(Discern Money)—Affluent Americans are advised to review their bank deposit insurance coverage following recent changes to Federal Deposit Insurance Corporation (FDIC) rules. These changes, implemented last month, have placed a cap on FDIC insurance for trust accounts at $1.25 million, a significant shift from the previous no-limit policy.

This adjustment aims to simplify the understanding of deposit insurance rules and expedite the determination of insured accounts in case of bank failures.

Under the new regulations, the FDIC continues to insure up to $250,000 per depositor and per account category at each bank. However, the changes affect how trust accounts are insured. Previously, each beneficiary of a trust could receive $250,000 in insurance protection, potentially insuring an “almost infinite amount” at one bank. Now, the new rule limits the number of trust beneficiaries receiving this protection to five, totaling at most $1.25 million.

Moreover, the FDIC has merged irrevocable trusts and revocable trusts into one ownership category, impacting the insurance coverage. This change could decrease coverage for some depositors but could also increase coverage for a small number of irrevocable trusts. The FDIC estimates that nearly 27,000 trust account depositors and over 36,000 trust accounts could be directly affected by these changes.

To ensure that your deposits are fully insured, use the FDIC’s Electronic Deposit Insurance Estimator to determine if any of your funds exceed the new coverage limits. If you find that some of your money is now uninsured, consult your bank. Financial institutions are typically ready to assist customers affected by these regulatory changes to ensure that large deposits remain protected. You may need to open a different type of account or deposit the uninsured sum in an account at another bank to maintain full insurance coverage.

Article generated from corporate media reports.

The event has triggered fears of cascading bank failures, with economists warning about rising risks and mounting stress for almost 300 institutions. As economic uncertainty continues to weight on financial markets and add pressure on the commercial real estate sector, many banks that seem too big to fail are now facing unprecedented losses that could put them on a very destructive path, the experts say.

In the final days of April, Republic First Bank, a Pennsylvania-based financial institution has collapsed. Earlier this week, the FDIC issued a note saying it had stepped in to protect $6 billion in assets and $4 billion in customer deposits. The federal agency transferred the deposits to another regional bank after an agreement was reached.

Struggling under the regime of higher interest rates, Republic First Bancorp suffered painful losses due to its high exposure to the commercial real estate market. The bank’s fourth quarter report cited “serious difficulties amid an elevated interest rate environment,” with executives noting last year that the Fed’s monetary policy to curb inflation “severely hurt” its commercial real estate portfolio.

The sector, which has been facing numerous challenges since the COVID-19 pandemic, accounted for nearly half of Republic Bank’s loan book. The institution was also facing other significant problems, including low liquidity and battles with activist investors. In October 2023, Republic Bank managed to secure $35 million in funding from a group of investors led by George Norcross, but that plan fell apart in February.

Now, another regional lender has come forward to rescue the bank’s assets. Fellow Pennsylvania-based bank Fulton Financial Corp has agreed to acquire all of Republic’s assets and over $5.3 billion in liabilities. On Saturday, Republic Bank’s 32 branches in New Jersey, Pennsylvania and New York will reopen as branches of Fulton Bank, reports say.

The move represents the latest crack – and the latest bandage job – in the distressed regional-banking industry. The failure marked the first major bank collapse of this year, following five that occurred in 2023, as the Fed’s rate hikes destabilized the balance sheets of big financial players. When Silicon Valley Bank (SVB) collapsed last spring, many economists warned that more could follow – and their predictions have been proven accurate. Signature Bank, First Republic Bank, Heartland Tri-State Bank, and Citizens Bank, all collapsed in the succeeding months, as a result of the financial instability caused by policymakers.

By the time news of the failure of Republic Bank broke, many people had already started their weekends.  And the FDIC probably assumes that most people will have forgotten all about this by the time Monday morning rolls around.  But this was a big deal, and it is inevitable that more dominoes will soon start to fall.

At the time it was seized, Republic Bank had 32 branches in New Jersey, Pennsylvania and New York.  The following comes directly from the FDIC announcement that was issued on Friday…

Philadelphia-based Republic First Bank (doing business as Republic Bank) was closed today by the Pennsylvania Department of Banking and Securities, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect depositors, the FDIC entered into an agreement with Fulton Bank, National Association of Lancaster, Pennsylvania to assume substantially all of the deposits and purchase substantially all of the assets of Republic Bank.

