Federal Reserve had a baby. What you're going to learn in this video is going to teach you what that baby looks like and that baby actually exists and it gives you some warning signs of which banks might be knocking on the door of oopsie dupsies next. But first, I Want you to understand how close we were to financial Calamity with Credit Suisse Listen to this. The Swiss government quote was compelled to intervene to save Credit Suisse as the troubled bank would not have survived another day said the Finance Minister of Switzerland Not Only would they have not survived another day, but their entire payment transaction systems would have not only been significantly disrupted, but could have potentially collapsed and we could have more broadly expected a literal and Global Financial Crisis quote.

The crash of Credit Suisse would have sent other Banks into the abyss. In in other words, one Domino knocks over and lots of dominoes. The banking crisis is very severe. We've got to study it and that's why we're going to talk about the Federal Reserve's baby in this video is that baby's getting a little bit more active here and it's something to pay attention to.

now. All other options were more risky for the state say they're Swiss and so taking over Credit Suisse was very clearly important. They could not allow a restructuring or liquidation of Credit Suisse They had to intervene. Now, let's get into it.

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You can actually pay for your life insurance. Check out those links down below next to the link for the courses. I'm building you with which Now 50 of users who are signing up are using buy Now pay later to sign up at least within the last 24 hours since we turned on that option. Obviously, we know we're in the midst of a banking crisis and there's an institution that not a lot of folks know about it, but it's actually quite important.

It is the Federal Home Loan Bank. Now this isn't just for home alone as they this a banking system is actually a banking system that's chartered by Congress. It operates somewhat like the FED. It's sort of like the next version of the Fed the Small like If The Fed had a baby.

It would probably be the FED Home Loan banking system and the question is who's borrowing from this and could it be a signal of potentially which companies are going bankrupt? Next, take a look for example at this following chart that I'm going to pull up here. This will show you loans in 2007 taken out by banks for the Uh or or from the Federal Home Loan Savings Bank In 2007 and these highlighted in red here were banks that didn't make it. And so look at the borrowing that you had in 2007 and 2007. you had advances of 63.9 billion for WAMU they went under and ended up being acquired by JP Morgan Countrywide 18.9 billion they went under, acquired by Bank of America and then you have the others here as well.

Merrill Lynch Wachovia They're gone. These companies absolutely gone. I Remember being a child in fourth grade, being invited uh in the school to listen to a presentation about how important savings accounts and checking accounts were and how we should have our parents come to a Wachovia branch and open up a kids bank account with them. Yeah, they went bankrupt anyway.

Uh, so what is this ushin and why does it potentially matter? Well first of all, we have a new chart that shows us which banks are potentially at risk of uh of of collapse as well because of their borrowing from this institution. Now, uh, this institution is generally considered to be a source of liquidity. We have seen borrowing for this Bank Skyrocket to 304 billion dollars in just one week. It provides liquidity.

So it's basically if a bank is having problems like you go, hey man, can you lend me a little bit of money? That's what they do. They're kind of the the secondary backdrop. Think of them as like there's the discount window at the FED which is kind of embarrassing to go to because it's public record. and then there's going to the second stop which is the Fhlb which is also not great.

This uh, this banking system. by the way, the Federal Home Loan Banks uh set up is is a private Cooperative so again, it's it's chartered by Congress Uh through the Federal Home Loan Banking Act of 1932. So it's been around since the Great at the end of the Great Depression era. It's really a network of about 11 Regional banks in the United States and its primary purpose is to be a stable source of low-cost funding for banks.

and uh, that enables commercial Banks savings institutions Credit Unions insurance companies, financial institutions of of other types To be able to have access to to Capital And and those loans to make sure the Cog wheels of the economy keep going now. Uh, Fhl Banks together on the 13th. So about 12 days ago, we're looking to raise about 64 billion dollars via bonds. That's actually how the Fhl makes most of their money.

So it's not actually another quote-unquote Fed facility. It's actually another banking system. It's a whole whole other group of banks. and they make money by issuing bonds.

and people think those bonds are safe. That's why they buy them providing that liquidity to the banking system because they believe they're basically a baby fed and there's no way they're going to go bankrupt. That's the belief. Although there's no such guarantee now, it's worth looking at that facility this.

well. Well, the facility from the FED which is the Um I like to call it the buy the FED pivot facility. but uh, it's the bank term funding program. That facility, Uh, the bank term funding facility plus the Federal Home Loan Bank facility uh, will give us a lot of data into who is borrowing which banks are actually borrowing from these facilities.

And take a look specifically at this chart here and you're going to see Federal Home Loan Bank borrowing from the Bank of San Francisco as of December 31, 2022. So this is Q4 which banks borrowed the most money from the Fhl and it's scary You ready for this? Check out the links down below for the programs. I'm building your wealth that's the primary sponsor of the channel. Oh sorry, had to do it.

Had to do it. But when 50 of you now who are signing up or using buy now pay later got a pitch that it's available. A firm followed by Clara is the most popular. All right here we go.

