Just look at what is happening to our banks.

The FDIC’s most recent report tells us that there are 63 “problem banks” in the United States, and collectively our banks now have 517 billion dollars in unrealized losses…

According to the Federal Deposit Insurance Corporation’s first quarter report, the US banking system is sitting on a collective $517 billion in unrealized losses and has 63 “problem banks.”

Those losses have been sparked primarily by a surge in interest rates over the past two years, which have driven down the price of fixed-income securities held by banks.

Unrealized losses held by banks increased by $39 billion in the first quarter relative to the fourth quarter of 2023.

“Higher unrealized losses on residential mortgage-backed securities, resulting from higher mortgage rates in the first quarter, drove the overall increase,” the FDIC said.

I would love to know what banks are on that list.

Wouldn’t you?

But the FDIC will not tell us.

As Daisy Luther has accurately noted, the FDIC won’t release that information because they are afraid of bank runs…

We don’t get to know which banks are in trouble.

It could be my bank. It could be yours. Or maybe it’s not.

Are they big banks? Small ones?

The list is confidential to inhibit the likelihood of bank runs finishing off these institutions.

So we just don’t know.

If Americans had the truth, there would be bank runs all over the country tomorrow morning.

That is a rather comforting thought.

And the condition of our banks just continues to deteriorate because mountains of commercial real estate loans are going bad.

At this point, it has become clear that we have never faced a commercial real estate crisis of this magnitude in our entire history…

The CRE sector faces the triple whammy of falling prices, falling demand, and rising interest rates. The post-pandemic rise of telecommuting and work-at-home programs crushed demand for office space. Vacancy rates in commercial buildings have soared.

This has put significant stress on commercial real estate companies. The biggest bankruptcy in 2023 was the failure of the Pennsylvania Real Estate Investment Trust. The company had loaded up with more than $1 billion in liabilities.

The collapse of the commercial real estate market could easily spill over into the financial sector. That’s because a lot of loans are coming due.

According to the Mortgage Bankers Association, around $1.2 trillion of commercial real estate debt in the United States will mature over the next two years.

A lot of financial institutions will fail during the months and years that are ahead of us. Just hope that your money is not in one of them.

Meanwhile, one recent survey discovered that approximately two-thirds of all small businesses in the United States are teetering on the brink of disaster…

A new survey reveals that over two-thirds of small business owners are terrified of the state of the economy under Joe Biden’s watch, fearing that current conditions and ongoing downward trends will lead to them having to close their businesses.

As reported by the Daily Caller, the poll from the Job Creators Network Foundation (JCNF) shows that 67% of small business owners maintain such fears about the economy as it stands today, marking a 10-point increase from sentiments two years ago. In the same poll, participants’ perceptions of economic conditions for their own businesses fell from 70.2 to 68.1. Perception of national conditions fell even more drastically, from 53.2 to 50.4.

Maybe you don’t care about what is happening to our small businesses.

But you should, because close to half of all workers in the United States are employed by small businesses…

Forbes estimates that at least 46% of all employees in the United States, around 61.6 million people in total, are employed by small businesses.

I think that it is quite an ominous sign that the household survey showed that the U.S. economy lost a whopping 408,000 jobs last month.

Sadly, I think that a lot more months like that are coming.

Retailers are also really struggling right now.

In fact, as Mark B. Spiegel recently discussed, major retailer after major retailer has been reporting disappointing sales numbers…

The U.S. economy seems to finally be cracking. This month a slew of retailers (off the top of my head: Target, Lowe’s, Macy’s, Kohl’s, Best Buy and Foot Locker) reported negative year-over-year sales comps, and that’s before adjusting for the inflation that makes them 3% to 4% more negative in “real” terms. Others (Dollar General and Burlington) reported same-store sales comps in the +2% range, but that too was negative when adjusted for inflation, while Walmart and Nordstrom comps managed to roughly keep pace with inflation, but were unable to exceed it.

At one time, Walmart was an unstoppable retail behemoth. But now even Walmart is closing down stores…

WALMARTS are closing across the country – and retail experts say the cuts are signals of a bleak future for shoppers.

The multi-million dollar corporation has closed nine stores so far this year, which could be a warning sign for other retail giants.

Of course the stores that Walmart is shuttering are just a drop in the bucket compared to what other chains are doing. As I detailed in an article that I posted last week, we are on pace to lose 7,800 stores in 2024.

When the Drudge Report used the term “retail apocalypse” in one of their headlines on Monday morning, that was not an exaggeration at all.

We really are in the early stages of a historic meltdown.

And the outlook for the months ahead is extremely bleak.

In fact, Harry Dent just told Fox News that we should brace ourselves for “a bigger crash than we got in 2008 to ’09”…

Speaking in an updated interview with Fox News Digital, Dent cautioned that the “everything” bubble has still yet to burst, and it may be a bigger crash than the Great Recession.

