The Banking Crisis JUST got WORSE.

are we about to see the next wave of

bank failures the FDIC just reported

that we had another 11 Banks move into

the category of seriously troubled Banks

and they've issued a report to outline

exactly what the stability of the

banking system looks like in this video

I'm going to give you my opinion along

with this data on how concerned you need

to be about this banking crisis and the

next one that's Brewing let's get

started so first this is the FDIC

quarterly banking profile uh for the

first quarter so it's for q1 now there's

something really important to know about

this being from the first quarter it's

that unfortunately things are going to

get worse before they get better see

most of these banks have issues or the

ones that do have issues have issues

because they have portfolios of bonds on

their bank balance sheets okay fancy

way of basically saying they have a bag

of stuff that's worth less than it used

to be worth that means you have a lot of

banks that are sitting on a lot of

unrealized losses which means they

haven't sold that bag yet but those are

still losses which unfortunately means

some banks have less money than people

might otherwise think they have and

especially with how accounting rules

work not all of those actually have to

show up on the balance sheet Mark to

Market and that's how you end up getting

banking failures when oopsy doopsy more

people are trying to get their money out

of the bank but you just can't get it

out something similar is actually

happening to not a bank right now which

is a company called yata bank that has

to do with one of their intermediaries

going bankrupt and that's really a topic

for a different video this video was

about actual Banks and a real banking

crisis so the report tells us the

following data that we really want to

pay attention to the first thing that

makes me most nervous is this section

right here it's on page two of the

report unrealized losses on available

for sale and held to maturity Securities

increased 39 billion to

$517 billion that's an increase of about

7.5% in a quarter that's not great a 7

1.2% increase in a quarter is like a 30%

increase in a year so uh quarter

sequentially I like to write uh that's

from the fourth quarter to the first

quarter yikes and this is also the ninth

straight quarter of unusually high

unrealized losses since the Federal

Reserve began to raise interest rates so

in otherwise in other words we're 9 * 4

9 * 4 we're now at

36 months into oh sorry uh 9 time three

right there we go uh each quarter is

three months we're now 27 months in a

row into this crisis of losses going up

at Banks now in addition to this we get

a note here that there's also been a

notable increase in the level of right

Downs on credit cards and that the

industry's quarterly net charge off rate

remained about 65% in the second quarter

but that's 25 basis points higher than

it was last year and the most important

bottom line in case a lot of that sounds

noisy it's the highest rate of charge

offs since the third quarter of 2011 but

2011 was like the second wave bottom at

least in the real estate market that's

kind of scary to compare to as you're

coming out of the Great Recession not

great but then you've also got this

right above chart number 14 which would

put us at page let's say it's 11 yes

page 11 right here okay the FDIC has a

list of problem Banks and total assets

by held by problem Banks just ballooned

it just exploded from $15.8 billion of

risk to

82.1 billion of risk that's a really big

explosion in Risk that's a

5x increase in in the total assets held

by problem Banks that's not great 5x now

when did this change well it says here

the number of banks on the list

increased from 52 in the fourth quarter

to 62 uh sorry 63 in the first quarter

of 2024 so in one quarter we had 11 more

Banks added to the list and total assets

held by problem Banks increased

5x that's the scary part this five X

increase in problem Banks not good not

good at all now something you'll notice

is if you actually do the math you had

about a 21% increase in the number of

problem Banks that's going 52 to 63

right that's about 21% but it's worth

noting there are 4500 banks in America

so you really only went from 1.15%

problem Banks to 1.4% problem Banks and

the FDIC says it's normal to have 1 to

2% of banks on the problem list

but what they don't mention is what a

normal level of assets at risk is like

look if you had 52 banks with

$15.8

billion of problem money uh or or assets

at those problem banks that means each

of the banks had an average balance of

about $300 million so 52 at 15.8 8

equals average of $33 million each

problem Bank enter there we go all right

but now that's actually risen

substantially so we're going to now

change this math and we're going to do

63 uh

Banks and the total assets of exposure

here about

82.1 so we 5x which means all of a

sudden the level of problem Banks or the

the average balance at each of these has

just

exploded to

$1.3 billion for each problem Bank well

wait a second that means what we just

did is we just for

xed the number of assets uh or or the

average size Forex

average uh problem Bank

size that's a little bit scary why is

that scary well look at the end of the

report right here they talk about how

FDIC lost $22 billion from signature

bank and they have to recover that

through other assessments on other Banks

and they lost uh let's see here

Signature

Bank uh yeah that's all they show here

they don't show the other Banks I

thought they maybe they showed another

bank here okay that's okay they lost

$22.5 billion ah there it is for Silicon

Valley Bank and Signature Bank that was

their total loss so for those two Banks

$22.5 billion loss well the current

problem is also about four times the

loss that they had from Signature Bank

and signature Valley uh Silicon Valley

Bank so the current level four level

five problem is 4X the size even though

it feels like we just went from 1.15 to

1.45 so what does that practically mean

as a bottom line well so a practical

point of view is I'm going to write this

down you ready for this annotate page

no

more hikes okay practical Point number

one the FED can't afford to create

another banking crisis because then

they'll be forced to cut rates

substantially more rapidly and they

could reintroduce inflation so

ironically you start lowering interest

rates you create less stress on the

banks and you potentially solve

inflation at the same time whereas you

rates or keep rates high too long you

create more stress in the banks create a

crisis now you have to cut rates

substantially and then oh no you might

have to reverse because all of a sudden

inflation is rising again so I think

this practically screams no more hikes

and if anything it probably means you

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I use uh met kevin.com slife uh but it

also practically probably means honestly

reports like this sooner rate cuts which

sort of now makes sense why jpow seems

like he's sort of been brushing off hot

data or sort of like warmer data and it

feels like he's been looking for a

reason to cut this might be why he's

looking for a reason to cut uh that's a

little un un fortunate now uh well is it

unfortunate though um Maybe not maybe

it's a good thing because equities are

supported by that anyway we're currently

pricing in 1.8 rate cuts for December

and we are pricing in our first full

rate cut the two days after the

election uh we only have about an 80%

chance of a rate cut by September so

anyway a little bit on the banking

crisis and are things getting worse

just four times worse in the quarter

over

quarter why not advertise these things

that you told us here I feel like nobody

else knows about this we'll we'll try a

little advertising and see how it goes

congratulations man you have done so

much people love you people look up to

you Kevin PA there financial analyst and

YouTuber meet Kevin always great to get

your

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