The *Trillion Dollar Banking Crisis* | Worse than 2008 - Do this NOW.

falling after I was trading it's

tumbling right now by 42 after saying

it's weighing strategic options pack

West Western Alliance Comerica Zions and

keycorp leading the industry to the

downside well the banking crisis is on

back and at the same time we've just hit

the highest level of unemployment claims

in six weeks and of course the gold bugs

are cheering the fact that gold is now

as expensive as it was when Russia

invaded Ukraine yep apparently four

Regional lenders collapsing wasn't

enough to satisfy their cleaning out of

the junk in the banking system Silicon

Valley Bank Signature Bank silvergate

and First Republic weren't enough and

the 54 billion dollars in losses to

investors weren't enough to end the

banking crisis even the 800 million

dollars of First Republic bonds that

went poof

weren't enough now a new Target is pack

West Bank and potentially Western

Alliance Pac West Bank is down 86

percent year to date 50 today while at

the same time the big boys like JP

Morgan are only down 1.49 year today

they are actually positive before the

two percent drop today which is wild

comparing that to the smaller Banks The

Regionals like Pac West bank or Western

Alliance down 56 on the day uh it's low

and 69 year today and all of this

somehow happens right after Jerome

Powell says the banking system is sound

and resilient conditions in that sector

have broadly improved since early March

and the U.S banking system is sound and

resilient yes right after that we

basically heard news that Pac West Bank

was considering a sale and now Western

Alliance potentially as well though they

dispute this and it makes you wonder oh

boy how many dominoes are lined up and I

suppose when you've consider that the

FDIC themselves says that banks are

sitting on unrealized losses of over 620

billion dollars that's more than half a

trillion dollars makes you think that oh

wow wait a minute if unrealized losses

are 620 billion and of the four big

banking failures investors lost 57

billion that means maybe we're only one

tenth of the way in if all of those

unrealized losses actually have to come

to fruition now technically they don't

have to but yikes

this is leading some to say that

186 banks in the United States today

according to Bloomberg are in quote

distress

yikes we're at four banking failures

plus maybe pack West and then maybe

Western lines or maybe not who knows

that brings us to maybe six

and there are 186 that are distressed

and just by counting the first four

collapses we have seen the banking

collapse of 2023 is already officially

larger than the

2008 collapse

the 2008 banking collapse uh was about

25 bank failures with a total uh asset

failure of 373 billion dollars so

basically the total assets at all the

banks that doesn't necessarily mean

losses just total uh assets that all the

banks controlled were about 373 billion

dollars and that was spread apart in 25

banks that failed including Washington

Mutual back in the day well now we sit

at 548 billion dollars in total asset

failures and that's just with the first

four Banks now we've got potentially two

more and then who knows the dominoes

that are left now some folks like a

professor from UC Berkeley Ross Levine a

finance professor says well this is how

markets are supposed to work the bad are

supposed to get fleshed out basically

the ones with poor risk management

procedures are supposed to get flushed

out after all that's what the Federal

Reserve said in their Silicon Valley

Bank and banking crisis report they said

yeah hey look this was a bank that had

basket bad risk management procedures

and yeah we probably need to regulate

better and we have failed at that great

but how much worse is it going to get

because it's possible that well

according to a finance Professor from

Northwestern we could see another 300

billion dollars of Bank assets impaired

that would put us to a potentially

trillion dollar banking crisis think

about that the potential trillion dollar

banking crisis that would be three times

as large as 2008. but don't worry

everything is Justified

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during the pre-sale pacwest is a Beverly