“In 1925 to ‘29, it was a natural bubble. There was no stimulus behind that, artificial stimulus per se. So this is new. This has never happened,” Dent said on Tuesday. “What do you do if you want to cure a hangover? You drink more. And that’s what they’ve been doing.”

“Flooding the economy with extra money forever might actually enhance the overall economy long-term. But we’ll only see when we see this bubble burst,” he added. “And again, this bubble has been going 14 years. Instead of most bubbles [going] five to six, it’s been stretched higher, longer. So you’d have to expect a bigger crash than we got in 2008 to ’09.”

Our leaders were able to keep the game going for years by pumping trillions upon trillions of dollars into the system.

But they didn’t fix anything.

Instead, they just delayed the inevitable.

Our entire system really is crumbling all around us, and as it crumbles we are going to see chaos on a scale that most people don’t even want to imagine.

Already, major cities from coast to coast are being terrorized by theft, violence, drugs, homelessness, gangs and anarchy.

If things are this bad already, what is America going to look like once our leaders completely lose control of the economy?

Michael’s new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

(Discern Money)—Affluent Americans are advised to review their bank deposit insurance coverage following recent changes to Federal Deposit Insurance Corporation (FDIC) rules. These changes, implemented last month, have placed a cap on FDIC insurance for trust accounts at $1.25 million, a significant shift from the previous no-limit policy.

This adjustment aims to simplify the understanding of deposit insurance rules and expedite the determination of insured accounts in case of bank failures.

Under the new regulations, the FDIC continues to insure up to $250,000 per depositor and per account category at each bank. However, the changes affect how trust accounts are insured. Previously, each beneficiary of a trust could receive $250,000 in insurance protection, potentially insuring an “almost infinite amount” at one bank. Now, the new rule limits the number of trust beneficiaries receiving this protection to five, totaling at most $1.25 million.

Moreover, the FDIC has merged irrevocable trusts and revocable trusts into one ownership category, impacting the insurance coverage. This change could decrease coverage for some depositors but could also increase coverage for a small number of irrevocable trusts. The FDIC estimates that nearly 27,000 trust account depositors and over 36,000 trust accounts could be directly affected by these changes.

To ensure that your deposits are fully insured, use the FDIC’s Electronic Deposit Insurance Estimator to determine if any of your funds exceed the new coverage limits. If you find that some of your money is now uninsured, consult your bank. Financial institutions are typically ready to assist customers affected by these regulatory changes to ensure that large deposits remain protected. You may need to open a different type of account or deposit the uninsured sum in an account at another bank to maintain full insurance coverage.

Article generated from corporate media reports.

By the time news of the failure of Republic Bank broke, many people had already started their weekends.  And the FDIC probably assumes that most people will have forgotten all about this by the time Monday morning rolls around.  But this was a big deal, and it is inevitable that more dominoes will soon start to fall.

At the time it was seized, Republic Bank had 32 branches in New Jersey, Pennsylvania and New York.  The following comes directly from the FDIC announcement that was issued on Friday…

Philadelphia-based Republic First Bank (doing business as Republic Bank) was closed today by the Pennsylvania Department of Banking and Securities, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect depositors, the FDIC entered into an agreement with Fulton Bank, National Association of Lancaster, Pennsylvania to assume substantially all of the deposits and purchase substantially all of the assets of Republic Bank.

Republic Bank’s 32 branches in New Jersey, Pennsylvania and New York will reopen as branches of Fulton Bank on Saturday (for branches with normal Saturday hours) or on Monday during normal business hours. This evening and over the weekend, depositors of Republic Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on Republic Bank will continue to be processed and loan customers should continue to make their payments as usual.

I think that a pattern is emerging that we will likely continue to see for future bank failures. Before this seizure was even announced, an agreement had already been made for a larger bank to swallow up the assets of Republic Bank.

Of course taxpayers didn’t exactly get off scot-free in this deal.  According to the FDIC, this agreement is going to cost the Deposit Insurance Fund 667 million dollars…

As of January 31, 2024, Republic Bank had approximately $6 billion in total assets and $4 billion in total deposits. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) related to the failure of Republic Bank will be $667 million. The FDIC determined that compared to other alternatives, Fulton Bank’s acquisition of Republic Bank is the least costly resolution for the DIF, an insurance fund created by Congress in 1933 and managed by the FDIC to protect the deposits at the nation’s banks.

If only a few banks fail this year, the Deposit Insurance Fund will be able to handle it.

But what is going to happen if dozens of banks start to fail?

It has been clear for a long time that Republic Bank was in trouble.

They were sitting on “$262 million of unrealized losses on bonds”, and Republic’s stock price had fallen all the way down to 1 cent…

The bank’s stock price has tumbled from just over $2 at the start of the year to about 1 cent on April 26, leaving it with a market capitalisation below $2 million. Its shares were delisted from the Nasdaq in August and now trade over the counter.

