Robert F. Kennedy Jr., who launched his presidential campaign last month, issued several warnings this week about the state of the U.S. economy, the banking crisis, and President Joe Biden’s cryptocurrency mining tax proposal. He is a nephew of President John F. Kennedy and a son of U.S. attorney general Robert F. Kennedy.

According to a report by Bitcoin News, Kennedy “Job openings plummeted for the third month in a row. Core factory orders dropped for the second consecutive month. Inflation is destroying the middle and working class. We need to turn our attention to rebuilding our nation,” his tweet further details.

Commenting on President Joe Biden assuring Americans on Monday that the banking system is “safe and sound,” Kennedy pointed out in another tweet that “bank stocks are crashing.” He stressed: “The American people deserve more than glib assurances and perception management.”

He added: “Bailouts create perverse incentives for banks to make reckless swings for the fences with depositors’ money, knowing they will pocket vast windfalls when they connect and that the taxpayer will bail them out when they miss.”

I understand the rationale for the rescue of First Republic Bank. The problem isn't this specific bailout. It's a system of too-big-to-fail institutions that requires bailouts in the first place. #Kennedy24

— Robert F. Kennedy Jr (@RobertKennedyJr) May 1, 2023

Ultimately the problem stems from an over-financialized economy. Finance is supposed to serve production, not replace it. We need to reinvest in the productive base: infrastructure, labor, health, social, and natural capital. #Kennedy24

— Robert F. Kennedy Jr (@RobertKennedyJr) May 1, 2023

“I understand the rationale for the rescue of First Republic Bank,” he posted. “The problem isn’t this specific bailout. It’s a system of too-big-to-fail institutions that requires bailouts in the first place.”

Regulators seized First Republic Bank on Monday and sold most of its assets to JPMorgan Chase.

President Biden assured us Monday that the banking system is “safe and sound.” Today, bank stocks are crashing. The American people deserve more than glib assurances and perception management. #Kennedy24

— Robert F. Kennedy Jr (@RobertKennedyJr) May 2, 2023

On Wednesday, Kennedy also slammed the proposed Digital Asset Mining Energy (DAME) excise tax. “Biden’s proposed 30% tax on cryptocurrency mining is a bad idea,” he tweeted, elaborating:

“Some advocate tight control of cryptocurrencies to prevent their use by criminals. But it isn’t just criminals who want privacy. So do dissidents and ordinary citizens,” he emphasized. “Governments harass their enemies and crush dissent by controlling bank accounts and payment platforms. Until we restore trust in government (a distant prospect) we need cash and crypto to ensure freedom.”

He means to be a good master, but he still wants to be our master. Government is slavery and there will be no freedom until there is no government.

Article cross-posted from SHTF Plan.

Article cross-posted from Zero Hedge.

Another California bank failure for Mary Daly's @sffed which is more concerned about DEI, colorful flags, virtue signaling and climate change than, you know, actually supervising insolvent banks

— zerohedge (@zerohedge) May 1, 2023

What emerged on Monday morning was far from perfect, despite weeks of discussions and posturing. What we have are US government institutions caught up in the policy implications of a “second best” world  — that is, the repeated inability to come up with an optimal solution. What’s emerged will come with collateral damage and unintended consequences.

First Republic found itself in a similar situation to Silicon Valley Bank, which was shut down by regulators in March. Its failure to manage an interest rate mismatch on its balance sheet ultimately crippled it as deposits flew out the door in response to the earlier bank failures. Its vulnerability was amplified by the Federal Reserve’s initial mischaracterization of inflation as transitory, the failure to take timely measures, and the inevitably highly concentrated set of hikes that followed.

The inevitable assessments of First Republic’s failure are also likely to point to significant lapses in bank supervision and regulation — the type of failures that were detailed last Friday in a  report by the Fed that, refreshingly and encouragingly, saw the central bank finally take ownership of a mistake and seek to learn from it. Unlike other major central banks, it had repeatedly failed to do so when it comes to monetary policy.

First Republic became increasingly fragile as the contraction in deposits worsened funding costs, deepened a capital hole, and plummeted its stock price by around 95%. That was the bad news. The good news was that, at least on paper, there was a constructive alignment of incentives among the main actors in the bank resolution process.

Having already lost three institutions, the banking system as a whole desperately needed an orderly resolution for First Republic that minimized the risk of further disruptions.

This was not just the case for regional and community banks where the risks of flighty deposits and duration mismatches were under a bright spotlight. It was also the case for the 11  larger banks as they had injected tens of billions of deposits into First Republic in an earlier attempt to stabilize the situation.

It was also the case for regulators, especially the Federal Deposit Insurance Corp. and the Fed. The  FDIC wanted to avoid being on the hook for financial losses and having to dispose of yet another bank’s assets and liabilities; and the Fed did not want to trigger yet again the “systemic risk” clause to allow for an extension of deposit insurance to theoretically uninsured deposits. The Fed was also keen to keep the door open for the policy “separation principle” that has interest rate policy aimed at inflation reduction and other tools used for financial stability.

