Why Big Banks & Jamie Dimon are PANICKING.

banking sector has an issue. I'm not

sure if it's because they're secretly

panicking, but there are changes

happening in the banking sector. And

it's really important to know that

historically

banks tightening is the ideal way for

the economy to start contracting. A lot

of us look at the M2 money supply and we

say, "Oh, but the M2 money supply is

expanding." We have to be careful with

that because the M2 money supply

historically expands rapidly in

recessionary environments leading into

recessions and then a massive expansion

of the M2 money supply coming out of the

recession as we try to print our way out

of recession. But something that we

really want to pay attention to is bank

lending because banks basically create

money out of thin air. So they lend $100

and then somebody deposits that $100

into their bank account. the bank can

then go turn around and lend another

$90. And so now you've created $190 for

the economy. And they do this over and

over and over again. And you're really

creating money out of thin air. And

lately, Jaime Diamond as well as

Cityroup have been, you know, indicating

some increases in problems. Jaime

Diamond, maybe he's just weird. I don't

know what's going on over there. I I I I

think a lot of the big banks like a

Chase have kind of lost the ability to

actually give you better service

compared to all what a lot of the

fintexs are doing. So, especially when

it comes to real estate lending, these

banks are worthless. So, I don't

recommend people going to like a JP

Morgan or Chase or whatever anymore. I

used to, but you could get much better

deals, loans, and services at other

entities. Uh this sort of like

reputation of these big banks doesn't so

much matter anymore, I believe. And

we've already heard that Jerome Powell

is going to bail out basically any bank.

I mean, we saw what happened with

Silicon Valley Bank. We basically got an

infinite FDIC bailout for for banks,

right? So, the banking system is is a

hard like has a hard put option under it

from the Fed. That said, Croup is set to

put aside hundreds of millions of

dollars more than it did last quarter to

account for potential losses on loans.

An early sign that the biggest US banks

are bracing for deteriorating economic

health. Okay. as banks start putting

aside more potential uh losses for

credit reserves, you also have Jamie

Diamond being a little weeny baby. And I

don't know if he's being a weenie baby

because he sees things coming, but he

says the impacts of pandemic era

government spending and monetary policy

that help support the economy have

faded. So basically, the money printing

is faded and that makes the country

vulnerable to a downturn. Well,

actually, here it is in the coming

months. there's a chance the real

numbers will deteriorate soon. I think

what's happening in the banking industry

is you're getting banks that are saying,

"Okay, let's increase our compliance

standards. Let's reduce our risk. Let's

start thinking about reducing lending."

And when we do that, what we're really

doing is we're limiting the money access

that especially small and medium

businesses have access to. You know,

when banks close credit lines or when

banks don't issue home equity lines of

credit, like there's a comment here in

the stream. Zach says, "Banks are

tightening big time. Wanted to pull out

a heliloc with over $400,000 of equity,

and the bank would only offer me

$200,000 max." Obviously, it's likely

you have a lot more room in your your

not only personal debt to income, but

also potentially the property's value.

But a lot of banks, what they're doing

is they're saying, "Hey, we just limit

HELOCs at 200K." So, you know, you could

have a million dollars of equity and

maybe they only give you 200k. That's

not going to be true at every single

bank and there again, they're fintex.

They're going to offer you more uh

access to credit often. But

I think what you're seeing at the big

banks is a potential early sign of more

constriction happening at banks. And

maybe it's just because they want to get

through the next 3 to 6 months, but I

would argue that it's really important

to pay attention to the delta that's

happening at banks. So, watch for

changes that banks are making. Are they

closing loan products? Are they closing

offers? Are they increasing uh, you

know, payback terms or interest rates?

Uh, or issuing fewer credit cards

because they're worried about the losses

they're running into. Now, that could

obviously hurt bank growth. But, if you

go into a recession, I think banks want

to be in an environment where they have

a lot of cash so that they could be

opportunists. Because remember how JP

Morgan made a lot of money during the

banking crisis the Silicon Valley

banking crisis in 23 they ended up

buying was it first oh what was the bank

of I can't remember what it was called

uh first republic that's what it was

they bought first republic and JP Morgan

took like a billion dollar gain a

billion gain first uh republic JPM I'm

pretty sure they took this this billion

dollar write up

oh I'm sorry $3 billion ion dollar bump

from First Republic.

