THE DEPOSIT EXODUS FROM BANKS
You will want to pay attention to this story shared by V.T., because it seems that depositors are abandoning American banks in unprecedented numbers:
Now, the reasons being given by this article are intriguing, and, I think, only a part of the story:
New numbers from the Federal Deposit Insurance Corporation (FDIC) show Americans are pulling their money at a pace not seen in yearly four decades.
According to the FDIC’s newly-released quarterly report, depositors took a total of $472 billion out of their accounts in the first quarter of this year – shattering a 39 year record.
“The quarterly decline is the largest reduction reported in the QBP since data collection began in 1984.This was the fourth consecutive quarter that the industry reported lower levels of total deposits.”
The “primary driver” of deposit flight came from uninsured deposits, says the FDIC, as people moved to protect capital that is above the $250,000 FDIC insured maximum.
Case in point – the amount of insured deposits held by banks actually increased during the quarter as people diversified their risk.
The mass exodus follows the failures of Signature Bank, Silicon Valley Bank and First Republic, which were triggered in large part by the Federal Reserve’s aggressive interest rate hikes.
As depositors leave the banking system, money market funds have witnessed massive weekly cash inflows.
And that, pretty much, is the entire article and, as far as it is concerned, the entire story. Depositors with more money in a bank than the deposits are insured for are "managing risk exposure" and "diversifying portfolios" by putting money into money markets and so on. They're abandoning the banking system for greener pastures, and all because of the failures of Silicon Valley Bank and First Republic.
But there's a line in this article that has me wondering if there might not be a hidden story here, one that the FDIC might not want told too loudly. Here's the actually numbers being shown on the Federal Deposit Insurance website:
You'll note that there appears to have been a deposit flight for the last four quarters, with another large one setting off the flight of deposits last June. But how much of this is actually the "whales" pulling out their deposits, "diversifying" and "managing risk"? I suspect the Hodl article is correct, and that the "whale" activity constitutes the bulk of it, but not all of it.
It's that possible other part of the story that concerns me. Indeed, I am supposing, on the basis of little evidence from the FDIC numbers that I've been able to find on such short notice, that there's is "another story" at all, and that it is not being told. That story is the story of the small depositors, who, FDIC insurance or not, might be pulling their deposits out of banks, and particularly large regional or national banks, and putting them into more local, smaller institutions, like credit unions.
If indeed people are doing that - if they're pulling their money out for an entirely different reason such as Catherine Fitts has said on more than one occasion, "Why would you bank with your enemy?" - if indeed some people are waking up to the fact that Too Big to Jail Megabank is their enemy and they're withdrawing their money for that reason, then it's no wonder that there's nary a peep about it from the FDIC or the policy wonks in Swampington. Time will tell, of course, if that wild idea has any traction. But if it is true for the small insured depositor, I can imagine that at least some of the "whales" might also have realized that Too Big to Jail Megabank is not their friend either.
After the shenanigans we've seen from the financial system, not to mention the galloping fraud behind the derivates scandal, robo-signing, mortgage fraud of the past few decades, can you blame them?
See you on the flip side...
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A few points about the alleged banking crisis among “small,” “midsize,” or “regional” banks and the three banks that set off all the media hype about it:
Signature Bank, Silicon Valley Bank (SVB Financial Group), and First Republic Bank each had over $100 billion in total assets. By that measure, they were among the top 30 or 40 banks in the U.S. These were big banks. Their downfall says nothing about the health of small or community banks.
The three above-mentioned banks, as compared with other big banks, had an inordinate percentage of deposit accounts (79%-94%) that were over the FDIC-insured limit of $250,000 (see https://bestevidence.substack.com/p/presenting-the-bestevidence-spreadsheets). That alone is suspicious. And, apparently, these banks had some pretty big whales. At Silicon Valley Bank, 10 depositors had about $13 billion on deposit (see https://www.youtube.com/watch?v=1sCq9FJQQNA at 17:15, for clip from Senate Banking Committee hearing). That is super-suspicious. Curiously, at least two of the three banks were also involved in trials of the FedNow system.
The long and short of it seems to be that a small number of big depositors suddenly all shifted their money out of those three banks within a short time, touching off the whole fiasco. It has the air of a coordinated bank take-down more than anything else. Cui bono? The too-big-to-fail banks — at least I believe that was the plan. JP Morgan Chase got all the deposits of First Republic Bank, and the media got an excuse to scare (some of) the public into believing that they’d better get their money out of small banks and deposit it with the too-big-to-fails. Did the ploy work? I don’t know. It has been reported that insiders at small banks have recently been buying shares in their banks at a record pace, whatever that might mean.