Republic Bank’s 32 branches in New Jersey, Pennsylvania and New York will reopen as branches of Fulton Bank on Saturday (for branches with normal Saturday hours) or on Monday during normal business hours. This evening and over the weekend, depositors of Republic Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on Republic Bank will continue to be processed and loan customers should continue to make their payments as usual.

I think that a pattern is emerging that we will likely continue to see for future bank failures. Before this seizure was even announced, an agreement had already been made for a larger bank to swallow up the assets of Republic Bank.

Of course taxpayers didn’t exactly get off scot-free in this deal.  According to the FDIC, this agreement is going to cost the Deposit Insurance Fund 667 million dollars…

As of January 31, 2024, Republic Bank had approximately $6 billion in total assets and $4 billion in total deposits. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) related to the failure of Republic Bank will be $667 million. The FDIC determined that compared to other alternatives, Fulton Bank’s acquisition of Republic Bank is the least costly resolution for the DIF, an insurance fund created by Congress in 1933 and managed by the FDIC to protect the deposits at the nation’s banks.

If only a few banks fail this year, the Deposit Insurance Fund will be able to handle it.

But what is going to happen if dozens of banks start to fail?

It has been clear for a long time that Republic Bank was in trouble.

They were sitting on “$262 million of unrealized losses on bonds”, and Republic’s stock price had fallen all the way down to 1 cent…

The bank’s stock price has tumbled from just over $2 at the start of the year to about 1 cent on April 26, leaving it with a market capitalisation below $2 million. Its shares were delisted from the Nasdaq in August and now trade over the counter.

Moving forward, we will want to keep an eye on other banks that are currently on shaky ground.

For example, New York Community Bank would have completely collapsed already if a group of investors had not been convinced to pump a billion dollars into that troubled institution…

Recently, New York Community Bank saw wild swings in its stock price as customers began pulling their cash from the regional lender after it said it had identified “material weakness” in the company’s controls. The bank got a $1 billion equity investment lifeline from investors, including former Treasury Secretary Steven Mnuchin’s firm, Liberty Strategic Capital, in March.

Of course it isn’t just New York Community Bank that is treading on thin ice.

Kevin O’Leary of Shark Tank fame is convinced that thousands of U.S. banks will fail during the years ahead…

In the next three to five years, thousands more regional institutions will fail. That’s why I don’t have a dime saved or invested in a single one.

One of the primary reasons why so many banks are on the brink of disaster is because we are facing a commercial real estate collapse of historic proportions.

In St. Louis, the tallest office building recently sold for 98 percent less than what it sold for in 2006…

Take, St Louis’s largest office building – its 44-story AT&T tower – for example. In 2006 this prime real estate sold for $205 million.

But that same now vacant skyscraper recently sold for around $3.5 million – a shocking 98 percent drop in value in less than two decades, the outlet reported.

The Railway Exchange Building, once the crown jewel of downtown St. Louis with its Famous Barr department store and sprawling offices, is also now an empty relic with peeling paint.

All over the nation, commercial real estate property values have fallen dramatically, and our small and mid-size banks are sitting on mountains of commercial real estate loans.

This story is not going to end well, and anyone that suggests otherwise is simply being delusional.

Meanwhile, more signs continue to emerge that the overall economy is rapidly heading in the wrong direction.

For example, Walmart just announced that it is closing two more stores…

Walmart is shutting another two stores next month – bringing the total closures announced this year to eight.

Bosses said the two stores – in California and Wisconsin – were not making enough money.

Walmart, which has already shut six in 2024, is among several major retailers to announce closures.

If bright economic times were ahead, Walmart wouldn’t be shutting stores down.

Just like everyone else, they can see what is coming.

Of course Joe Biden and his minions insist that everything is just great.

They are telling us that the economy is booming and that the unemployment rate is low.

But that is not the truth.

The Ludwig Institute For Shared Economic Prosperity analyzes the data provided by the federal government in order to calculate a “true rate of unemployment”…

Using data compiled by the federal government’s Bureau of Labor Statistics, the True Rate of Unemployment tracks the percentage of the U.S. labor force that does not have a full-time job (35+ hours a week) but wants one, has no job, or does not earn a living wage, conservatively pegged at $25,000 annually before taxes.

According to them, instead of an unemployment rate of “3.8 percent”, the true rate of unemployment is actually 24.2 percent.

Right now, there are countless people that continue to remain unemployed even though they are desperate to find a job.