Despite this alignment, it took weeks for a solution to emerge. And when it did, it involved unfavorable spillovers, as well as having one of the nation’s biggest and most dominant bank – JPMorgan – becoming even more so. With this comes the further evolution of  the largest financial institutions from major sources of systemic risk to stabilizers of the system itself. Moreover, and also departing from the previous conventional wisdom, the bigger and more diversified banks are now being considered “safer” than the narrow banks which have either no or a very limited range of capital market activities that have traditionally been viewed as a source of financial stability risk.

The solution that emerged early Monday morning  deals with the immediate threat of a disorderly failure of First Republic and, therefore, does not fuel the already uncomfortable risk of possible additional disruptions to other regional and community banks.

Yet the potential collateral damage and the unintended consequences are far from immaterial.

Four stand out in particular.

• First, the US now has a more concentrated banking system, with what was once viewed not so long ago as  “too big to fail”/”too big to manage” banks becoming larger.
• Second, there is even greater doubt about the nature of the de facto deposit insurance system in place.
• Third, the compositional risk within the banking system of less credit extending into the economy will continue, potentially aggravating the headwinds to high and inclusive growth.
• Finally, the total cost of First Republic’s resolution remains to be assessed, including how the burden be shared among the public and private sectors and, with that, the extent of the “bailout” for the 11 banks that had large deposits with First Republic.

The US economy continues to suffer from too many years of easy money, and the subsequent mishandling of the rate hiking cycle and lapses in supervision and regulation. With that comes the ever-present risk of collateral damage and unintended consequences given that first best policy responses are no longer available.

A 30 billion dollar rescue plan that was hastily put together last month was supposed to stabilize First Republic, but that hasn’t worked.

On Tuesday, First Republic shares fell by about 50 percent after the public learned that “customers withdrew more than $100 billion during last month’s crisis”…

First Republic Bank’s shares plunged 50 percent after a ‘troubling’ earnings call where company executives refused to answer questions.

The stock dropped Tuesday after it emerged that customers withdrew more than $100 billion during last month’s crisis, with fears swirling that it could be the third bank to fail in quick succession after the collapse of Silicon Valley Bank and Signature Bank.

Unfortunately for First Republic, the carnage continued on Wednesday.

Shares of First Republic were down another 29.75 percent, and so far this year the stock price has fallen by a total of more than 95 percent.

Let me try to put this into perspective. On February 2nd, First Republic stock closed at $147.00. Today, it closed at $5.69. That is what a collapse looks like.

The reason why this is happening is because costumers have been pulling their money out of First Republic at a pace that is absolutely staggering.  In fact, it is being reported that First Republic lost 40 percent of their total deposits in the first quarter alone…

This week’s drop for First Republic comes after the San Francisco-based lender late Monday said it lost roughly 40% of its deposits in the first quarter. First Republic was seen by customers and investors alike as a risky bank after the collapse last month of Silicon Valley Bank, which had a similar financial profile.

And if 11 of the largest banks in the country had not agreed to collectively deposit 30 billion dollars of their own money in First Republic last month, that figure would have been closer to 50 percent…

But those deposits include the $30 billion that 11 large banks deposited at the bank in March to prop it up and keep contagion from spreading.

Without this influx of $30 billion, deposits would have dropped by 50%. So this was really nip and tuck.

Unfortunately, that rescue plan was not nearly large enough, and so now First Republic plans to beg those banks for even more help…

The best hope for avoiding a collapse of ailing lender First Republic hinges on how persuasive one group of bankers can be with another group of bankers.

Advisors to First Republic will attempt to cajole the big U.S. banks who’ve already propped it up into doing one more favor, CNBC has learned.

The pitch will go something like this, according to bankers with knowledge of the situation: Purchase bonds from First Republic at above-market rates for a total loss of a few billion dollars – or face roughly $30 billion in Federal Deposit Insurance Corp. fees when First Republic fails.

Ouch.

I think that those large banks would be quite foolish to throw more good money into the First Republic black hole, but we shall see what happens.

In addition to pleading for assistance, First Republic also plans to lay off thousands of employees…

The bank says it plans to sell off unprofitable assets, including the low-interest mortgages that it provided to wealthy clients. It also announced plans to lay off up to a quarter of its workforce, which totaled about 7,200 employees at the end of 2022.

Will all of this be enough to turn First Republic around?

Of course not.

As one expert explained, if First Republic still had any good options left “they would have pursued them already”…

Kathryn Judge, who works as an analyst at Columbia Law School, said that there is no easy solution for First Republic.

‘If there were attractive options, they would have pursued them already,’ she told the Times.

Meanwhile, the overall economy continues to deteriorate all around us.

On Wednesday, Amazon conducted layoffs in their cloud computing and human resources divisions.  Sadly, these new job cuts are just the latest wave in “the largest layoffs in Amazon’s 29-year history”…

The layoffs are part of the previously announced job cuts that are expected to affect 9,000 employees. Last week, Amazon laid off some employees in its advertising unit, and it has let go of staffers in its video games and Twitch livestreaming units in recent weeks.

