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🥁 How Many More Banks are Going to Fail?

Do Kwon pleads not guilty, Coinbase is in hot water with PEPE, and more!

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BEN Beats
May 16, 2023

Read time: 4 minutes | Total savings in this newsletter: $1,329.15

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How Many More Banks are Going to Fail?

Regional banks are in trouble, but first - what exactly are they 🤔

It used to be banks that operated in a specific region (ok that might have been obvious). But today, you can be across the country and still be a regional bank, as long as you only manage $10 bil to $100 bil.

Back when interest rates were close to 0% to help during COVID, regional banks like SVB, Signature Bank, First Republic, PacWest, and Western Alliance were giving out tons of loans, and putting the rest into low-risk bonds.

Well, low-risk EXCEPT when interest rates go up.

Since our good buddies the Fed has raised rates 10 times in just 14 months, the bonds and treasury values were falling and the banks were losing money. People and businesses were also struggling and wanted cash, so these banks were forced to sell their bonds at a loss.

They tried raising capital (SVB) or borrowing from other banks (First Republic), but this just scared customers into withdrawing even more!

The Fed has outlined some potential changes, like raising the FDIC insurance above $250k per account. Some say the fears are overblown, since all 144 regional banks in the US are the size of Bank of America and Wells Fargo combined.

The remaining regional banks are giving out fewer loans, but that means fewer customers. Those 144 banks are at risk of failing, plus some larger ones. They may get scooped up by the big banks, just when you thought they monopolized enough😫

Trending News 🗞️

  1. Do Kwon pleads not guilty after being released on a whopping €400,000 bail! He is currently sticking it out in Montenegro.

  2. Coinbase got itself in some hot water with the PEPE community after labeling it a "hate symbol" in a recent email.

  3. The PEPE market cap has plummeted below $500 million! Seems the poor little frog just can't catch a break.

  4. Ethereum's mainnet had a hiccup and couldn't fully finalize transactions for 25 minutes!

  5. MakerDAO is planning to use AI governance and launch a new token, calling it their "endgame".

  6. Lido V2 is live, and over 45,830 ETH is in the pending withdrawal queue! That is peanuts though to the 18.3 to 20 million ETH currently staked.

  7. OpenAI (ChatGPT) co-founder Sam Altman’s $200M bet that crypto will solve AI threat!

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Disclaimer: This newsletter is purely educational and is not intended to be financial advice. Please don't take it as such. This is not an invitation to buy or sell digital assets, nor does it suggest how you should make financial decisions. Always do your own research.

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