Moving forward, we will want to keep an eye on other banks that are currently on shaky ground.

For example, New York Community Bank would have completely collapsed already if a group of investors had not been convinced to pump a billion dollars into that troubled institution…

Recently, New York Community Bank saw wild swings in its stock price as customers began pulling their cash from the regional lender after it said it had identified “material weakness” in the company’s controls. The bank got a $1 billion equity investment lifeline from investors, including former Treasury Secretary Steven Mnuchin’s firm, Liberty Strategic Capital, in March.

Of course it isn’t just New York Community Bank that is treading on thin ice.

Kevin O’Leary of Shark Tank fame is convinced that thousands of U.S. banks will fail during the years ahead…

In the next three to five years, thousands more regional institutions will fail. That’s why I don’t have a dime saved or invested in a single one.

One of the primary reasons why so many banks are on the brink of disaster is because we are facing a commercial real estate collapse of historic proportions.

In St. Louis, the tallest office building recently sold for 98 percent less than what it sold for in 2006…

Take, St Louis’s largest office building – its 44-story AT&T tower – for example. In 2006 this prime real estate sold for $205 million.

But that same now vacant skyscraper recently sold for around $3.5 million – a shocking 98 percent drop in value in less than two decades, the outlet reported.

The Railway Exchange Building, once the crown jewel of downtown St. Louis with its Famous Barr department store and sprawling offices, is also now an empty relic with peeling paint.

All over the nation, commercial real estate property values have fallen dramatically, and our small and mid-size banks are sitting on mountains of commercial real estate loans.

This story is not going to end well, and anyone that suggests otherwise is simply being delusional.

Meanwhile, more signs continue to emerge that the overall economy is rapidly heading in the wrong direction.

For example, Walmart just announced that it is closing two more stores…

Walmart is shutting another two stores next month – bringing the total closures announced this year to eight.

Bosses said the two stores – in California and Wisconsin – were not making enough money.

Walmart, which has already shut six in 2024, is among several major retailers to announce closures.

If bright economic times were ahead, Walmart wouldn’t be shutting stores down.

Just like everyone else, they can see what is coming.

Of course Joe Biden and his minions insist that everything is just great.

They are telling us that the economy is booming and that the unemployment rate is low.

But that is not the truth.

The Ludwig Institute For Shared Economic Prosperity analyzes the data provided by the federal government in order to calculate a “true rate of unemployment”…

Using data compiled by the federal government’s Bureau of Labor Statistics, the True Rate of Unemployment tracks the percentage of the U.S. labor force that does not have a full-time job (35+ hours a week) but wants one, has no job, or does not earn a living wage, conservatively pegged at $25,000 annually before taxes.

According to them, instead of an unemployment rate of “3.8 percent”, the true rate of unemployment is actually 24.2 percent.

Right now, there are countless people that continue to remain unemployed even though they are desperate to find a job.

Sadly, the employment market is only going to get tighter in the months ahead.

I am entirely convinced that global events will become extremely chaotic during the second half of this year, and that is going to have a devastating impact on our economy.

So whatever you need to do, I would encourage you to do it with haste.

Because the pace of events is not going to slow down for anyone, and it is much later than most people think that it is.

Michael’s new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.

Or face consequences.

The issue is described in a letter, authored by Kansas Attorney General Kris Kobach and joined by many others, to bank chief Brian Moynihan.

It’s over the bank’s practice of “de-banking,” or simply shutting down the accounts and banking rights, of various people and groups with whom to bank disagrees.

The letter, bearing the signatures of officers from Alabama, Arkansas, Idaho, Indiana, Iowa, Mississippi, Missouri, Montana, Nebraska, South Carolina, South Dakota, Texas, Utah and Virginia, too, calls on Moynihan to deliver, within 30 days, a report about his “account-cancellation policies and practices,” his “risk tolerance,” “reputational risk,” “hate” and “intolerance perspectives, and “whether Bank of America considers a customer’s speech or religious exercise—or public perception or other groups’ perception of them—as a component of those policies.”

The letter told Moynihan, “It is nearly impossible to function today as an individual, family, or organization without a bank account, a credit card, and the ability to obtain a loan. Federal and state governments recognize the necessity of these kinds of financial services, which is why they have passed numerous laws to prohibit various types of discrimination in the past. It is also why national banks like yours receive bailouts and many other privileges, courtesy of the American taxpayers.”

However, the letter charges, his bank “appears to be conditioning access to its services on customers having the bank’s preferred religious or political views.”

“This is inconsistent with your bank’s promise to uphold ‘the highest standards of corporate governance and ethical conduct [including] efforts to always do business the ‘right way for [its] customers.’ Surely Bank of America would not say that denying service to clients for exercising their civil liberties is doing ‘business the right way for [its] customers.’ Your discriminatory behavior is a serious threat to free speech and religious freedom, is potentially illegal, and is causing political and regulatory backlash.”