Hills based bank and they are weighing

either a sale or Capital raise and

that's leading their stock to plummet

the sad thing about the regional Banks

is as soon as one of them says Hey we'd

like to raise some money people go with

a shotgun basically you must be having

problems sure

and so the irony is they're trying not

to have problems by raising Capital but

as soon as they suggest they need to

raise Capital they might be interested

may maybe in raising Capital boom you

did it's sad and it is often caused by

the deposit Rush that we're seeing of

individuals basically saying yeah I

don't know how much confidence I have

left in the small Banks let me uh

transfer my money out of these small

base not most people have their deposits

insured some large entities and startups

maybe don't but

effectively in the United States we have

nearly 100 FDIC insurance coverage even

above 250 000 now technically we don't

but so far we have had not a single

depositor has lost a dime but because of

the rush of deposits away from these

Regional Banks Regional banks are

realizing oh yeah this sucks we are way

upside down and now those banks are

being forced to close some of them are

being blamed for essentially exposing

themselves to risky lending like Silicon

Valley Bank hey maybe you shouldn't only

lend to startups going into a recession

oops and maybe you shouldn't go long on

low interest rate debt when we're going

into a rising interest rate environment

but others are saying well like what do

you expect these Banks made a reputation

for providing lending to a part of the

market that nobody else was willing to

lend to well maybe there was a reason

nobody else was willing to lend because

there was more risk and that's what

happens the bank then fails when the

underlying assets start going

poopy-doopy well pack West Bank only had

about seven percent of their outstanding

loan book

to well outstanding to startups most of

their loans were actually to residential

investors think about that over 40

percent of their loan book was for

residential purchases another 13 was for

residential construction and most of

that residential stock construction was

actually two to four multi-family

residential so that duplex Triplex

fourplex the smaller apartment building

think kind of your neighborhood landlord

the blue jeans millionaire who's out

investing in real estate and they're

getting 30-year fixed rate loans but

with a Twist they're often getting two

to three year interest only terms which

basically makes it easier to upfront get

into some of these multi-family projects

as you're trying to stabilize them and

raise rents over time especially in rent

control areas like Los Angeles

unfortunately when you rip away the

opportunity to receive these kinds of

loans you make it more expensive for

investors to invest in residential real

estate which many home buyers are like

thank God please get the hell out we

don't need more investors in residential

real estate making our real estate more

expensive now of course many argue that

that's not how the economy works and

landlords provide value to people who

want to rent properties but that's

really a topic for a different video

what this does suggest though is the

implication that hey if smaller banks

are essentially having to well go under

and now all of a sudden they're no

longer providing these comfortable

lending options then that's how you

actually see lending conditions tighten

you go to an area like Los Angeles and

you go all right well the person or the

bank that was just lending the

multi-family investors money is gone and

then the investors go all right well

where else can we borrow money JP Morgan

oh wait no they're not allowed to give

us more than four loans because the big

four banks are restricted via Dodd-Frank

in terms of what kind of loans they can

get okay well maybe I'll call up a loan

broker who let me get up to 10

investment property loans and that might

be possible but it's still that might

not be as good as the deal you could

have gotten at Pac West with that

initial introductory interest-only term

which you'd think maybe we would have

learned something from 2008 that would

suggest maybe just maybe we shouldn't do

introductory terms for loans because

eventually those end up going bad but

then again as they say history does not

repeat itself it just happens to rhyme

very similarly to what happened in the

past and nobody seems to learn any of

their lessons but then again Bloomberg

was reporting yesterday that only about

13 percent of 8th graders are actually

proficient in history because their

school sucks so much so maybe it's not

actually our fault maybe it's school's

fault and then of course the schools are

going to blame the politicians so it's

congress's fault no it's bailand's fault

or Trump's fault

oh whatever

now you have the arizona-based Western

Alliance exploring strategic options as

well for the financial times they're a

bank with 71 billion dollars in assets

at least as of the end of March the

financial times is suggesting that they

have hired advisors to help them explore

a sale now shares initially traded down

as much as 25 after that report but

Western Alliance is actually responding

and saying No this is completely false

we are not uh exploring a sale and

there's no truth to the financial times

piece which has the market somewhat

rebounding for the bank but a lot of

people saying yeah where there's smoke

there's fire there's probably something

going on over there

same time of all of this a lot of people

are saying maybe one of the reasons all

these banking failures are really

getting pushed to the edge is because

the banks make good deals for big Banks

to swallow up now Jerome Powell says he

doesn't have a vendetta against small

Banks and he doesn't have some kind of

agenda to destroy small Banks but it's

awfully interesting that after the

Silicon Valley Bank deal and Silicon

Valley Bank collapse now there are

investigations into Goldman Sachs for

potentially purposefully sandbagging the

lining up of capital for Silicon Valley

Bank creating fear in the market and

letting the bank completely essentially

collapse so that First Citizens could

get a good deal on the entire book of

business for Silicon Valley bank

whatever's left now no guarantees maybe

Goldman Sachs was trying to do their

best but people were nervous and

uncertain that there was a lot of risk

involved but they're now investigations

that maybe big boys are purposely trying

to sandbag these smaller Banks because

after all raise your hand to suggest you

need funding boom you get shot with the

shotgun and the government's the one

that's really coming in taking the big

L's see remember when Credit Suisse was

taken over by UBS well imagine this I

want you to pretend you are UBS which is

also a Swiss bank

now I want you to imagine somebody

knocks on your front door you know with

an iPad like a solar sales person right

except now they're trying to sell you a

bank they say dear UBS you dare you

would you be interested in buying Credit

Suisse it's a massive bank and uh they

got some toxic assets well you're gonna

be like

well how am I gonna financially protect

myself from that one I'm gonna need a

lot of time to go do due diligence on

that and then well this is where of

course then what kind of response do you

get oh fear not how about if you pay

this price a will take nine billion

dollars of losses and then if you make