Sadly, the employment market is only going to get tighter in the months ahead.

I am entirely convinced that global events will become extremely chaotic during the second half of this year, and that is going to have a devastating impact on our economy.

So whatever you need to do, I would encourage you to do it with haste.

Because the pace of events is not going to slow down for anyone, and it is much later than most people think that it is.

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

Internal or external auditors occasionally comb through individual loans in a bank’s portfolio and make judgments as to whether those loans are worth what the bank says they are worth due to lower appraised values and other issues either particular to an individual property or the market as a whole. Bankers then, begrudgingly, set aside earnings for potential loan losses.

In the case of the real estate loans at New York Community Bank, loan examiners must have told senior management to increase the bank’s loan loss provision by 790 percent to $552 million. This balance sheet expense drove the fourth-quarter loss and caused the bank to cut its dividend.

“The bank reported a near $2 billion increase in criticized multifamily loans—debt with a probability of default,” wrote Suzannah Cavanagh for the Real Deal. “Of its $37 billion multifamily loan book, which comprises 44 percent of its total portfolio, 8 percent was marked criticized in the quarter.” The bank also reported a $42 million net charge-off—debt unlikely to be paid back—for an office loan on which the borrower stopped paying interest.

The bank’s chief financial officer John Pinto pooh-poohed the loan carnage, saying, “We had higher levels of substandard [loans] throughout the Financial Crisis, throughout the pandemic. The rise in substandard loans does not lead directly to specific losses.”

Hope Springs Eternal

Like the 2008 financial crisis, what happens in the US isn’t staying in the US. Tokyo-based Aozora Bank said losses in its US office’s loan portfolio will likely lead to a net loss for the year ending in March, the Wall Street Journal reports. Also, the private Swiss bank Julius Baer took a roughly $700 million provision on loans made to Austrian property landlord Signa Group. The bank said shutting down the unit was what made the loans, and the chief executive has resigned.

Jay Powell made no mention of the New York Community Bank’s news in his prepared remarks, and reporters didn’t ask him about the bank’s troubles during the Q and A. There were no questions concerning the Bank Term Funding Program that will be sunsetted March 11 despite having risen to record highs. According to the Wall Street Journal’s Andrew Ackerman, the popularity of the program was not because of new stresses on banks. But reportedly, “some banks had recently figured out a way to game the program by pocketing the difference between what they pay to borrow the funds and what they can earn from parking the funds at the central bank as overnight deposits.” On January 31, banks had borrowed more than $165 billion from the facility.

It’s doubtful there are no new stresses on banks. New York Community Bank is not an anomaly.

To that point, real estate investor Barry Sternlicht told a conference crowd…

We have a problem in real estate. In every sector of real estate, not just office, because of the 500 basis point increase in rates that was vertical. The office market has an existential crisis right now . . . it’s a $3 trillion dollar asset class that’s probably worth $1.8 trillion [now]. There’s $1.2 trillion of losses spread somewhere, and nobody knows exactly where it all is.

Sternlicht mentioned a project in New York that was purchased for $200 million that he thought was now worth just $30 million, encumbered by a $100 million loan.

Harold Bordwin, a principal at Keen-Summit Capital Partners LLC in New York, which specializes in renegotiating distressed properties, told Bloomberg, “Banks’ balance sheets aren’t accounting for the fact that there’s lots of real estate on there that’s not going to pay off at maturity.”

Bordwin went on to say, “Banks—community banks, regional banks—have been really slow to mark things to market because they didn’t have to, they were holding them to maturity. They are playing games with what is the real value of these assets” (emphasis added).

The plan for the Bank Term Funding Program was hatched in haste over a weekend in March of last year in the wake of the Silicon Valley Bank and Signature Bank failures (Signature’s assets were purchased by New York Community Bank). To hide their embarrassment over banks using the facility for risk-free interest rate arbitrage, they say they are shutting the program down because there is no stress in the banking system.

There is stress aplenty in the banking world. As Murray Rothbard wrote in The Mystery of Banking, “Fractional reserve bank credit expansion is always shaky, for the more extensive its inflationary creation of new money, the more likely it will be to suffer contraction and subsequent deflation.”

While bankers and regulators have their heads in the sand, the contraction has already begun.

About the Author

Douglas French is President Emeritus of the Mises Institute, author of Early Speculative Bubbles & Increases in the Money Supply, and author of Walk Away: The Rise and Fall of the Home-Ownership Myth. He received his master’s degree in economics from UNLV, studying under both Professor Murray Rothbard and Professor Hans-Hermann Hoppe. His website is DouglasInVegas.com.

