The banking collapse has begun and the Government responded by bailing out the Banks now I know some people are going To have a problem with that statement And the government is consistently Reminding everyone that this isn't a Bailout yet even Neil burfosky who Oversaw the troubled asset relief Program in 2008 has a hard time seeing It any other way than a bailout he was Quoted as saying if your definition is Government intervention to prevent Private losses then this is certainly a Bailout in just the past week we've had A total of three Banks collapse and with The stock market open on Monday many More Banks were down massively as fear And uncertainty led to people being wary Of which bank May collapse next now the Very first bank to collapse was Silvergate bank which was heavily Invested in the crypto space after the Collapse of crypto in 2022 and the Failure of FTX which silvergate had Connections to many institutions Individuals became wary of working with Them and deposits the bank had slowly Dwindled and their stock crashed almost 90 percent in late 2022 until they Ultimately announced on March 8th that They would be winding down operations And liquidating now this single Bank Collapsing led to fear entering the Market on just who was next for months
There had been speculation if we are in A recession or entering one and talks of Bank runs have been going on for some Time so when another bank a Silicon Valley Bank announced that it needed to Raise 2 billion in capital after selling Billions of assets at a loss this sent Its clients into a panic and investors Began pulling their funds out of silicon Bank which ultimately led to its Collapse on the 10th of March some Things to note about svb is that if its Clients hadn't initiated a bank run it's Very likely that they would have been Able to raise the necessary funds to Stay afloat but once clients believe the Bank was doomed it became a Self-fulfilling prophecy which led to Svb becoming the second largest bank in U.S history to fail now I am in no way Excusing for svb the bank management Acted in a greedy way that ultimately Led to its downfall and customers are Now having lawsuits against the bank's Management but it's very possible that This Bank could have recovered if their Clients hadn't panicked most of their Clients were startups such as roadblocks And Roku that had collectively hundreds Of millions of dollars in uninsured Finances in the bank had they not all Tried to withdraw all their funds in a Matter of days this situation at Silicon Valley Bank could have ended much
Differently unfortunately the pain did Not stop there because over the weekend Signature Bank also had its clients Withdraw over 10 billion in deposits After seeing the collapse of svb the Government preemptively stepped in and Took over the bank to prevent another Meltdown and this led to Signature Bank Becoming the third largest bank to Collapse in U.S history a pretty ominous Sign when both the second and third Largest bank collapses happen within Days of each other the banking collapse Also spread to other markets as the fear Continued Signature Bank had heavy Investments in crypto and its collapse Triggered fear in the blockchain Community which caused the second Largest stable coin in the world which Is supposed to be pegged one for one With the dollar to collapse all the way Down to 87 cents a coin this is never Supposed to happen and if the second Largest stable coin were to collapse it Would undoubtedly create mass panic in The crypto World fortunately things Started to turn around and for now the Stablecoin usdc has recovered after the Collapse of silicon Bank fear started to Set in and many of these companies had No way to pay their employees or debts Without access to their funds but late Sunday the federal government announced Clients would be able to get access to
All their funds even those that were Unsecured thus alleviating a lot of the Concern that this could end up ruining Many companies now here lies where the Bailouts come into play the government Is doing everything in its power to make Sure that everyone knows this isn't a Bailout and the banks will be liquidated However they are now stepping in and Using FDIC funds to rescue uninsured Assets the FDIC was created in 1933 and Protects your assets in regulated Banks Up to 250 000 through the Deposit Insurance Fund normally this works fine As Banks pay into it every year and the Accounts covered by this are small However the government announced that All accounts at silicon Bank many of Them in the hundreds of millions would Be secured and paid back with the use of The deposit Insurance Fund doing so will Drain the fund and could potentially Cause new fees to be introduced to Replenish its reserves now the banks are The ones that will have to pay any new Fees to replenish the deposit fund and I'm sure they will do everything in Their power not to pass those fees on to You the customer they'll probably just Cut bonuses for executives maybe the CEOs might take a few million dollar pay Cut or they'll just cut back on a Marketing expenses we all know how Trustworthy the banks are and I have 100
Confidence this won't be passed on to The customer in any way on top of that News the Federal Reserve announced they Were creating a new handout for banks Known as the bank term funding program This is 25 billion the reserve is Setting aside that will help small and Mid-sized Banks restore their balance Own sheets now that they have unrealized Losses in long-term low interest Securities following aggressive rate Increases by the Federal Reserve under The program a bank owns bonds that are Trading at 60 cents to the dollar it can Exchange those bonds at the FED discount Window for one dollar in liquidity Effectively removing the risk of Insolvency on any bank now it's Important to remember everyone that the Government wants to make sure you know That these are in no way bailouts sure We're giving Banks billions to help keep Them afloat and using FDIC funds to Secure unsecured assets of some of the Biggest startups in the world to make Sure they don't collapse but the most Important thing you need to know is that This isn't a bailout this is just the Government being a good bro and doing The banks a solid I'm sure these Billions flush down the toilet will in No way come back to bite the common man In the butt because as we all know the Government is always looking out for the
Little guy and will always have your Best interest in heart now finally for Those who don't understand my sarcasm That was clearly a joke and ultimately This cost will be passed on to the Consumer but let me know what you think Down Below in the comments about these New bailout programs that the government Are issuing for the banks