Already, the company has built a reputation for denying services to gun manufacturers and others, fossil-fuel producers, private prisons and “conservative and religious Americans.”

Further, the bank “willingly participated in … financial surveillance” of Americans, the letter said.

“We are deeply concerned that Bank of America is willing to cooperate in the infringement of its customers’ constitutional and privacy rights to help federal law enforcement surveil and target millions of conservative Americans, many of whom live in our states. Bank of America has a pattern of viewpoint-based debanking.”

And in egregious actions, Bank of America canceled the banking accounts of multiple Christian ministries.

The letter asks the bank to “curb” its “discrimination.”

A report from the ADF explained, “Just last month, the U.S. House Subcommittee on the Weaponization of the Federal Government singled out Bank of America for voluntarily handing over confidential customer information to government agencies without a warrant and without notifying its customers. Government agencies had flagged ADF and other mainstream religious and conservative organizations as ‘domestic terrorist’ threats, urging major banks to disclose private transactions involving keywords like ‘Cabela’s,’ ‘Dick’s Sporting Goods,’ and ‘religious texts.'”

The report noted the bank’s annual shareholder meeting is just days away, on April 24, at which board faces a request for a report on the “risks of politicized de-banking.”

Potentially, the report explains, there are “numerous legal and regulatory risks” the bank is embracing.

Content created by the WND News Center is available for re-publication without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@wndnewscenter.org.

Suppose you lived in the eighteenth century and had a hundred ounces of gold. It’s heavy, and you do not live in a safe neighborhood, so you decide to bring it to a goldsmith for safekeeping. In exchange for this gold, the goldsmith gives you ten tickets on which are clearly marked as claims against a total of ten ounces. Now, gold is heavy and burdensome to carry, so in a short period of time, those claims will start circulating in place of gold. This is the creation of near monies. This doesn’t mean you have given up your ownership claims on gold but have instead used a simpler way of transferring ownership on this gold.

Of course, the gold now just sits in the vault, and no one usually comes to get some of it or even checks that it is still there. Quickly, the goldsmith realizes there is an easy, fraudulent way to get rich: just lend out the gold to someone else by creating another ten tickets. Since the tickets are rarely redeemed for actual gold, the goldsmith figures he can run this scam for a very long time. Of course, it is not his gold, but since it is in his vault, he can act as though it is his money to use.

This is fractional reserve banking with a reserve of 50 percent. This is also how the banking system can create money out of thin air, or basically counterfeit money, and steal the purchasing power from others without having to produce real goods and services. On March 26, 2020, the United States central bank reduced reserve requirements for US banks to 0 percent from 10 percent in reaction to the economic effects of the covid pandemic.

Now the goldsmith, or what we will now call a bank, is limited in the amount of fraud or counterfeiting it can commit. There is a hundred ounces of gold and claims on two hundred ounces of gold. The bank must keep a certain amount of gold in its vaults since depositors on occasion will exchange tickets for gold. Another constraint is that depositors, if they get suspicious that there are more claims than available gold, may run to the bank demanding to redeem their “on demand” claims into gold.

This run, really, only reflects the totally fraudulent nature of banking. Banking holidays, which were implemented in the ’30s, or capital controls, which were implemented recently in Cyprus, are actions to benefit the fraudster (the banks) instead of the victim (the depositors). Of course, the European Central Bank supported these actions by Cyprus. The world has been turned on its head.

Suppose you are the goldsmith, and your rich uncle promises to lend you as much gold as you need if you happen to run out (the lender of last resort function of the central bank). Are you likely to commit more fraud? Suppose this rich uncle tells you that if things go bad, he will make sure everyone gets their gold back (deposit insurance). Again, are you likely to commit fraud? Since you have no skin in the game, are you likely to take even more risks, for higher returns, in your lending activities?

Austrian economists have a hard time explaining why fractional reserve banking is fraudulent. The standard response from the average Joe is that “everyone knows that the bank loans out your money.” Or they will say that “all banks in the US include a clause in the depositor’s contract that specifically says that the relationship between the depositor and the bank is exclusively one of creditor and debtor.”

Suppose the bank takes your money and loses it all. How does the bank satisfy your expectation that the money is there on demand to pay your rent and electricity bills? It’s simple. They take the money from someone else. If the bank had told you that the money is unfortunately lost, there would be no fraud (if you had signed a clear statement on the use of your funds). The fraud occurs the minute the bank takes someone else’s money. The victims of the fraud are the other depositors.