It’s as if the Fed is asking the healthiest swimmers to don faulty life jackets first, in a bid to make them seem less alarming to those already struggling to stay afloat. Our guest commentator explains why this strategy, while intended to fortify the banking sector against future storms, would endanger all US banks.

The following article was originally published by the Mises Wire.

Last Thursday, Bloomberg reported that federal regulators are preparing a proposal to force US banks to utilize the Federal Reserve’s discount window in preparation for future bank crises. The aim, notes Katanga Johnson, is to remove the stigma around tapping into this financial lifeline, part of the continuing fallout from the failures of several significant regional banks last year.

This new policy is reminiscent of the Fed’s actions during the 2007 financial crisis, where financial authorities encouraged large banks to tap into the discount window, taking loans directly from the Federal Reserve, to make it easier for distressed banks to do the same. The hesitancy from financial institutions to tap into this source of liquidity is justified. If the public believes a bank needs support from the Fed, it is rational for depositors to flee the bank. The Fed’s explicit aim is to provide cover from at-risk banks, trying to hold off bank runs that are an inherent risk in our modern fractional reserve banking system.

By strong-arming healthy banks to comply, the Fed is escalating moral hazard and leaving customers more vulnerable. They are deliberately trying to remove a signal of institutional risk.

The regulator’s concerns about bank fragility are justified. The Fed’s low-interest rate environment meant financial institutions seeking low-risk assets bought up US treasuries with very low yields. As inflationary pressures forced rates upward, the market value of these bonds decreased in favor of new, higher-yield bonds. It was this pressure that sparked the failure of Silicon Valley Bank last year.

Additionally, the state of commercial real estate is a further stress for regional banks, which are responsible for 80 percent of such mortgages. In the previous low-interest rate environment, investors viewed commercial real estate as “a haven for investors in need of reliable returns.” Unfortunately, this same period experienced major changes in consumer behavior. Online shopping, remote work, and shared office space increased at the expense of traditional brick-and-mortar locations. Covid lockdowns only further amplified these trends.

As a result, commercial real estate debt is viewed as one of the most dangerous financial assets out there today, sitting right on the balance sheets of regional banks across the country.

These stresses have had a major impact not only on this latest policy from federal regulators but the depth of their response to last year’s failures. Following the failure of SVB, the Fed created the Bank Term Funding Program, which allowed banks and credit unions to borrow using US Treasuries and other assets as collateral. This emergency measure reflected fears of other banks being at risk. The Fed has signaled its willingness to let this program expire in March, with the aim of transitioning banks to increasing their use of the discount window.

While the actions of the Fed and financial regulators illustrate real concerns about the health of US banks, these same institutions have projected bullish optimism about the state of the economy in public. Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen have consistently described the US economy as “robust” over the last few months, a view not shared by the majority of Americans. Additionally, Powell proclaimed victory over inflation this past December, even while the Fed’s preferred measures remain well above their 2 percent target, in stark contrast to his previous statements about the necessity to aggressively tackle inflation at the risk of it becoming normalized.

The shadow of politics obviously can’t be decoupled from the rosy statements from government officials on the economy, particularly going into a presidential election year. Another motivation for projecting economic strength, however, is to re-arm the Federal Reserve’s policy arsenal. While the projections of Fed officials for rate cuts in 2024 have been packaged as reflecting the growing strength of the US economy, the reality is that the Fed desires the option to lower rates as a response to financial distress. The Fed has proven time and time again that if given the choice between forcing Americans to suffer from the consequences of inflation or bailing out the financial system, it will choose the latter.

With the 2024 election in full swing, Americans will be consistently bombarded with political lies and false promises, not just from politicians but from government agencies and the central bank. While we can expect another ten months of being told how strong the economy is, the actions being taken behind the scenes tell a very different story.

This new policy is reminiscent of the Fed’s actions during the 2007 financial crisis, where financial authorities encouraged large banks to tap into the discount window, taking loans directly from the Federal Reserve, to make it easier for distressed banks to do the same. The hesitancy from financial institutions to tap into this source of liquidity is justified. If the public believes a bank needs support from the Fed, it is rational for depositors to flee the bank. The Fed’s explicit aim is to provide cover from at-risk banks, trying to hold off bank runs that are an inherent risk in our modern fractional reserve banking system.

