(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.

But as the saying goes, in Washington a crisis is always a terrible thing to waste and so we are seeing a reflexive response for more government intervention. No surprise that Senate Democrats immediately pounced into action calling on federal regulators to add another layer of rules including a complex increase in capital requirements on the U.S. banking system. Reacting quickly, the Federal Reserve, with the Office of the Comptroller of the Currency and the FDIC released a joint proposal for the U.S. implementation of the so-called “Basel III regulatory framework.” These are complex rules, but in a nutshell, these rules would increase the amount of money that banks hold in reserve by 25%.

Sorry, this WON’T stop occasional bank failures of the hundreds of banks in America. What it will do is choke off lending to small businesses, homebuyers, and consumers that need loans.

The theory behind higher capital requirements is that banks will have more money in reserve to offset the losses from loans that go sour. Bank reserve requirements are a good safety precaution for sure. We don’t want banks to take on too much risk and then rush to a taxpayer safety net every time they are in trouble. But many well-respected government and private studies have found that American banks as a group are NOT undercapitalized, nor were the banks that failed.

Those banks simply made a series of bad investment/lending decisions. Ironically, some of the bad decisions, such as holding on to “safe” low-interest-paying Treasury bonds, which then lost market value when the Fed finally began raising interest rates, were a direct result of federal regulations.

The FDIC and the Federal Reserve are authorized to maintain the health and safety of America’s banks. Their job is to avoid 1930s-style bank runs that could do great damage to our financial system. Here’s the problem: these new rules would punish banks that are financially sound and shrink the available pool of loans available to homebuyers, small businesses, and lower income families. Less lending to qualified borrowers would mean less economic growth and less financial stability.

A forthcoming Committee to Unleash Prosperity study finds several negative – unintended – consequences of these rules based on the best research findings:

First, they will reduce the available pool of capital by an estimated $100 to $150 billion a year.

Second, the reduction in lending will reduce economic activity and thus shrink annual GDP by as much as 0.6%.

Third, because foreign banks are not subject to these regulations, American banks will lose competitiveness to foreign banks.

Fourth, and most importantly, it’s the little guy that gets squeezed out of the lending market. Small businesses and lower-income families are most likely to be the ones whose loans are rejected as a result of these new rules.

It’s simple: Lending is the oxygen supply that keeps our economy vibrant and competitive. Cutting it off, as the Basel rules are proposing, won’t make our economy safer, but will put it at greater risk.

Stephen Moore is a senior fellow at the Heritage Foundation and an economist with FreedomWorks. His latest book is Govzilla: How the Relentless Growth of Government Is Devouring Our Economy.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

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We don’t take the weekends off.

This Friday’s episode of “Bury the Bombshell” features the collapse of another bank. Heartland Tri-State Bank in Kansas has officially gone under and is being gobbled up in a deal brokered by the FDIC.

According to their press release:

Heartland Tri-State Bank of Elkhart, Kansas, was closed today by the Kansas Office of the State Bank Commissioner, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect depositors, the FDIC entered into a purchase and assumption agreement with Dream First Bank, National Association, of Syracuse, Kansas, to assume all of the deposits of Heartland Tri-State Bank.

The four branches of Heartland Tri-State Bank will reopen as branches of Dream First Bank, National Association, on Monday, July 31, under normal business hours. This evening and over the weekend, depositors of Heartland Tri-State Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

Depositors of Heartland Tri-State Bank will become depositors of Dream First Bank, National Association, so customers do not need to change their banking relationship in order to retain their deposit insurance coverage. Customers of Heartland Tri-State Bank should continue to use their existing branch until they receive notice from Dream First Bank, National Association, that it has completed systems changes to allow its branch offices to process their accounts as well.

As of March 31, 2023, Heartland Tri-State Bank had approximately $139 million in total assets and $130 million in total deposits. In addition to assuming all of the deposits, Dream First Bank, National Association, agreed to purchase essentially all of the failed bank’s assets.

The FDIC and Dream First Bank, National Association, are also entering into a commercial shared-loss agreement on the loans it purchased of the former Heartland Tri-State Bank. The FDIC as receiver and Dream First Bank, National Association, will share in the losses and potential recoveries on the loans covered by the shared-loss agreement, which is projected to maximize recoveries on the assets by keeping them in the private sector. The agreement is also expected to minimize disruptions for loan customers.

Customers with questions about the transaction should call the FDIC toll-free at 1-866-431-1725. The phone number will be operational this evening until 9:00 p.m. Central Time (CT); on Saturday from 9:00 a.m. to 6:00 p.m. CT; on Sunday from noon to 6:00 p.m. CT; on Monday from 8:00 a.m. to 8:00 p.m. CT; and thereafter from 9:00 a.m. to 5:00 p.m. CT. Interested parties also can visit the FDIC’s website.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $54.2 million. Compared to other alternatives, Dream First Bank, National Association’s, acquisition was 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.

Alarm Bells

The alarming part about this news is NOT that another bank has collapsed. As we’ve said since the banking system collapse started earlier this year, there will continue to be a sprinkling of small banks collapsing and being gobbled up by bigger banks until it turns into a full-blown system collapse, government bailout, and more importantly the dreaded “bank bail-in” through which banks can hold YOUR money.

The real alarm here is that the collapse was kept under wraps until the solution was ready to present. It’s as if the FDIC is mobilized to handle these situations so rapidly, the failing banks are sold before anyone even knows they’re failing.

That does not bode well for the system as a whole because it means they know more collapses are coming and they’re prepared to rapidly patch the holes until all of a sudden they cannot. This is probably a good time to link to our sponsored article, “3 Reasons Why Plain Old Gold and Silver Rounds and Bars Are the Best Protection If the American Economy Collapses.”