The bank essentially runs a Ponzi-like scheme (a fraudulent activity) that can continue for a very, very long time, but it is no less a fraudulent activity and should be treated as such. Although you and the bank may be aware of what is going on, it still should be treated as fraud. The fact that you are aware, or even unaware, of the Ponzi-like scheme does not diminish the fraud. Government deposit insurance just shifts the ultimate cost of the fraud to other depositors, taxpayers, or anyone using currency to conduct transactions.

Why is counterfeiting illegal? The counterfeiter is happy since he gets real goods and services, and the store owner is happy since he made a sale and can also get more real goods and services if he spends the money quickly before prices go up. So where is the problem? The transaction has been beneficial to both. It is illegal because of third-party effects.

The counterfeiter takes from the economic pie but does not contribute to the economic pie. He has basically stolen real goods and services by reducing the purchasing power of the money in everyone else’s pockets. When the fractional reserve banking system creates money out of thin air, it is also a form of counterfeiting and has undesirable third-party effects. Economists know that it is the rapid expansion of money and credit, unjustified by the growth of slow-moving savings, that has created the booms and busts of the last two centuries, and the hardships that have gone along with them.

Eliminate fractional reserve banking and you eliminate booms and busts. Unable to create money out of thin air, banking would now just be another sector without the ability to sink the entire world economy.

We need to start a serious discussion about ending fractional reserve banking, and central banking at the same time. Our current banking system is not free market capitalism. Banking in its current form should be outlawed because it is both fraud and theft.

Internal or external auditors occasionally comb through individual loans in a bank’s portfolio and make judgments as to whether those loans are worth what the bank says they are worth due to lower appraised values and other issues either particular to an individual property or the market as a whole. Bankers then, begrudgingly, set aside earnings for potential loan losses.

In the case of the real estate loans at New York Community Bank, loan examiners must have told senior management to increase the bank’s loan loss provision by 790 percent to $552 million. This balance sheet expense drove the fourth-quarter loss and caused the bank to cut its dividend.

“The bank reported a near $2 billion increase in criticized multifamily loans—debt with a probability of default,” wrote Suzannah Cavanagh for the Real Deal. “Of its $37 billion multifamily loan book, which comprises 44 percent of its total portfolio, 8 percent was marked criticized in the quarter.” The bank also reported a $42 million net charge-off—debt unlikely to be paid back—for an office loan on which the borrower stopped paying interest.

The bank’s chief financial officer John Pinto pooh-poohed the loan carnage, saying, “We had higher levels of substandard [loans] throughout the Financial Crisis, throughout the pandemic. The rise in substandard loans does not lead directly to specific losses.”

Hope Springs Eternal

Like the 2008 financial crisis, what happens in the US isn’t staying in the US. Tokyo-based Aozora Bank said losses in its US office’s loan portfolio will likely lead to a net loss for the year ending in March, the Wall Street Journal reports. Also, the private Swiss bank Julius Baer took a roughly $700 million provision on loans made to Austrian property landlord Signa Group. The bank said shutting down the unit was what made the loans, and the chief executive has resigned.

Jay Powell made no mention of the New York Community Bank’s news in his prepared remarks, and reporters didn’t ask him about the bank’s troubles during the Q and A. There were no questions concerning the Bank Term Funding Program that will be sunsetted March 11 despite having risen to record highs. According to the Wall Street Journal’s Andrew Ackerman, the popularity of the program was not because of new stresses on banks. But reportedly, “some banks had recently figured out a way to game the program by pocketing the difference between what they pay to borrow the funds and what they can earn from parking the funds at the central bank as overnight deposits.” On January 31, banks had borrowed more than $165 billion from the facility.

It’s doubtful there are no new stresses on banks. New York Community Bank is not an anomaly.

To that point, real estate investor Barry Sternlicht told a conference crowd…

We have a problem in real estate. In every sector of real estate, not just office, because of the 500 basis point increase in rates that was vertical. The office market has an existential crisis right now . . . it’s a $3 trillion dollar asset class that’s probably worth $1.8 trillion [now]. There’s $1.2 trillion of losses spread somewhere, and nobody knows exactly where it all is.

Sternlicht mentioned a project in New York that was purchased for $200 million that he thought was now worth just $30 million, encumbered by a $100 million loan.

Harold Bordwin, a principal at Keen-Summit Capital Partners LLC in New York, which specializes in renegotiating distressed properties, told Bloomberg, “Banks’ balance sheets aren’t accounting for the fact that there’s lots of real estate on there that’s not going to pay off at maturity.”

Bordwin went on to say, “Banks—community banks, regional banks—have been really slow to mark things to market because they didn’t have to, they were holding them to maturity. They are playing games with what is the real value of these assets” (emphasis added).

The plan for the Bank Term Funding Program was hatched in haste over a weekend in March of last year in the wake of the Silicon Valley Bank and Signature Bank failures (Signature’s assets were purchased by New York Community Bank). To hide their embarrassment over banks using the facility for risk-free interest rate arbitrage, they say they are shutting the program down because there is no stress in the banking system.