money after that good on you if you lose

money after that oh well but uh we'll

just basically guarantee the first nine

billion in losses please take this back

before everything collapses then after

that if there are gains you can have

them if their losses that's on you but

would you be willing to take the deal

then and then you're like

damn five build after a quick glance

that should cover a lot of losses sure

let's do the deal right this is a kind

of negotiating that happens and I'm sure

it's obviously a lot more detailed and

involved than that but the point is the

big banks are only going to buy the

small ones if it's a good deal and so

the Swiss National Bank of the Swiss

government bailed out essentially the

Credit Suisse deal to make it palpable

for UBS to buy them it's very similar to

the FDIC taking a 13 billion dollar loss

on the First Republic takeover by JP

Morgan JP Morgan's taking him over but

FDIC is still getting stuck with a 13

billion dollar bag

Signature Bank left the FDIC with a two

and a half billion dollar bag

Silicon Valley Bank left the FDIC with a

20 billion dollar bag well if you add

all this stuff up somebody's going to

have to pay for it and it's either going

to be the taxpayers who are going to pay

to bail out and essentially refund the

FDIC or it's going to be everybody else

at banks that aren't failing who are

going to have to pay higher FDIC fees

and that's corporate socialism because

realistically what should be happening

is these Banks should fail if there is a

deficit of 13 billion dollars or say 10

of assets then anybody who has more than

250

000 of deposits should take a haircut of

10 15 20 to make sure that not the rest

of the world has to take a loss for the

failures of that bank of course that's

just one argument that's the harsh

capitalism point of view other people

say well how could you expect depositors

to know about the bank's Financial

conditions oh well maybe because the

banks actually post their financials

every single quarter and then people say

put that's not the responsibility of the

depositor the government should do it

fine somebody should do something but

ultimately this is what's happening big

banks are getting good deals small banks

are going to put and then there is a lot

of finger pointing but it's not just the

Goldman Sachs who's getting a finger

pointed at them or The Regulators or the

FDIC there's actually another entity as

well I do want to remind you though that

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Kevin meet kevin.com so who else is

being blamed well potentially

KPMG they're the auditor for a lot of

banks in fact by some accounts they are

the actually just straight up they are

the largest banking auditor and guess

which companies they've audited Silicon

Valley Bank signature First Republic and

now Pac West and so now questions are

being raised about the capability of

this auditor to actually well audit and

do their job especially since KPMG gave

a clean financial statements for all of

these three Banks as recently as

February before the banking crisis and

so now there's a lot of question about

the staff's independence and potentially

red flags here which boy doesn't that

sound a whole lot like what happened in

2008 where rating agencies were

basically stamping toxic bonds as AAA

even though they weren't AAA

hmm after all it is the banks who choose

the auditor technically the auditor

wants to do a good job to preserve their

reputation but then again who would

think that after the Great Recession

we'd end up having another banking

crisis so the real question now is how

does this affect the whole economy and

you well some say you just have to look

again at Commercial Real Estate which is

already 50 vacant and already trashed

potentially down 40 in value because of

covid but now consider what's going to

happen to all of these Banks after they

failed after all in a study by Bloomberg

60

of First Republic Branch branches posts

outposts are less than a five minute

walk

from Chase well Chase just bought First

Republic so what are you going to do

with all those other offices and

branches

in 16 cases the First Republic Branch

was just a one-tenth mile away from

Chase now some suggest maybe these will

be converted to wealth Center offices

Charlie Munger says hey you know Warren

Buffett's buddy a lot of trouble in

Office Buildings a lot of trouble

shopping centers a lot of troubled

properties out there a lot of Agony out

there he says

but also as the banking crisis worsens

not only do you now crimp lending on

Commercial Real Estate and investment

real estate potentially driving up the

amount of inventory that ends up coming

to Market driving prices down further

but you remove new investors from the

market while at the same time as Banks

themselves collapse not only are you

affecting all the other office real

estate via a tighter lending standards

and potentially liquidations of

properties but also you yourself are now

adding to inventory because we just need

less offices in the banking space so

what is the impact to you well the

impact is hurry up and wait to see what

happens to the real estate market so far

in q1 it actually seems like it's doing

okay at least residential is now there

could be some stresses around hey when

is your neighborhood Bank going to

default but then with how much our

deposits have essentially been

universally guaranteed and how many of

us don't have 250 000 in cash in the

bank anyway it probably really doesn't

matter now it is probably a good

opportunity to wake up and go oh how

much of a yield are you actually getting

on the cash you have deposited and if

you're only earning a quarter of a

percent maybe it's time to move some of

that money and diversify it over to

other platforms or money market funds

that could offer you a higher yield like

a high yield savings account or a Robin

Hood or a wealth whatever this video is

not sponsored or brought to you by

anything other than this beautiful

course uh and uh the bundle coupon that

you can get by emailing us at kevin.com

now one of the ways you could

potentially solve this and how else this

could potentially impact you is that if

the Federal Reserve started cutting

rates then losses that these Banks would

ex would be expected to diminish

substantially because as rates go down

the value of the existing loan

portfolios goes up and those FDIC losses

potentially get limited those unrealized

losses at Banks now once you lose

confidence though it can be very hard to

rebuild faith in Banks so the banking

dominoes may continue to fall and the

stress for commercial real estate May

remain as well as if we do see an

increase in inventories we could see

some real pressure on real estate

valuations though again we haven't seen

that happen yet but if some of these

things happen that is more banking

failures tighter lending conditions and

stress in real estate at the same time

as inflation starts trending down I

would expect the bond market could

actually end up being correct and we

could see rate cuts from the Federal

Reserve as soon as July so buckle up one

thing that is guaranteed around here is

entertainment and if you appreciated

this video and this Insight consider

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leave me a comment down below thanks so

much wish you the best goodbye

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thank you

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