Falling after I was trading, it's tumbling right now by 42. After saying it's weighing strategic options, Pack West Western Alliance Comerica Zions and Keycorp leading the industry to the downside. Well, the banking crisis is on back and at the same time, we've just hit the highest level of unemployment claims in six weeks. And of course, the gold bugs are cheering The fact that gold is now as expensive as it was when Russia invaded Ukraine Yep, apparently four Regional lenders collapsing wasn't enough to satisfy their cleaning out of the junk in the banking system.

Silicon Valley Bank Signature Bank Silvergate and First Republic weren't enough and the 54 billion dollars in losses to investors weren't enough to end the banking crisis. Even the 800 million dollars of First Republic bonds that went poof weren't enough. Now a new Target is pack West Bank and potentially Western Alliance Pac West Bank is down 86 percent year to date 50 today. While at the same time, the big boys like JP Morgan are only down 1.49 year today.

They are actually positive before the two percent drop today, which is wild comparing that to the smaller Banks The Regionals like Pac West bank or Western Alliance down 56 on the day. Uh, it's low and 69 year today and all of this somehow happens right after Jerome Powell says the banking system is sound and resilient. Conditions in that sector have broadly improved since early March and the U.S banking system is sound and resilient. Yes, Right after that, we basically heard news that Pac West Bank was considering a sale and now Western Alliance potentially as well, though they dispute this and it makes you wonder, oh boy, how many dominoes are lined up.

And I Suppose when you've consider that the FDIC themselves says that banks are sitting on unrealized losses of over 620 billion dollars. That's more than half a trillion dollars. Makes you think that oh, wow, Wait a minute. If unrealized losses are 620 billion, and of the four big banking failures, investors lost 57 billion, that means maybe we're only one tenth of the way in if all of those unrealized losses actually have to come to fruition.

Now, technically, they don't have to. But yikes. This is leading some to say that 186 banks in the United States today according to Bloomberg are in quote distress. Yikes.

We're at four banking failures Plus, maybe pack West and then maybe Western lines or maybe not. Who knows? That brings us to maybe six, and there are 186 that are distressed. And just by counting the first four collapses we have seen, the banking collapse of 2023 is already officially larger than the 2008 collapse. The 2008 banking collapse uh, was about 25 bank failures with a total Uh asset failure of 373 billion dollars.

So basically the total assets at all the banks. That doesn't necessarily mean losses, just total Uh. assets that all the banks controlled were about 373 billion dollars and that was spread apart in 25 banks that failed including Washington Mutual back in the day. Well, now we sit at 548 billion dollars in total asset failures and that's just with the first four.

Banks Now we've got potentially two more and then who knows the dominoes that are left. Now Some folks like a professor from UC Berkeley Ross Levine a finance professor says, well, this is how markets are supposed to work. The bad are supposed to get fleshed out. basically the ones with poor risk management procedures are supposed to get flushed out after all.

That's what the Federal Reserve said in their Silicon Valley Bank and Banking Crisis report. They said yeah, hey, look, this was a bank that had basket bad risk management procedures and yeah, we probably need to regulate better and we have failed at that. great. But how much worse is it going to get Because it's possible that well, according to a finance Professor from Northwestern we could see another 300 billion dollars of Bank assets impaired.

That would put us to a potentially trillion dollar banking crisis. Think about that, the potential trillion dollar banking crisis that would be three times as large as 2008. But don't worry, everything is Justified Yeah, right now, hey, have you heard that Stanford Just suggested the average workers productivity can be increased by at least 14 with artificial intelligence as of a month ago. Imagine with the new tools that have come out in just the last few weeks and are coming out, how much productivity will continue to increase.

So if you're not yet learning about artificial intelligence, check out my program down below featuring artificial Intelligence, the course on how to make more money and get sh9t done a faster featuring AI as its entire AI segment releasing on June 1st. And if you lock in the price today, you'll be guaranteed the best price going forward during the pre-sale Pacwest is a Beverly Hills based bank and they are weighing either a sale or Capital raise and that's leading their stock to plummet. The sad thing about the regional Banks is as soon as one of them says Hey we'd like to raise some money, people go with a shotgun. Basically, you must be having problems.

sure. And so the irony is, they're trying not to have problems by raising Capital But as soon as they suggest they need to raise Capital they might be interested may maybe in raising Capital Boom, you did! It's sad and it is often caused by the deposit Rush that we're seeing of individuals basically saying yeah, I don't know how much confidence I have left in the small Banks Let me, uh, transfer my money out of these small base. Not most people have their deposits insured, some large entities and startups maybe don't But effectively in the United States we have nearly 100 FDIC insurance coverage even above 250 000. Now technically we don't but so far we have had not a single depositor has lost a dime.

but because of the rush of deposits away from these Regional Banks Regional Banks are realizing. oh yeah, this sucks. We are way upside down. and now those banks are being forced to close.