There is stress aplenty in the banking world. As Murray Rothbard wrote in The Mystery of Banking, “Fractional reserve bank credit expansion is always shaky, for the more extensive its inflationary creation of new money, the more likely it will be to suffer contraction and subsequent deflation.”

While bankers and regulators have their heads in the sand, the contraction has already begun.

About the Author

Douglas French is President Emeritus of the Mises Institute, author of Early Speculative Bubbles & Increases in the Money Supply, and author of Walk Away: The Rise and Fall of the Home-Ownership Myth. He received his master’s degree in economics from UNLV, studying under both Professor Murray Rothbard and Professor Hans-Hermann Hoppe. His website is DouglasInVegas.com.

As a result, the “unbanked” – people who do not have accounts in financial institutions –  are having a hard time processing electronic transactions and, to date, there are roughly six million of them in the U.S., which is about the population of Wisconsin. Outside of America, more than a billion people do not have a bank account.

There are several reasons why people opt out of banking. Back in 2021, the Federal Deposit Insurance Corporation (FDIC) held a survey of households about their connections to the banking system and asked why they didn’t have a bank account. The top reason, with over 40 percent of respondents, was that they didn’t have enough money to meet the minimum balance set by the banks. According to recent FDIC data, about 25 percent of people earning less than $15,000 a year are unbanked. Among those earning more than $75,000 a year, almost every person surveyed had some type of bank account. Another reason why customers do not choose to have accounts in financial establishments is that they have become skeptical of banks. Roughly one-third of survey respondents agreed that “Avoiding a bank gives more privacy,” while another one-third said they simply “do not trust banks.” Moreover, another one-quarter of respondents felt bank account fees were too high and about the same proportion felt fees were too unpredictable.

A recent Bankrate survey also showed that basic monthly service fees range between $5 and $15. Beyond these steady fees, banks earn $4 to $5 each time people withdraw cash from an ATM or need services like getting cashier’s checks. Unexpected bills can result in overdraft fees of about $25 each time an account is overdrawn.

Another set of data showed that there are almost six million “unbanked” and 19 million “underbanked” U.S. households. People with a bank account but who primarily rely on alternative services such as check cashing outlets are called “the underbanked.” As 2.5 people live in the average household, more than 15 million people are living in a home with no connection to banks and 48 million more are in homes with only a tenuous connection to banks – meaning, one out of every five people in the U.S. has little or no connection to banks or other financial institutions. That can leave them shut out from stores, restaurants, transportation and medical providers that don’t take cash.

The pandemic accelerated the shift to digital payments

A lot of business owners across America and even worldwide, blame it on the Wuhan coronavirus (COVID-19) pandemic as to why the shift to cashless transactions was catalyzed.

Forty-one percent of Americans said they did not use cash for their purchases in a typical week in 2022, up from 29 percent in 2018, according to a Pew Research Center survey released last October and business owners found it favorable for their enterprises. According to “experts,” the shift paved the way to “rising consumer demand, faster checkout, lower labor costs and increased security.” Those who wait risk losing revenue, they said.

However, there are drawbacks to going cash-free. These include the learning curve for entrepreneurs who may not understand how to set up digital payments; a lack of accessibility to credit cards for low-income consumers; and the most risky – privacy and surveillance. The threat that a digital financial system can be in the hands of one controlling body spells tyranny and totalitarianism. The stakes are too high. (Related: BIG BROTHER ALERT: CBDC projects around the world not installing privacy safeguards, British privacy organization finds.)

Meanwhile, a lot of people still prefer the anonymity that cash transactions provide. Cash is also seen as a way for spenders to remain aware of their expenditures. To top it all, the recent bank turmoil has made many depositors question the stability of the banking system. Also, a lot of business owners are still hesitant about moving too quickly with a technology that could go obsolete at any time.

Head over to DollarDemise.com to read more about the death of the United States dollar as a currency.

Sources for this article include:

• StudyFinds.org
• FDIC.gov
• NYTimes.com

The letter was sent to executives at Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo and took exception with the group’s membership in the UN organized Net-Zero Banking Alliance (NZBA), according to Fox News.

The NZBA is “committed to financing ambitious climate action” and is attempting to force the economy to net zero greenhouse emissions by 2050. The letter notes that this could result in “severe consequences” for farmers.

The letter reads: “Achieving net-zero greenhouse gas emissions in agriculture requires a complete overhaul of on-farm infrastructure — one of the goals of the NZBA.”

“This would have a catastrophic impact on our farmers. Proposed net-zero roadmaps describe dramatic, impractical, and costly changes to American farming and ranching operations such as switching to electric machinery and equipment; installing on-site solar panels and wind turbines; moving to organic fertilizer; altering rice-field irrigation systems; and slashing U.S. ruminant meat consumption in half, costing millions of livestock jobs,” it continues.

