The end of banking?
I entered kindergarten when they retired the wheat penny to mark Lincoln’s 150th birthday. At Woodland Elementary in Cleveland, I often was in the last class of teachers who had taught my four older sisters and maybe my mother and my aunts.
It was the Eisenhower Era, which marked the end of small-town America. Kennedy’s New Frontier offered us a hope that was dashed by his murder and LBJ’s welfare state, which he sold as the Great Society.
A teller from the Society for Savings would come to school each week or so and collect our dimes and quarters for our savings accounts. Our passbooks were red leather and she would duly mark each deposit. Likely it cost the bank more money to send her to the various schools but she planted seeds that grew later in life.
The bank, too, grew and is now called KeyBank and located in Key Tower on Public Square — the tallest building in Ohio — next to the Society for Savings Building, which when constructed was the tallest building between Chicago and New York City. The bank was very conservative and thrifty and survived the Great Depression intact. Collecting dimes from schoolchildren grew many a customer. Its assets are $171 billion today.
I thought of my old passbook upon reading Carl Icahn’s reaction to the collapse of Silicon Valley Bank. An interviewer asked him his reaction to the reaction of Ken Griffin of Citadel LLC to SVB’s demise.
Icahn said, “You can’t have the country feeling that it doesn’t matter if they save, it doesn’t matter, because they could spend all the money they want. They could do whatever you want, because the government will bail you out. You can’t have that. Now, should you bail this bank out? I don’t know. That’s a part of — I don’t like to opine on things that are not really that conservative.”
Griffin opposed bailing out SVB’s rich depositors.
He said, “It would have been a great lesson in moral hazard.”
Instead the lesson is if you are a politically connected billionaire like Mark Cuban or a Democrat governor like Brylcreem Newsom, Washington will bail you out. SVB paid insurance premiums on only 3% of the amount deposited but will enjoy 100% coverage. That is like paying a Kia-sized premium to cover a fleet of Bentleys.
Icahn said, “I do agree that the system is breaking it out. And one of the major reasons, the only reason, obviously, but one of the major reasons is that you don’t have good corporate leadership. So you say, ‘So what?’
“But I’ll tell you, so what. If you don’t have good corporate leadership, companies, you know, when the tide is high, and things are great, it doesn’t matter, and all these guys that are running these companies are partying and having a good time and giving themselves bonuses. But, you know, it is different than the people who invest with them. You know, they’re looking to get their bonuses. And I tell you, I live it, so I go into it. And there’s a reason that we make so much money.”
Bear in mind, the same people who told us we had to shut the economy for two weeks to flatten the curve and stop covid are telling is we must give Mark Cuban $10 million to make him whole to save the economy they wrecked in the name of stopping covid — which of course, they didn’t do.
The FDIC has no business paying billionaires millions for their deposits in a bank that went belly up. The limit is $250,000. That’s the law. Republicans need to take Biden’s administration to court and stop this crooked raid on our empty treasury that benefits Democrat donors and elected officials.
Never write in anger so excuse me while I walk around the block.
OK, I am back and winded. Give me a few more moments.
The media plays it as oh well, this is just another crisis we will overcome. Axios said, “The Silicon Valley Bank crisis’ parallels to the 1980s.”
The Fed raised interest rates to kill inflation, just as now.
Axios said of the savings and loans crisis, “S&Ls were in the mortgage business, and when they made these loans they held them on their books. As rates rose, those mortgages were worth less and less — a sort of corollary to the mortgage-backed and government securities sitting on SVB’s books.”
The story went on, saying, “In SVB's case, it was similarly reliant on one sector — tech.”
That is so wrong, I may need to take another walk. The S&Ls were run by people who knew banking. SVB and Signature Bank were run by politicians and DEI tokens. Signature had Barney Frank on its board of directors lobbying for rolling back the restrictions in his Dodd-Frank Act, which was congressional CYA over the Great Recession.
The Daily Mail reported, “Only ONE member of failed SVB’s board had a career in investment banking — and the rest were Obama, Clinton mega-donors who ‘grieved’ when Trump won including one who went to Shinto shrine ‘to pray.’”
You mean the Village People didn’t learn banking at the YMCA? What were they doing then?
The New York Times spin is, “Shock from Silicon Valley’s woes reverberated through parts of the banking sector, and investors started to dump bank stocks, including those of First Republic, Signature Bank and Western Alliance. Many of those institutions cater to niche clients. The nation’s largest banks appeared insulated from the fallout.