By strong-arming healthy banks to comply, the Fed is escalating moral hazard and leaving customers more vulnerable. They are deliberately trying to remove a signal of institutional risk.

The regulator’s concerns about bank fragility are justified. The Fed’s low-interest rate environment meant financial institutions seeking low-risk assets bought up US treasuries with very low yields. As inflationary pressures forced rates upward, the market value of these bonds decreased in favor of new, higher-yield bonds. It was this pressure that sparked the failure of Silicon Valley Bank last year.

Additionally, the state of commercial real estate is a further stress for regional banks, which are responsible for 80 percent of such mortgages. In the previous low-interest rate environment, investors viewed commercial real estate as “a haven for investors in need of reliable returns.” Unfortunately, this same period experienced major changes in consumer behavior. Online shopping, remote work, and shared office space increased at the expense of traditional brick-and-mortar locations. Covid lockdowns only further amplified these trends.

As a result, commercial real estate debt is viewed as one of the most dangerous financial assets out there today, sitting right on the balance sheets of regional banks across the country.

These stresses have had a major impact not only on this latest policy from federal regulators but the depth of their response to last year’s failures. Following the failure of SVB, the Fed created the Bank Term Funding Program, which allowed banks and credit unions to borrow using US Treasuries and other assets as collateral. This emergency measure reflected fears of other banks being at risk. The Fed has signaled its willingness to let this program expire in March, with the aim of transitioning banks to increasing their use of the discount window.

While the actions of the Fed and financial regulators illustrate real concerns about the health of US banks, these same institutions have projected bullish optimism about the state of the economy in public. Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen have consistently described the US economy as “robust” over the last few months, a view not shared by the majority of Americans. Additionally, Powell proclaimed victory over inflation this past December, even while the Fed’s preferred measures remain well above their 2 percent target, in stark contrast to his previous statements about the necessity to aggressively tackle inflation at the risk of it becoming normalized.

The shadow of politics obviously can’t be decoupled from the rosy statements from government officials on the economy, particularly going into a presidential election year. Another motivation for projecting economic strength, however, is to re-arm the Federal Reserve’s policy arsenal. While the projections of Fed officials for rate cuts in 2024 have been packaged as reflecting the growing strength of the US economy, the reality is that the Fed desires the option to lower rates as a response to financial distress. The Fed has proven time and time again that if given the choice between forcing Americans to suffer from the consequences of inflation or bailing out the financial system, it will choose the latter.

With the 2024 election in full swing, Americans will be consistently bombarded with political lies and false promises, not just from politicians but from government agencies and the central bank. While we can expect another ten months of being told how strong the economy is, the actions being taken behind the scenes tell a very different story.

Sound off about this article on the Economic Collapse Substack.

About the Author

Tho is Editorial and Content Manager for the Mises Institute, and can assist with questions from the press. Prior to working for the Mises Institute, he served as Deputy Communications Director for the House Financial Services Committee. His articles have been featured in The Federalist, the Daily Caller, Business Insider, The Washington Times, and The Rush Limbaugh Show.

For Chase Bank’s customers, these closures represent serious inconveniences, if not outright terrible disruptions to their lives. Services previously offered by human bank tellers and other banking professionals who used to staff these now-shuttered branches have now been replaced by automated customer service helplines. (Related: Largest banks in America have collectively cut 20K JOBS so far this year.)

Twenty states have or will be impacted by the Chase Bank branch closures. Some, like Wisconsin and Wyoming, will only have one branch closed in each state. Others have more than a dozen branches being shut down by the end of the year.

California is the hardest hit of all, with the state recording a total of 46 branches that will have closed by the end of the year.

Kentucky, Louisiana, Massachusetts, Nevada and Utah will see two branches shut down in each state by the end of the year. They are followed by Connecticut and Michigan with three branches each; Arizona and Florida with five branches each; and Colorado, Indiana, New Jersey, Ohio and Washington with six branches each.

Along with California, three other states will see double-digit number of Chase Bank branches shut down by the end of the year: Texas, New York and Illinois, with 13, 17 and 24 branches, respectively.

Bank of America, Wells Fargo and Citi Bank also shutting down hundreds of branches

The latest data from the Federal Deposit Insurance Corporation notes that approximately 8,000 bank branches were in operation in the U.S. in 2000. By 2022, this figure had been halved. Other Big Banks in America are also reporting dozens of bank closures, including the Bank of America, Wells Fargo and Citibank.