The letter then says: “To make matters worse, these changes will increase food costs and decrease food production at a time when global food demand is expected to rise dramatically.”

“This is compounded by the fact that, the average American has been struggling to keep up with inflation during the tenure of the Biden Administration. The reality could be much worse. These effects will hit the poor the hardest,” the commissioners wrote.

They said the goal of net zero emissions could “permanently damage American agriculture and endanger our country’s food security” and said that “American farmers should not be forced to put our food supply at risk.”

Georgia Agriculture Commissioner Tyler Harper commented to Fox: “American agriculture is sending a clear signal: we will not bend the knee to the failed, left-wing climate agenda of the United Nations that seeks to cripple one of our country’s most critical industries.”

“Now more than ever, banks that do business with America should be unquestionably supporting American industries — and that starts with the one that puts food on our tables, clothes on our backs, and shelter over our heads.”

Harper continued: “The UN’s Net-Zero Banking Alliance would be the equivalent of a run on the bank for our nation’s agriculture industry and pose a serious threat to our national security — and it must be stopped.”

Will Hild, the executive director of watchdog group Consumers’ Research, told Fox News: “Farmers and ranchers are the foundation of our economy and international climate cartels like the NZBA pose nothing less than an existential threat to their future. By forcing ESG, Brian Moynihan and his cohort have driven the cost of doing business for small family farmers and independent ranchers to astronomical heights.”

Hild continued: “The Ag officials and Commissioners hit the nail on the head in their letter: should their misguided climate extremism continue unabated, these megabanks will put our entire food supply in serious jeopardy. I applaud the states for their action, and I look forward to working with them to defend American consumers from this corporate malfeasance.”

Officials from Georgia, Alabama, Florida, Iowa, Kentucky, Louisiana, Mississippi, North Carolina, North Dakota, South Carolina, Texas and West Virginia all signed the letter. You can read the full letter here:

The letter asserts that, as members of the Net-Zero Banking Alliance (NZBA), @BankOfAmerica, @Citi, @JPMorgan, @MorganStanley, @WellsFargo, and @GoldmanSachs are all working in lockstep to force the ESG agenda onto the entire domestic food supply chain: pic.twitter.com/1phYm6iOvo

— Will Hild (@WillHild) January 29, 2024

It’s as if the Fed is asking the healthiest swimmers to don faulty life jackets first, in a bid to make them seem less alarming to those already struggling to stay afloat. Our guest commentator explains why this strategy, while intended to fortify the banking sector against future storms, would endanger all US banks.

The following article was originally published by the Mises Wire.

Last Thursday, Bloomberg reported that federal regulators are preparing a proposal to force US banks to utilize the Federal Reserve’s discount window in preparation for future bank crises. The aim, notes Katanga Johnson, is to remove the stigma around tapping into this financial lifeline, part of the continuing fallout from the failures of several significant regional banks last year.

This new policy is reminiscent of the Fed’s actions during the 2007 financial crisis, where financial authorities encouraged large banks to tap into the discount window, taking loans directly from the Federal Reserve, to make it easier for distressed banks to do the same. The hesitancy from financial institutions to tap into this source of liquidity is justified. If the public believes a bank needs support from the Fed, it is rational for depositors to flee the bank. The Fed’s explicit aim is to provide cover from at-risk banks, trying to hold off bank runs that are an inherent risk in our modern fractional reserve banking system.

By strong-arming healthy banks to comply, the Fed is escalating moral hazard and leaving customers more vulnerable. They are deliberately trying to remove a signal of institutional risk.

The regulator’s concerns about bank fragility are justified. The Fed’s low-interest rate environment meant financial institutions seeking low-risk assets bought up US treasuries with very low yields. As inflationary pressures forced rates upward, the market value of these bonds decreased in favor of new, higher-yield bonds. It was this pressure that sparked the failure of Silicon Valley Bank last year.

Additionally, the state of commercial real estate is a further stress for regional banks, which are responsible for 80 percent of such mortgages. In the previous low-interest rate environment, investors viewed commercial real estate as “a haven for investors in need of reliable returns.” Unfortunately, this same period experienced major changes in consumer behavior. Online shopping, remote work, and shared office space increased at the expense of traditional brick-and-mortar locations. Covid lockdowns only further amplified these trends.

As a result, commercial real estate debt is viewed as one of the most dangerous financial assets out there today, sitting right on the balance sheets of regional banks across the country.

These stresses have had a major impact not only on this latest policy from federal regulators but the depth of their response to last year’s failures. Following the failure of SVB, the Fed created the Bank Term Funding Program, which allowed banks and credit unions to borrow using US Treasuries and other assets as collateral. This emergency measure reflected fears of other banks being at risk. The Fed has signaled its willingness to let this program expire in March, with the aim of transitioning banks to increasing their use of the discount window.