JP Morgan's $3 billion bump from First

Republic. I don't know if they

recognized all of that as a gain. The

country's biggest and most profitable

bank in tanks to get even bigger and

take in more income in 2023 despite the

chaos and possible recession. Look, they

were talking about recession in 23. We

were still talking Nike swoosh back

then. I wasn't even worried about

recession then. Um, so a key update was

that JPM raised its forecast for net

interest income, uh, the difference

between what it earns on its loans and

pays by $3 billion. The bulk of that was

because of First Republic. In other

words, in uncertain environments, the

banks want to have cash and access to

capital to go acquire banks. Then what

they do is they go through and they weed

out what they don't want. They increase

their compliance standards. They reduce

their risk and they set up for a next

recessionary environment where they can

go acquire even more banks. JP Morgan is

we know is a too big to fail bank. It's

the biggest bank in the world. Uh and

Jamie Diamond's warning is here.

Employment will come down a little bit.

Inflation will go up a little bit. So

far neither of those are happening.

Hopefully it's just a little bit. I

think that's his concern though that,

you know, the economy quote unquote soft

landing looks like it might end up being

weaker going forward. Uh, and let's see

here. Another area Diamond warned about

was private credit. Well, the one of the

reasons you this could be a little bit

of bias. One of the reasons you're

seeing bankers panic about private

credit is really because it takes a lot

of their book away, you know. So he

talks about the risks of private credit.

I feel like there's some bias here where

to some extent he says, "Do I think now

is a good time to buy credit? No, I

wouldn't be buying credit at these

prices and spreads." Basically, there

are two ways to look at this. One is

jaded and biased. Okay, Jamie Diamond's

pissed that the FinTechs and the other

banks are doing way better at lending

and they're giving way better deals and

way better services uh than than Jamie

than JP Morgan can. When I got a loan on

my plane, uh, I didn't I I tried going

through JP Morgan because I'm like,

"Hey, I've built this relationship for

15 years with you guys. You guys could

get me a good loan, right? You'll take

care of me." And they offered me a loan

with a remaring provision. And I'm like,

"Suck my wiener. I'm not taking a loan

with a remaring provision." It was like

a 10-year loan, one-year remaring, uh,

and then a balloon payment after 10

years. And I'm like, "This is the

dumbest thing I've ever seen. This is

like a stupid loan because these are

depreciating assets, you know. I I mean,

even though it's a bird and it flies,

it's still a depreciating asset. It's a

tool, right? That's all it is. It's a

tool. So, you know, I I I ended up going

to a non big four bank that I didn't

have a relationship with at all. And

that bank is like, "We'll give you a

20-year fixed rate loan, no prepayment

penalties, and no remaring provision."

What is a remaring provision? If the

value of the plane goes down, JP Morgan

wanted the right to reappraise the plane

and then make me pay off parts of the

loan earlier, whenever the hell they

want. And I told him, I go, "Well, what

if we go into a recession and the value

of this collapses? I'm going to have to

go sell a bunch of other assets just to

pay this loan down. And they're like,

"Yeah, not our problem." And I'm like,

"F you. Had a 15-year relationship with

you guys. You guys can't even do a loan.

That doesn't suck. You guys are morons."

Uh, and so I think that's part of where

these banks are frustrated because

they're getting smoked by other lenders.

Uh, and you know, I'm kind of like

shipping that. I'm kind of like happy to

see other banks do a lot better for

service than these big banks can. In

fact, if you look at I think this is

kind of crazy, but you can now get and I

haven't tried this yet, okay? So, I

don't want this to sound like it's like

an endorsement of this or whatever, but

how many of y'all bank or or like do

your, you know, accounting through

QuickBooks, okay, into it. Great stock,

by the way. Like huge cash flow. The

stock's been performing amazingly,

talked about it in the course lives for

years.

One of the things to pay attention to is

what QuickBooks is doing with this.