According to data provided by the Bank of America to the Office of the Comptroller of Currency, the bank will be shutting down 138 locations. To date, at least 95 of those branches have already been closed. Fifteen more will shutter by the end of the year, and the remainder will stay open up to 2024.

Wells Fargo has closed 61 branches so far – a number expected to increase to 65 before December. A spokesperson for the company claims many of its customers are already taking advantage of “our wide range of digital capabilities for many of their banking needs.” As a result, fewer and fewer transactions are being carried out in person in branches.

“We continually evaluate our branch network in light of changing customer needs, increased usage of digital banking and market factors,” added the spokesperson.

Citigroup, the parent company of Citibank, claimed that its shuttering of branches not just in the U.S. but globally is part of a shift in the company’s strategy to focus on wealth management. The shuttering of Citibank branches is aimed at focusing on more affluent clients and generating higher returns through feel while simplifying operations and reducing complexity and capital requirements.

Citigroup’s wealth division handled $746 billion of wealth globally in 2022, significantly lower than Bank of America’s own wealth management division, Merrill Lynch, which had an asset size of more than $2.8 trillion in the same year.

Collapse.news has more stories about bank closures. Watch this special report from Next News Network reporting on the downgraded credit ratings of major U.S. banks.

This video is from the News Clips channel on Brighteon.com.

More related stories:

• Bank payment processing outages highlight risks of relying on electronic banking.
• 1.8M fraudulent transactions led banks to close accounts of innocent customers without warning or explanation.
• Banking system showing more signs of COLLAPSE as customers report widespread deposits.
• Why are online banking services suddenly being disrupted on a massive scale all over the United States?
• Big Banks LAYING OFF tens of thousands of workers, including over 20,000 employees in the U.S. alone.

Sources include:

• MSN.com
• FrankNez.com
• en.as.com 1
• en.as.com 2
• Eightify.app
• Brighteon.com

America’s sixth-largest bank, PNC, has confirmed the closure of 19 more branches nationwide, following a staggering 203 branch closures earlier this year. This decision, aligning with the bank’s shift towards digital banking, is raising concerns among customers who prefer traditional banking methods.

Scheduled for February 2024, the closures will primarily impact ​Pennsylvania, where the majority of branches marked for closure are located. However, several branches in other states, including ​Illinois, ​Texas, Alabama, New Jersey, Ohio, Florida, and Indiana, will also be shutting their doors, leaving customers in these regions with limited access to in-person banking services, The Sun reported.

Of course PNC has lots of company.

During that exact same week, several other prominent banks made similar moves…

JPMorgan Chase followed closely with 18 filings—three in Ohio, two each in Connecticut and South Carolina, and one each in 11 states, including New York, Illinois, Florida, and Massachusetts.

Citizens Bank came in third with eight branch closure filings—six in New York, and one each in Massachusetts and Delaware. Minneapolis-based U.S. Bank filed for seven closures—three in Tennessee and one each in Missouri, Wisconsin, Ohio, and Illinois.

Bank of America made five filings—two in New York and one each in Texas, Massachusetts, and California.

Citibank filed for two branch closures, and Sterling, Bremer, First National Bank of Hughes Springs, Windsor FS&LA, and Aroostook County FS&LA made one filing each.

Altogether, banks filed to shut down 64 branches.

Read that last sentence again.

In just one week, U.S. banks decided to shut down a total of 64 branches. That is stunning.

What we are witnessing right now is a tsunami of branch closures.

Unfortunately, even more trouble is coming for our banks because the real estate industry is a total mess right now.

Existing home sales have fallen to depressingly low levels, and we just learned that new home sales in the U.S. dropped 5.6 percent last month…

New home sales in the United States fell in October as typical mortgage rates reached their highest levels this year.

Sales of newly constructed homes fell 5.6% in October to a seasonally adjusted annual rate of 679,000, from a revised rate of 719,000 in September, according to a joint report from the US Department of Housing and Urban Development and the Census Bureau.

Prices for new homes are falling as well…

So the median price of new single-family houses sold in October fell by 3.1% from September, to $409,300 (red line), the lowest since August 2021, down by 17.6% from a year ago, which had been the peak, according to data from the Census Bureau today. The three-month moving average is down by nearly 12% from its peak in December last year (green).