“Treasury Secretary Janet L. Yellen reassured investors that the banking system was resilient.”
Need I insert the Leslie Nielsen Nothing To See Here GIF?
After all, the banks that are Too Big To Fail will protect us, right?
Fortune magazine reported, “Bank of America has raked in $15 billion in new deposits after SVB collapse.”
The story said, “Bank of America isn't the only giant bank seeing an influx of new trade. According to reports from the Financial Times, JPMorgan is supporting its raft of new customers by shortening the waiting time for opening an account. It is also speeding up the rate at which new customers can access funds in order to ensure they can pay staff this week, confirmed a source briefed on the matter.
“Citigroup has also reportedly scrambled to onboard customers, with all the large financial institutes seeing a particular push from account holders with holdings above the $250,000 threshold that is guaranteed by federal insurance — despite the government pledging they would still be covered.”
That made me chuckle. Fortune just admitted that $250,000 limit is balderdash. The FDIC will insure all accounts to the full because all these banks pay the right politicians off. Long before he pimped his son out to Burisma in Ukraine, they called Joe Biden “D-MBNA” because his other son was a registered lobbyist for the credit card company while Biden worked on credit card regulation.
In 2019, as he prepared for a third presidential run, Mother Jones reported, “How Joe Biden helped build a financial system that’s great for Delaware banks and terrible for the rest of us.”
It is a nice lefty screed. Now that FJB and Kamalala-ding-dong are running the show, the story embarrasses the magazine.
The story said, “When the economy sagged in the late 1970s, the cash-strapped state began looking for ways to supplement its income. In 1981, it passed a new law, written by banking lobbyists and backed by DuPont, with the hopes of becoming, in the words of the governor who signed it (a du Pont, naturally), ‘the Luxembourg of the United States.’ [SNIP] The result was a corporate gold rush. A dozen companies, including JP Morgan and Chase Manhattan (now JP Morgan Chase), opened offices in Delaware in the first year alone.”
Biden still serves the banks that are Too Big To Fail.
When the other banks collapse, the Fed will pay off the deposits, the depositors go to the banks that are Too Big To Fail, and everyone is happy. Right?
Basically, the Fed is allowing the banks that are Too Big To Fail acquire all the assets of these banks for pennies on the dollar. By covering all the deposits instead of just the 3% or so that the failed banks insured, the Fed is shifting those deposits — in full — to the bigger banks.
Do you believe Mark Cuban will now take his money to the Community Bank of Parkersburg in West Virginia instead of, say, Bank of America?
SVB’s tale is simple. Under Biden, the Fed papered the economy with dollar bills, which sent prices up, which forced rate hikes on the interest paid to borrow the money, which made the government bonds SVB had worthless, which led to the bank’s collapse — which is just as well as the bank was run by DEI tokens who knew not what they were doing. Don’t worry about their futures. San Francisco will give them reparations for breathing.
What is to stop people from leaving a small bank like KeyBank and move their money to a bigger, safer bank? I mean after 191 years in banking — after teaching generations of schoolchildren how to save — the bank’s assets are smaller than SVB’s were when it collapsed.
And what happens when those banks that are Too Big To Fail fail?
The government takes over, of course, and it does not matter whether the government runs the banks well because it is all about control. If a walleye fish like Justin Trudeau can get GoFundMe to stop donations to a convoy protesting his covid tyranny, what chance do Americans stand under Banker Joe?
Schools stopped teaching thrift and saving long ago. Today the best and the brightest students take out student loans so they can live like trust-fund babies at college. I do not believe the Supreme Court will stop the forgiveness of more than a trillion dollars in student loans because Justice Amy Coney Barrett does not want to endure another summer of noisy picketing at her home — especially when a mostly peaceful protest is more likely this time.
Killing banks is part of installing a totalitarian regime. Call it socialism. Call it fascism. Call it communism. The name does not matter. The goal is always the same: Being in charge of a government that’s in charge of everything.
My first passbook was followed by others. When I retired in 2014, I acquired my final passbook from Rock Branch Community Bank, which became First Sentry, which is now Wesbanco. I saved all my life for financial freedom. Now I realize, I save for all my freedoms.
The end of independent banking endangers all of us.
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