Well, I'm going to pull this up for you

and I think this is a gamecher and I

can't endorse this yet because I don't

know if it's trash or if it's good, but

I'm looking at this for house hack

because we go through PCAOB audits and

we have public, you know, like really

good accountants who are good with like

dealing with preIPO companies. They're

very, very expensive. And when you have

to go between QuickBooks and a bank and

reconcile this for auditors, you know,

obviously we reconcile our stuff every

month, but it's still like there's this

back and forth with auditors. Every back

and forth costs another hundred bucks,

hundred bucks, 100 bucks cuz these

auditors are very expensive and you get

these like $40,000 auditing bills and

it's like good lord, it's expensive to

be a preo company. Anyway, look at this

folks. QuickBooks banking.

Basically, inside of your QuickBooks,

they let you have a bank account. And

now you basically, I don't know this,

but I'm assuming you can automatically

reconcile between QuickBooks and your

bank account because your bank account

is QuickBooks.

So, like

like if you're a small business owner,

you the idea of that I I don't know if

it's actually good. Okay. I haven't

tried it yet. I'm just saying like as a

business owner, I'm salivating over it

because I'm like this is brilliant. This

could save us tens of thousands of

dollars in bull crap going between a

bank and and our accounting software. Uh

so like again, I'm not trying to shill

it here. I'm just trying to give

examples of maybe these bankers are

being so bearish on the economy because

they're getting reamed by other

companies that are just doing better job

than they are. Whether it comes to a

plane loan, whether it comes to

mortgages on your home. I sat down at JP

Morgan. I'm like, "Hey, I've been, you

know, banking with y'all for 15 years or

whatever." I sit down and I go, "Hey,

can you give me a loan on my rental

properties?" They go, "Oh, you have more

than four rental properties. We can't

help you." And I'm like, "Bro, I could

get 20 with the lender down the street.

I could get 20 Fanny and Freddy loans

between Lauren and I. You're telling me

I can only have four? Suck a fat one.

This is dumb." So the the big banks just

don't have good products. So it's not

just real estate loans. It's not just

plain loans, but it's also innovation in

in the space over here. So maybe Jaime

Diamond is just being a little weeny

because they're starting to fall

behind. My take. Just saying. Just

saying. Uh, so

what else? I own three businesses and

that is correct. Kevin Max says

QuickBooks is expensive. Well, but you

have to look at it this way. If Yes.

Yes. I like QuickBooks deserves to be

expensive if it can cut out a lot of the

BS for us because we already pay a lot

of QuickBooks fees. But think about it

this way. If we can save,

you know, every 10 hours of auditing we

save is a thousand bucks. And if we have

to do these preIPO audits for House

Hack, remember, invest in House Hack, 5%

uh yield until conversion plus the

upside in the stock. Learn more at house

hack.com, not a solicitation. Read the

disclosures. There's risk with every

investment. You know, when you look at

this as a business owner and you're

like, man, I'm paying $40,000 to a, you

know, an auditing firm. I'm paying, you

know, $30,000 to a CPA or more. I'm

paying, you know, $30,000 to a

bookkeeper or more, right? You I'm

paying $100,000 in like accounting or

more. Maybe I'm even paying $200,000 in

accounting per year just to make sure

like our treasury bills and our money

markets and our our, you know,

properties and everything is fully

disclosed. There's no fraud. Uh there,

you know, there's there's no undisclosed

conflict of interest. Like, we're doing

everything correctly. That costs a lot

of money. If we could streamline that

with QuickBooks and simplify our PCAOB

auditing, that's fantastic. I'd love to

pay QuickBooks $2,000 a year more if it

saves me 20 grand. Duh. Now, does that

make a difference for you as like a

super small business or maybe not. Now,

am I going to put, you know, all of

house hacks cash at a QuickBooks bank?

Probably not, because I'd rather go

leave it, you know, a treasurydirect.gov

or in a money market somewhere, right?

You could have a Vanguard money market.

I think Vanguard's money market is like

the lowest fee you can get. But I'm just

talking about for like your operating

bank account. It's interesting. I'll let

you know how it goes. But I I I I think

I think that's something to think about

uh about why why Jaime Diamond's being a

little weeny baby. So I take his, you

know, Hurricane Storm Cloud stuff with a

grain of salt. Uh and and I don't know

if it's because their lunch is just

getting eaten by other competitors. find

that very interesting.