These are contract prices and do not include the costs of mortgage-rate buydowns and other incentives such as free upgrades. But they do reflect the lower price points due to smaller footprints and the “de-amenitizing.”

Meanwhile, the commercial real estate crisis just continues to intensify.

Just check out these new numbers that were released several days ago by Trepp…

The volume of CMBS loans that are classified as delinquent increased by 49.4% during the 10 months through October to $27.91 billion. That volume amounts to 5.07% of the $601.98 billion universe tracked by Trepp. In contrast, delinquencies at the end of last year amounted to 3.03% of the $616.15 billion universe then extant.

Wow.

It turns out that office buildings are the primary reason why delinquencies are rising at such an astounding pace…

The driver of the increase was the office sector, which had a 261% increase in delinquency volumes over the 10-month period through October. A total of 199 loans with a balance of $9.59 billion, or 5.91% of all CMBS office loans were at least 30 days late with their payments, as of the end of October. At the end of last year, 115 loans with a balance of $2.65 billion, or 1.63% of office loans, were delinquent.

The sector’s prospects are unlikely to improve as office occupancy rates have declined in most of the country’s major markets. That’s been driven by a substantial pullback in demand from office-using tenants.

All of this reminds me so much of what we witnessed in 2008.

When the real estate industry falls on hard times, a financial crisis is usually right around the corner. Needless to say, it isn’t just U.S. banks that are in trouble right now.

Major banks all over the globe are getting hit really hard, and that includes Metro Bank in the UK…

Metro Bank shareholders have backed a multi-million pound rescue deal aimed at securing the bank’s future.

The vote was on a package the bank agreed last month to raise extra funds from investors and refinance debt. Metro’s share price had plunged in September following reports it needed to raise cash to shore up its finances.

In the days ahead, we are going to hear about a lot more banks that need to “shore up” their finances. And it is inevitable that more banks will fail.

A number of people have asked me questions about their banks lately, and I have told them the same thing that I tell everyone. It is never wise to put all of your eggs in one basket.

We are moving into a period of time that is going to be extremely chaotic, and so you don’t want to have all of your assets in a single place.

What we have seen so far is just the beginning.  Our banks are going to get into even deeper trouble during the days ahead, and that is really bad news for all of us.

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

Moody’s Investors Service cut its rating outlook to negative from stable on Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co., but the stocks rallied Tuesday on the heels of tame inflation data.

The big news networks really haven’t talked much about this.

Why is that?

To me, this is a really big deal.

When push comes to shove, the “too big to fail” banks will be looking to the federal government to bail them out, but the financial position of the federal government just continues to get weaker and weaker…

Analyst Peter E. Nerby of Moody’s said that the worsening outlook on bank debt was due to “the potentially weaker capacity of the government of the United States of America (Aaa negative) to support the U.S.’s systemically important banks.”

In particular, JPMorgan’s downgrade was partially because the bank runs a “complex” capital markets business that may post “substantial” risks to its creditors.

For now, most Americans still seem to have faith in the stability of the banking system.

And that is good news.

But problem signs continue to erupt all around us.

In fact, Wells Fargo just permanently shut down 13 branches in a single week…

Six banks filed to close almost 40 branches last week leaving millions of Americans without access to vital financial services, with Wells Fargo alone axing 13 locations.

Wells Fargo has been a leader in the closure of branches around the country, having closed 160 in the first half of the year, according to data from S&P Global Market Intelligence.

When financial institutions get into trouble, they start getting really right with their money.

And according to a report that was just released by the Federal Reserve, the rate of credit rejection has risen substantially over the past year…

Reported rejection rates among applicants increased by 2.1 percentage points to 20.1% in 2023 from 18.0% in 2022, well above its 2019 level of 17.6%.

I fully expect that number to go even higher in 2024.

An excruciating credit crunch has begun, and that means that we are heading into a very tough economic environment.

Just look at what is already happening to home sales.

Today, we learned that existing home sales in the United States have fallen to the lowest level since 2010…

Existing home sales tumbled 4.1% last month to a seasonally adjusted annual rate of 3.79 million units, the lowest level since August 2010 when the sales were declining following the expiration of a government tax credit for homebuyers.

That is horrible!

And Zero Hedge has pointed out that on a year over year basis existing home sales are now down a total of 14.6 percent…

With housing affordability at its lowest since at least the early 1980s, (and homebuilder sentiment slumping as mortgage rates rose), it’s no surprise that analysts expected existing home sales in October to tumble 1.5% MoM.

