Everything is fine.
The U.S. banking system is “sound and resilient.”
Don’t panic.
Your deposits are safe.
The banking crisis has been resolved.
These have been the clarion calls of the Biden administration, the Federal Reserve, the Treasury Department, and Jim Cramer.
Well, not quite.
It looks like PacWest and Western Alliance are next to crumble.
The regional banks are in bad shape. But how bad has it been for the regional institutions?
Take a look at this market cap annihilation since January:
In January, the market cap of publicly traded regional banks was $475 billion.
Today? It is $100 billion.
JPMorgan Chase shall feast on the small- and mid-size banks!
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Banks’ reserve requirement was reduced…from 10% to 0%. A lending institution with billions of deposits can lend it all out. To stay liquid, they borrow short term (days.) That gambit is hyper-fragile. If your checking acct says $1234., bank ain’t got it, except the 3-day loan.
.and.
Savage irony: 1907 J.P.Morgan (the actual guy) saved Wall Street. Many said “no private bank/person should have more power/money than gov.” Thus … Federal Reserve, direct income taxation, go off gold. Now we beg “jpmorgan” (the thing) to save fiat everything. Run.