Amazon wrapped up a separate round of cuts earlier this year that affected approximately 18,000 employees. Combined with the cuts this month, it marks the largest layoffs in Amazon’s 29-year history.

Amazon is one of the wealthiest and most prosperous companies in the entire country.

If they have decided that it is necessary to conduct multiple mass layoffs because the economic outlook is so grim, what kind of signal does that send to everyone else?

In recent months, Google, Microsoft, Disney, Walmart and countless other large corporations have ruthlessly pruned their payrolls.

But don’t worry. Joe Biden says that the economy is going to be just fine. You believe him, don’t you?

Don’t let anyone fool you. The economic meltdown that we have been waiting for is here, and it is going to be incredibly painful.

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

Article cross-posted from The Economic Collapse Blog.

It’s for this reason that I’m always very cautious when ringing the alarm bells about the economy. On one hand, I have been warning readers of challenges that could impact their financial situation. For months I have said the biggest threat to banks and investment firms is wokeness; the collapse of Silicon Valley Bank can be directly attributed to exactly why I’ve been predicting.

On the other hand, I do not want my voice to add to fear that could help bring about the things that scare us. With that said, it certainly appears that the things that have concerned me and others are coming to pass which is why I’m more bullish than ever about moving retirement accounts and wealth to physical precious metals. I recommend three gold companies, but for this specific time I’m encouraging people to talk to my Christian, America First precious metals partner. They seem most suited to help people through what’s happening in America today. Here’s Jack Philips from The Epoch Times with more news on what’s happening with banks.

2 More Banks Seek to Reassure Customers After Silicon Valley Bank Collapse

California-based First Republic Bank and Arizona-based Western Alliance Bancorporation both attempted to calm nerves around the collapse of Silicon Valley Bank after shares for both financial institutions plunged in the past week or so.

First Republic Bank told customers that their deposits were safe amid fears of spillover caused by SVB’s collapse late last week and as shares of First Republic Bank dropped 33 percent over the past five days.

In a regulatory filing with the U.S. Securities and Exchange Commission (SEC) on Friday, First Republic said its liquidity position remains strong amid falling share prices.

“This filing reiterates First Republic’s continued safety and stability and strong capital and liquidity positions,” the filing stated. “First Republic’s deposit base is strong and very-well diversified. Consumer deposits have an average account size of less than $200,000 and business deposits have an average account size of less than $500,000.”

The U.S. Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per depositor per insured bank, for each account category. There were reports that about 85 percent of  Silicon Valley Bank (SVB) accounts weren’t insured as the financial institution was often used by tech firms and startups.

“Within business deposits, no one sector represents more than 9 percent of total deposits, with the largest being diversified real estate. Technology-related deposits represent only 4 percent of total deposits,” First Republic also said. Its investment portfolio is less than 15 percent of total bank assets and only less than 2 percent of total bank assets are categorized as available for sale.

Silicon Valley Bank is the first FDIC-insured institution to fail this year, the Federal Deposit Insurance Corporation said, although analysts noted that its collapse represents the largest bank to fall since 2008 when Washington Mutual collapsed. The last FDIC-insured institution to close was Almena State Bank in Kansas on Oct. 23, 2020.

Meanwhile, Western Alliance, based in Phoenix, issued a news release on March 11 that “deposits remain strong,” saying that “total deposits of $61.5 billion, an increase of $7.8 billion since year end, led by our deposit verticals of Settlement Services, Home Owner Associations and Mortgage Warehouse. The company expects deposits to moderately decline from these levels by quarter end due to typical seasonal and monthly activity.”

Like First Republic, shares of Western Alliance have plunged about 35 percent. As of Friday, it held $2.5 billion cash on its balance sheet while held-to-maturity securities made up less than 2 percent of assets with an unrecognized loss of $192 million as of Feb. 28.

Fears

On Twitter, a highly visible post alleged that people were going on “a bank run” at a Brentwood, California, First Republic Bank location. That post’s video, shot from a moving vehicle, showed what appeared to be a long line of people standing outside the branch.

“I’ve never seen a bank run in Brentwood Los Angeles in over 40 years—this is at first republic bank branch. People standing in rain,” the user alleged on March 11. The Epoch Times has contacted First Republic Bank for comment on the claim and others.

A Daily Mail article, too, published photos of the long lines outside the Brentwood location. Before SVB’s collapse, depositors moved to withdraw their money en masse, triggering California state regulators to shutter the bank and allow the FDIC to take over.

Those concerns were also exacerbated by a Wall Street Journal article with a headline that blared, “First Republic Hit by Silicon Valley Bank Failure” and that “investors have grown wary of First Republic Bank for reasons similar to those that caused concern at SVB.”

The bank, which was founded in San Francisco in 1985, has some 80 branches in 11 states around the United States. The WSJ article noted that the bank’s funding relies largely on wealthy individuals who want to seek higher yields on their money.

With about $212 billion in total assets, First Republic Bank is the 14th largest in the United States. Western Alliance is smaller, with about $34 billion in total assets.

Reuters contributed to this report. Image by Ali Eminov via Flickr, CC BY-NC 2.0.