Sales actually fell 4.1% MoM (far worse than expected and down for the 20th time in the last 23 months) with September’s 2.0% MoM decline revised even lower to -2.2% MoM. That decline left existing home sales down 14.6% YoY…

This feels so much like 2008.

And just like the Great Recession, consumers are starting to pull back on their spending on a widespread basis…

Shoppers will be splurging less this holiday than in past years, major retailers say.

Best Buy, Lowe’s and Kohl’s all reported sales declines during their most recent quarter Tuesday and are forecasting holiday sales to drop from a year ago.

“Consumer demand has been even more uneven and difficult to predict,” Best Buy CEO Corie Barry said in a statement, noting that the company “prepared for a customer who is very deal-focused.”

Earlier this week, I wrote an entire article about the severe troubles that U.S. consumers are experiencing right now.

The cost of living has been rising much faster than paychecks have, and as a result U.S. consumers just don’t have a lot of discretionary income to spend.

The mainstream media continues to insist that the U.S. economy is doing just fine, but survey after survey has shown that most Americans are extremely displeased with how things are going economically.

The bottom 80 percent of income earners has gotten poorer over the past several years, and now our economic problems are accelerating. But as bad as things are now, the truth is that they will get even worse in 2024 and beyond.

The shaking of our banks will intensify during the months to come, and that is going to put an incredible amount of stress on the entire system. Unfortunately, our system is simply not able to handle much stress at all at this point…

Sound off about this development on the Economic Collapse Substack.

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The effects of the outages were far-reaching. Many people’s payroll direct deposits failed, leaving them unable to access the money they earned. ACH payments also failed to process, which resulted in late fees. There were also duplicated withdrawals, which left many customers in a bind after their money was taken out twice for a single transaction. Between Wells Fargo, Chase and Bank of America, there were almost a million failed transactions in total.

A precise cause has not been disclosed, but the problem is almost certainly in the backbone of the banking system itself because people experiencing issues were unable to resolve them by going to their local branches.

The Clearing House Payments Company reported that instructions for transactions were sent to the affected banks “with the account number and names of customers masked” because of a processing error. This data is needed to process incoming payments and post funds to accounts, so the payments could not proceed.

The Clearing House said it was “working with the financial institutions with impacted customers, and with the Federal Reserve, to resolve this issue as quickly as possible.”

Banks that attempted to send funds during the outage must now send the original instructions again to make the transfers work, which is leading to significant delays for affected customers.

One bank, JPMorgan, said it is automatically refunding the overdraft fees it charged customers who did not have sufficient funds to pay their bills as a result of the problem. The bank, which is the country’s biggest, is still seeing an unusually high volume of problem reports from customers.

Is the FedNow system to blame?

Although the problem is largely under control now, banks have been frustratingly vague in explaining what happened, leading to speculation about the cause of the issue. Some observers, like The Daily Doom’s David Haggith, are convinced that the Federal Reserve’s new FedNow system could be the culprit.

He points to one news report that said “the bank issues were a technical glitch with the Federal Reserve System.” This is not a very clear statement and it’s hard to imagine the entire Federal Reserve system being broken, but it would make sense if it was FedNow that was at fault.

FedNow is an instant payment service backed by the U.S. Federal Reserve that was introduced in July. Banks and credit unions are not required to participate, but the customers of those that do join the program can make payments and transfers outside of business hours, as well as on holidays and weekends. This is not possible with standard online transfers such as Automated Clearing House (ACH) transfers, which are processed in batches and can take a few days to clear.

It’s not unusual for newer systems like this to encounter glitches, but this was a major problem that resulted in hundreds of thousands of failed transfers.

While there don’t appear to be any clear answers about what role, if any, FedNow played in this drama, the incident does highlight the vulnerabilities of these types of electronic systems. It could be a sign of even more trouble in the future if FedNow is, as many believe, meant to serve as a distributed ledger for a future central bank digital currency (CBDC) from the Fed.

As Haggith points out, when these problems occur, people who have cash on hand will have a backup source of funding if electronic banking fails, but with a cashless CBDC system, these types of problems could leave people with no way to cover their necessities until the system is fixed. Technical problems and hacking incidents could bring life to a standstill if people are overly reliant on such systems.

Sound off about this article on the Economic Collapse Substack.

Sources for this article include:

• TheDailyDoom.com
• NerdWallet.com
• CBSNews.com