While the actions of the Fed and financial regulators illustrate real concerns about the health of US banks, these same institutions have projected bullish optimism about the state of the economy in public. Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen have consistently described the US economy as “robust” over the last few months, a view not shared by the majority of Americans. Additionally, Powell proclaimed victory over inflation this past December, even while the Fed’s preferred measures remain well above their 2 percent target, in stark contrast to his previous statements about the necessity to aggressively tackle inflation at the risk of it becoming normalized.

The shadow of politics obviously can’t be decoupled from the rosy statements from government officials on the economy, particularly going into a presidential election year. Another motivation for projecting economic strength, however, is to re-arm the Federal Reserve’s policy arsenal. While the projections of Fed officials for rate cuts in 2024 have been packaged as reflecting the growing strength of the US economy, the reality is that the Fed desires the option to lower rates as a response to financial distress. The Fed has proven time and time again that if given the choice between forcing Americans to suffer from the consequences of inflation or bailing out the financial system, it will choose the latter.

With the 2024 election in full swing, Americans will be consistently bombarded with political lies and false promises, not just from politicians but from government agencies and the central bank. While we can expect another ten months of being told how strong the economy is, the actions being taken behind the scenes tell a very different story.

This new policy is reminiscent of the Fed’s actions during the 2007 financial crisis, where financial authorities encouraged large banks to tap into the discount window, taking loans directly from the Federal Reserve, to make it easier for distressed banks to do the same. The hesitancy from financial institutions to tap into this source of liquidity is justified. If the public believes a bank needs support from the Fed, it is rational for depositors to flee the bank. The Fed’s explicit aim is to provide cover from at-risk banks, trying to hold off bank runs that are an inherent risk in our modern fractional reserve banking system.

By strong-arming healthy banks to comply, the Fed is escalating moral hazard and leaving customers more vulnerable. They are deliberately trying to remove a signal of institutional risk.

The regulator’s concerns about bank fragility are justified. The Fed’s low-interest rate environment meant financial institutions seeking low-risk assets bought up US treasuries with very low yields. As inflationary pressures forced rates upward, the market value of these bonds decreased in favor of new, higher-yield bonds. It was this pressure that sparked the failure of Silicon Valley Bank last year.

Additionally, the state of commercial real estate is a further stress for regional banks, which are responsible for 80 percent of such mortgages. In the previous low-interest rate environment, investors viewed commercial real estate as “a haven for investors in need of reliable returns.” Unfortunately, this same period experienced major changes in consumer behavior. Online shopping, remote work, and shared office space increased at the expense of traditional brick-and-mortar locations. Covid lockdowns only further amplified these trends.

As a result, commercial real estate debt is viewed as one of the most dangerous financial assets out there today, sitting right on the balance sheets of regional banks across the country.

These stresses have had a major impact not only on this latest policy from federal regulators but the depth of their response to last year’s failures. Following the failure of SVB, the Fed created the Bank Term Funding Program, which allowed banks and credit unions to borrow using US Treasuries and other assets as collateral. This emergency measure reflected fears of other banks being at risk. The Fed has signaled its willingness to let this program expire in March, with the aim of transitioning banks to increasing their use of the discount window.

While the actions of the Fed and financial regulators illustrate real concerns about the health of US banks, these same institutions have projected bullish optimism about the state of the economy in public. Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen have consistently described the US economy as “robust” over the last few months, a view not shared by the majority of Americans. Additionally, Powell proclaimed victory over inflation this past December, even while the Fed’s preferred measures remain well above their 2 percent target, in stark contrast to his previous statements about the necessity to aggressively tackle inflation at the risk of it becoming normalized.

The shadow of politics obviously can’t be decoupled from the rosy statements from government officials on the economy, particularly going into a presidential election year. Another motivation for projecting economic strength, however, is to re-arm the Federal Reserve’s policy arsenal. While the projections of Fed officials for rate cuts in 2024 have been packaged as reflecting the growing strength of the US economy, the reality is that the Fed desires the option to lower rates as a response to financial distress. The Fed has proven time and time again that if given the choice between forcing Americans to suffer from the consequences of inflation or bailing out the financial system, it will choose the latter.

With the 2024 election in full swing, Americans will be consistently bombarded with political lies and false promises, not just from politicians but from government agencies and the central bank. While we can expect another ten months of being told how strong the economy is, the actions being taken behind the scenes tell a very different story.

Sound off about this article on the Economic Collapse Substack.

About the Author

Tho is Editorial and Content Manager for the Mises Institute, and can assist with questions from the press. Prior to working for the Mises Institute, he served as Deputy Communications Director for the House Financial Services Committee. His articles have been featured in The Federalist, the Daily Caller, Business Insider, The Washington Times, and The Rush Limbaugh Show.