You ready for this. Look at this. Look at that. look on the left side.

Do any of those Bank names seem Familiar of banks that are going to the federal? Home Loan Bank Yeah, they do the first one. Silicon Valley Bank Well, they went kaput. What's the next one? So this one's already gone. What's the next one? Oh, look at that.

First Republic Bank Oh what do we have over here is that Silvergate which also went PK How interesting. So this is just the San Francisco bridge, but it shows you some of the heads up warning signs that when Banks start going to the Fhlb for loans, it might be a little bit of a red flag. uh that uh that there could be some more stress coming to the banking system. It is a sign of stress.

Remember Washington Mutual when when this happened uh, the last time around, look at this: Washington Mutual Receivership gets bought by Chase Countrywide Merrill Lynch both purchased by Bank of America Wachovia bought by Wells Fargo These were the ones that one could put and they borrowed from the A Fhlb. Just like these right here that are either kabut or on the cusp of going kaput now. Reuters is presently reporting that the Uh Fhlb is continuing to experience heightened demand as Regional Banks Look for more liquidity support and they're not just resorting to the discount window with the Fed or the F uh, the by the FED pivot facility, but they're actually also going to the Federal. Home Loan Bank That's because everybody right now is trying to avoid a major banking failure and this is deemed to be a very important system for low-cost funding that enables essentially cheap Uh housing borrowing or or, uh, you know, cheap credit lines or cheap loans for startups.

Look at that. Silicon Valley was one of the big borrowers and they were able to take cheap money. and unfortunately, when that cheap money became expensive money, they went bankrupt. The New York Times reports that Regional Bank stocks, uh, have seen a surge in use Pass this Q4 report here even more substantially than what we see here and what's reflected.

And that's because. uh, the Federal Home Loan Bank Uh. Borrowing in general has skyrocketed over 300 billion dollars. It's pretty remarkable because when we consider those numbers, they blow anything out of the past out of the water.

They're just so high now. Mark Cudmore A writer over at Bloomberg he believes it's actually ridiculous to believe that a the banking crisis is so severe that we are going to need rate cuts. and I think that's the implication out of all of this is if the banking crisis continues, is it possible that we are going to crush the economy with such tight lending standards? And the answer is yes. But what do we have? Well, we have central banks who are responding with confidence.

The Bank of Europe Well, the European Central Bank had the privilege of going first after the banking cycle or crisis And what did they say? Banking crisis suck. Here's your 50 BP hike. Then the FED came out. What'd they say? Banking crisis suck? Here's your 25 BP hike.

In other words, they're still hiking in the face of this banking crisis. Some say this actually encourages, uh, the belief that the banking crisis is not what you want to be concerned about. and so the market is pricing in rate cuts by Q3q4 because of the belief that the banking crisis is going to continue. But if the banking crisis goes away, then all you are is focused on inflation.

Best case scenario: the banking crisis goes away. If I could snap my fingers and the banking crisis would go away and inflation would go away tomorrow, we would go to the Moon. It's that simple. Now, if the banking crisis creates a severe and extended credit Crunch and people don't have the increased savings on hand to spend through the the credit crunch, then we got big problems.

Remember it was Bank of America who reported that somebody with an average bank balance of twenty five hundred dollars to five thousand dollars now had the honor of having about thirteen thousand dollars in their bank account uh, compared to prior to the pandemic now? Okay, they didn't actually call that an honor because it's still not a lot of money. But the the point is, uh, that, uh, people might have an extra four to five times as much money as they had uh, pre-pandemic and so potentially that could help people spend through this recession assuming the banking crisis ends. Of course, in the last days we've been concerned about Deutsche Bank we've been uh, which is five times the size of um, uh, Silicon Valley Bank three times the size of Credit Suisse So some people are writing that off as speculation: Deutsche Bank is fine. Jim Cramer says Deutsche Bank is fine, so it must be fine.

But uh, the idea that these particular banks are pulling money from the federal Home Loan Bank at these elevated levels, which often has been associated with essentially going bankrupt in the past, it's a little bit scary and it makes me wonder how that impacts me as as just, uh, you know, as as anyone really me on behalf of you as an average everyday American or even just myself. Uh, and I think the banking crisis one we do have to really pay attention to and hopefully what we're getting from the FED In terms of the 25 hike, the ECB the 50 hike is a real signal that this banking crisis is not systemic. That this is that this banking crisis is weeding out the most risky and that's it. Then the pain stops.

That's helpful. I Don't think hope is an investing strategy, but I suppose we'll see. So somebody here writes: I just pulled 500 000 out of my Community Banks and put it in JPMorgan Infidelity. You know I mean I I Don't blame you I think if there's a non-zero chance of a default, why would you be there? So anyway, that does it for today's me.

Kevin Report Thanks so much for being here. We're gonna go to the Elite Hustlers Live stream soon. Uh, in about 19 minutes after. I Get some food and we'll see in the next one.

Goodbye.