Could the Banking Crisis Affect You?

Could the Banking Crisis Affect You?

June 16, 2023

There has been information recently in the news regarding the stability of banks and whether it is safe to leave large amounts of money in a bank account. Since the Silicon Valley Bank failure that occurred a couple of months ago, we, along with you, are wondering how safe our money is in the bank? Over the last few months two more banks have failed. Bank stocks have lost 66% of their value over the last 60 days! The S&P Regional Bank Index has dropped from 300 billion to just over 100 billion in two months! Perhaps more shocking is that we haven’t seen more failures during this period of declining value and deposit outflows. During the great financial crisis of 2008, the Federal Insurance Deposit Corporation closed 465 failed banks between 2008 and 2012. So far in 2023, there have been only three bank failures. The interesting fact is these three failed banks accounted for a loss of 532 billion in assets. The 465 banks combined over a four-year time span from 2008 to 2012 saw 526 billion in assets evaporate. It begs the question, if these relatively large banks have not been able to successfully navigate the current economy, why haven’t we seen more regional banks collapse?

Even the Fed knows that banks are not out of the woods yet. The other shoe to drop could be the commercial real-estate sector. With over $1 trillion of commercial real estate loans set to mature by 2025, we have to question how willing these banks will be to renew these loans given tightening lending standards, decreasing property values and higher prevailing interest rates. Credit is the life blood of our economy. If the banks are not willing to renew these loans due to tightening lending standards, it could mean a significant rise in defaults on their existing loan books, exacerbating current issues.

Now might be a good time to consider diversifying your exposure to banks. Point in fact to consider, each account held in your bank is insured up to $250,000. In my opinion, if we had a major bank crisis in this country it would be literally impossible for the FDIC to cover everyone. Sorry, but those with over $250,000 in the bank would be out of luck. We think COVID was bad, how much money would the government have to print to bail out all accounts up to $250,000?

GVC to the rescue! Global View Capital has an alternative to depositing money in a bank. You can open a reserve cash account which is 3,6 and 12-month treasuries all in one ETF (exchange traded fund). The minimum to open an account is $2,000. Unlike a CD, you are not required to tie your money up for any length of time. It pays you interest monthly and is backed by the full faith of the US government, not the bank. It pays you before the government pays any obligation including social security or Medicare. With little or no risk, the money is completely liquid, you can take it out at any time. It has been paying 4-5% monthly.*  Many individuals and companies are finding this to be an excellent solution for putting “lazy” money to work. It sure beats earning practically nothing in a bank and is backed by the full faith and credit of the US Government. Click GVCM Reserve Cash Account for more information.

*Interest rate will fluctuate per market conditions.