Two major regional U.S. banks – the Silicon Valley Bank in California and Signature Bank in New York – collapsed a couple of weeks ago….
Right away our government announced that it will NOT bailout the failed banks BUT that ALL banks’ customers can be assured that they will get their deposits back…..
Not only those who are covered by the FDIC insurance (which has a max of $250K per each depositor), but also those with millions of dollars deposited to this bank, which were mostly wealthy elites, venture capitalists and Chinese companies (although, supposedly, only U.S. citizens can be insured by the FDIC insurance).
If this is not a bailout, I don’t know what is…
And in order to bailout failed banks, government has to come up with more money… which means more printing money, even higher national debt (according to the U.S. Treasury Department, the current national debt of the U.S. is $31.3 trillion, which translates to roughly $94,000 per citizen), even higher inflation, and lower purchasing power of U.S. dollar….
Auch….
Then last Monday stock shares of “rock-solid” Credit Suisse bank plunged and Swiss authorities helped cut a deal with its bigger rival, UBS, to acquire the troubled Credit Suisse bank at a marked-down price to calm the troubled financial markets and to re-instill investors’ trust in this “used-to-be” premier financial institutions….
If you ask me, I don’t think these “superficial” government-arranged bailout-like actions can help restructure financial markets.
Here’s why.
As more facts started to come out about the Silicon Valley Bank’s operations and priorities, more and more people feel outraged with unconceivable incompetence and corruption of the SVB’s management and board of directors…
They had less than 10% of deposits covered by banking insurance!
Apparently, risk management was not SVB’s priority – its management didn’t have a director of risk management but had a director of equity and inclusion…
They were donating millions of dollars to their preferred political supporters (from both political parties but mostly democrats), who were influencing financial laws and regulations.
SVB didn’t have solid ethical and reliable operational guidelines….
Senior managers dumped millions in SVB’s stock just a few weeks before its collapse…. BIG red flag!
But that’s not all…
In the lead-up to Silicon Valley Bank’s historic collapse in March this year, insiders at this California-based lender scooped up a record $219 million worth of personal loans (according to the Bloomberg News).
Can you trust bankers with your money after such revelations??
I cannot.
And to be fair, NOT all regional banks are so corrupt and incompetent… but once you experience a rotten apple, it’s wise to be more careful and discerning.
And there’re more reasons for you to be alarmed right now.
Yesterday, the Fed (U.S. Federal Reserve) raised its key short-term interest rate by 0.25%, pushing ahead with its aggressive campaign to control inflation despite financial turmoil following Silicon Valley Bank’s collapse.
This move will further constrain banks’ lending and weaken the economy.
high Inflation + weak economy = stagflation
There’s not sugarcoating the challenging times we’re in right now….
But I am writing this NOT to stress you out but to wake you up and shake you out of complacency and status quo.
It’s not the time to choose what’s convenient, or familiar, or comfortable.
In the recent article about the banks failures, I shared the 5 Practical Lessons that will help you get well equipped to prepare for unexpected.
These banks’ failures are a wakeup call….
Be vigilant. Be observant. Be financially savvy.
NOBODY cares about your money more than you do.
And having money doesn’t make you good with money.
You can see it by all the millionaires who were not managing their risk by having cash deposits that exceeded the required FDIC insurance amounts at the bank that was not managed responsibly (to say the least.)
To your Health, Wealth and Freedom! 🙏💕
P.S. let me know your insights from these banks’ failures…
Are you going to make some adjustments to the way you manage your savings?