Heartland Tri-State Bank will not be the last to fall. It behooves every American to start solidifying their personal financial infrastructure outside of the banking system.

According to Fox Business [emphasis added]:

On Sunday, the Federal Deposit Insurance Corporation (FDIC) announced First-Citizens Bank & Trust Company of Raleigh, North Carolina entered a purchase agreement for all deposits and loans of Silicon Valley Bridge Bank, National Association.

“The 17 former branches of Silicon Valley Bridge Bank, National Association, will open as First–Citizens Bank & Trust Company on Monday, March 27, 2023,” the FDIC said in a statement.

“Customers of Silicon Valley Bridge Bank, National Association, should continue to use their current branch until they receive notice from First–Citizens Bank & Trust Company that systems conversions have been completed to allow full–service banking at all of its other branch locations,” the statement continued.

Depositors of the Santa Clara, California-located bank will automatically become depositors of First–Citizens Bank & Trust Company, according to the statement, and all deposits will be assumed and insured by First–Citizens Bank & Trust Company, up to the insurance limit.

The FDIC said: “As of March 10, 2023, Silicon Valley Bridge Bank, National Association, had approximately $167 billion in total assets and about $119 billion in total deposits. Today’s transaction included the purchase of about $72 billion of Silicon Valley Bridge Bank, National Association’s assets at a discount of $16.5 billion.”

In addition, approximately $90 billion in securities and other assets will remain in the receivership for disposition by the FDIC.

According to the statement, the FDIC and First–Citizens Bank & Trust Company entered into a “loss–share transaction” on all commercial loans it purchased from Silicon Valley Bank (SVB).

In layman’s terms, First Citizens Bank is doing the equivalent of taking over payments. The losses accrued during the collapse of Silicon Valley Bank as well as future losses when depositors pull out of their new bank will go through the legal but extremely shady transition process of book-jumping. Assets and liabilities will be bounced around different balance sheets to dilute the reported losses, but at the end of the day it will all come back to taxpayers. All of it.

Following the earthshattering fall of Silicon Valley Bank on Tuesday, fear of more carnage prompted actions by other banks. Now, the FDIC has shuttered another bank on the other coast, making massive turbulence in the coming weeks a certainty.

Regulators have shut down New York’s Signature Bank for the same basic reasons they took down Silicon Valley Bank. According to Red State:

The move to shutter the second bank is seen in the financial world as a race to contain the fallout from SVB’s collapse. The Fed is trying to auction the bank’s assets off, accepting bids until Sunday night. There is concern in Washington D.C. that this is the beginning of a bigger financial crisis, one that could rival the Global Financial Crisis from the Bush and early Obama years. The worry from folks like my colleague Streiff is that this is a very big and very slippery slope toward nationalizing the financial markets.

The Fed, in its release, is trying to convince Americans that this is limited to just a depositor bailout and not a greater handout to shareholders and other debtholders, saying “Shareholders and certain unsecured debtholders will not be protected” and that “Senior management has also been removed.”

Treasury Secretary Janet Yellen initiated an emergency series of policies. The most noteworthy is to remove the $250,000 limit on FDIC depositor insurance. This will allow big money depositors at these two banks to not be harmed. To be able to do this without putting the burden on taxpayers means printing more money. This is why in Yellen’s press release she noted that they are working with the Fed to offer a bailout to depositors.

According to the press release:

Washington, DC — The following statement was released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg:

Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.

After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.

We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.

Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.

Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.

The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.

It’s noteworthy that she referred to these measures as “reforms” rather than anything temporary. This isn’t a stopgap. It’s the new normal. This tells us beyond any shadow of a doubt that they realize the economy is in the process of tanking and they’re trying to hold it together until they get their Central Bank Digital Currency ready.

That’s part of the endgame. A manufactured and semi-controlled economic collapse will give the powers-that-be the predicate they need to force a Digital Dollar upon sooner rather than later. This is why I strongly urge Americans to start stocking up on essentials now. Tighten your financial belts. Cancel amenities and reduce frivolous spending if appropriate. Things are getting very rocky and if this really is by design as I suspect, it’s not going to get any better soon.

This is also why I am telling friends and family to move their retirement funds to self-directed precious metals IRAs. I am not a financial advisor but it makes a whole lot of sense to me to get wealth as far away from other markets as quickly as possible. Even though we have three gold sponsors, in this unique circumstance I’m recommending one in particular.

That was the single-word reply I received from a contact in the White House when I asked what the Federal Deposit Insurance Corporation (FDIC) was doing today about failed Silicon Valley Bank. Then, Bloomberg confirmed what many expected would be happening this weekend:

The Federal Deposit Insurance Corp. kicked off an auction process late Saturday night for Silicon Valley Bank, with final bids due by Sunday afternoon, according to people familiar with the matter.

The FDIC is aiming for a swift deal but a winner may not be known until late Sunday, according to one person, who asked to not be identified because the matter isn’t public. No final decision has been made and it’s possible that no deal may be reached, said the people.

Representatives for the FDIC didn’t immediately respond to requests for comment outside regular business hours. Silicon Valley Bank collapsed into FDIC receivership on Friday, after its long-established customer base of tech startups grew concerned and yanked deposits.

As I noted in an article this weekend about the potential for Twitter to buy SVB, the logistics of buying and selling a bank are far less complicated than acquisitions of other similar-sized businesses. The roadmap for breaking apart and selling off a bank has been used many times in recent decades. It’s just a whole lot of paperwork.

We should hear who the new owners of Silicon Valley Bank are by Sunday evening. It behooves the FDIC and the White House to get this debacle resolved ahead of markets opening on Monday.