large cash w/d’s: (page 17)
“Large Cash Withdrawals. For security reasons and in order for us to properly prepare for such requests, we require advance notice for large cash withdrawals. We can refuse an order to withdraw funds in cash or to cash an item if we believe that the request is a security risk or will result in a hardship on the Bank. We may require you to accept an Official Check or electronic transfer to receive the funds. If we agree to a large cash withdrawal, you may be required to employ a courier service acceptable to us and at your risk and expense. If a large cash withdrawal is completed at a branch you will be required to sign a cash withdrawal agreement or affidavit. Refusal to sign the agreement is grounds for us to revoke the cash withdrawal and require an alternate delivery for the funds. You understand and agree that the Bank is not responsible for providing any security regarding any cash withdrawals or deposits.”
Neil Bush? Please pick up the white Courtesy Phone in the Lobby!
What companies might do is to pay employees on a ‘by Friday’ basis.
Don’t wait until Thursday or Friday to do the direct deposit.
If banks have 100% of the money secured, nobody should have trouble getting their money back even if every one of goes to the bank at the same time.
Now, if 99% of the money is secured and we all went to bank at the same time, 1% will not get their money. The banks rely on the idea that there will not be a bank run by everybody and they’ve figured the ideal ratio that they can have between keeping money in the bank and how much of that money they can loan out.
It works pretty much most of the time. Except when the bank gets greedy and goes out of ratio of what they can keep on hand and what they can loan out. I’m not saying that this would be the only reason why a bank cannot pay out a customer’s money from their account, but it is a big one. Bank executives put too much weight on profit and not enough on being an on-going concern.
“Bad commercial real estate loans”
Be aware that there are lots of rich Chinese that are looking to buy US real estate as a place to stash their money.
US commercial real estate has the advantage of a high upside.
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