For anyone interested in a good overview of the situation, I recommend the June 15, 2023, episode of Financial Rebellion, titled “Stopping the Steal with John Titus,” at CHD-TV, starting at 5:15. (I can only post so many links; you should be able to find it via a search engine.) For a deep dive into the Silicon Valley Bank et al. crash, see the YouTube video linked above.
To Dr. Farrell’s main point, an article recently appeared on the Forbes website (of all places!) titled “‘Small Banks’ Are Not Losing Deposits”: https://www.forbes.com/sites/forbesfinancecouncil/2023/06/09/small-banks-are-not-losing-deposits
Dr Farrell and readers :
Mike Gill, a whistleblower of corruption (search Rumble for his name), disclosed that the Sinalowa(?sp) Cartel got wind their money in Silicon Valley Bank was at risk, because it was being investigated. The cartel pulled their money out and that is what started the run on SVB that crashed it.
If you have the time, please search Youtube and Rumble for his name. The story he tells of the corruption, how politicians, courts, police, etc are bought, elections are rigged, etc. It will piss you off!
It matches what we are hearing from many of the states.
Godspeed!
Those “Too Big to Jail Megabank”s may be reaching an understanding that being Friends-of-the-Fed requires a new risk management clause and strategy of diversification instead of going along with the gang that seems to be treading toward a blank horizon – the infamous bottomless pit of woes off the cliff. There does not seem to be safety in stupidity.
Those folks with assets well above the insurable $250,000.00 in many multiples of banks may want to spread the wealth rather than hoard instead of worrying whether greed has limits after all or whether they really want to support a narrative that makes no sense for an investor. Put blinders on if they must if spooked so easily while they get a handle on sine wave cycles. It seems an individual can do a great deal with just $250,000.00 during wealth building processes that also stabilize the insured. Gangsters merging with Banks becoming “Banksters” seem to have another agenda.
Squirreling away legitimate wealth does not seem an easy way to be safe with assets. One has to remember the those squirrelled away stashes in a time of need as well as be able to negotiate a trade with the same.Or if misplaced know what will become of the shoots that will sprout.
BEER GOLD
Liquid currency is yeasty chemistry,
fermenting grain in brewery,
by squirreling away
for a rainy day,
in land of milk and honey.
Those “Too Big to Jail Megabank”s may be reaching an understanding that being Friends-of-the-Fed requires a new risk management clause and strategy of diversification instead of going along with the gang that seems to be treading toward a blank horizon – the infamous bottomless pit of woes off the cliff. There does not seem to be safety in stupidity.
Those folks with assets well above the insurable $250,000.00 in many multiples of banks may want to spread the wealth rather than hoard instead of worrying whether greed has limits after all or whether they really want to support a narrative that makes no sense for an investor. Put blinders on if they must if spooked so easily while they get a handle on sine wave cycles. It seems an individual can do a great deal with just $250,000.00 during wealth building processes that also stabilize the insured. Gangsters merging with Banks becoming “Banksters” seem to have another agenda.
Are these rats abandoning the good ship, Swindle whether they be rich or poor they are sick and tired of all this casino capitalism.
Yeah, this is a good topic to inform people of.
The bank “runs” so far have basically been about people moving deposits out of near zero rate bank accounts into 4 or 5 pct rate money market funds.
However……..
Corporate derivatives exposures are huge and largely unknown. I don’t know if my bank would survive a derivatives debacle and I doubt the bank’s top officers know either, so I keep cash in US Treasury money market funds.
The Federal bank deposit insurance fund is finite, and a derivatives debacle might wreck it.
Legally, bank deposits are unsecured loans, and unsecured loans have little protection in a bankruptcy.
Private grain storages, with no rats.
HARDING HARVEST
Beautifully strawn, in field of singing,
eyes of corn keep coming,
with strong desire
to expire,
sown, in death of sleeping.
HARDING FLIGHT
On meadow of windswept plain,
my straws bow with grain,
and they will fall
when I call,
so that Odin will rise again.
Squirreling away legitimate wealth does not seem an easy way to be safe with assets. One has to remember those squirrelled away stashes in a time of need as well as be able to negotiate a trade with the same. Or if misplaced know what will become of the shoots that will sprout.