Some of them are being blamed for essentially exposing themselves to risky lending like. Silicon Valley Bank Hey, maybe you shouldn't only lend to startups going into a recession. oops. And maybe you shouldn't go long on low interest rate debt when we're going into a rising interest rate environment.

But others are saying well, like, what do you expect these Banks made a reputation for providing lending to a part of the market that nobody else was willing to lend to. Well, maybe there was a reason nobody else was willing to lend because there was more risk and that's what happens. The bank then fails when the underlying assets start going poopy-doopy well pack. West Bank Only had about seven percent of their outstanding loan book to, well, outstanding to startups.

Most of their loans were actually to residential investors. Think about that. Over 40 percent of their loan book was for residential purchases, another 13 was for residential construction, and most of that residential stock construction was actually two to four multi-family residential. So that duplex Triplex fourplex the smaller apartment building think kind of your neighborhood landlord, the blue jeans millionaire who's out investing in real estate.

and they're getting 30-year fixed rate loans. but with a Twist they're often getting two to three year interest only terms, which basically makes it easier to upfront get into some of these multi-family projects as you're trying to stabilize them and raise rents over time, especially in rent control areas like Los Angeles Unfortunately, when you rip away the opportunity to receive these kinds of loans, you make it more expensive for investors to invest in residential real estate, which many home buyers are like thank God Please get the hell out. We don't need more investors in residential real estate, making our real estate more expensive Now, of course, many argue that that's not how the economy works and landlords provide value to people who want to rent properties, but that's really a topic for a different video. What this does suggest, though, is the implication that hey, if smaller banks are essentially having to well go under, and now all of a sudden they're no longer providing these comfortable lending options, then that's how you actually see lending conditions tighten.

You go to an area like Los Angeles and you go all right. Well, the person or the bank that was just lending the multi-family investors money is gone and then the investors go. All right. Well, where else can we borrow money? JP Morgan Oh wait, no, they're not allowed to give us more than four loans because the big four banks are restricted via Dodd-Frank in terms of what kind of loans they can get.

Okay, well, maybe I'll call up a loan broker who let me get up to 10 investment property loans and that might be possible, but it's still that might not be as good as the deal you could have gotten at Pac West with that initial introductory interest-only term, which you'd think maybe we would have learned something from 2008 that would suggest maybe just maybe we shouldn't do introductory terms for loans because eventually those end up going bad. But then again, as they say, history does not repeat itself. It just happens to rhyme very similarly to what happened in the past, and nobody seems to learn any of their lessons. But then again, Bloomberg Was reporting yesterday that only about 13 percent of 8th graders are actually proficient in history because their school sucks.

So much so. maybe it's not actually our fault, maybe it's school's fault. And then of course, the schools are going to blame the politicians. So it's Congress's fault.

No, it's bailand's fault or Trump's fault. Oh, whatever. Now you have the Arizona-based Western Alliance exploring strategic options as well. For the Financial Times, they're a bank with 71 billion dollars in assets, at least as of the end of March.

The Financial Times is suggesting that they have hired advisors to help them explore a sale now. Shares initially traded down as much as 25 after that report, but Western Alliance is actually responding and saying No this is completely false. We are not, uh, exploring a sale and there's no truth to the Financial Times piece, which has the market somewhat rebounding for the bank. But a lot of people saying yeah, where there's smoke, there's fire, there's probably something going on over there same time of all of this, a lot of people are saying maybe one of the reasons all these banking failures are really getting pushed to the edge is because the banks make good deals for Big Banks to swallow up now.

Jerome Powell says he doesn't have a vendetta against Small Banks and he doesn't have some kind of agenda to destroy small Banks But it's awfully interesting that after the Silicon Valley Bank deal and Silicon Valley Bank collapse, now there are investigations into Goldman Sachs for potentially purposefully sandbagging the lining up of capital for Silicon Valley Bank creating fear in the market and letting the bank completely essentially collapse so that First Citizens could get a good deal on the entire book of business for Silicon Valley Bank. Whatever's left now, no guarantees. Maybe Goldman Sachs was trying to do their best, but people were nervous and uncertain that there was a lot of risk involved. But they're now investigations that maybe big boys are purposely trying to sandbag these smaller Banks because after all, raise your hand to suggest you need funding.

Boom! You get shot with the shotgun and the government's the one that's really coming in taking the Big L's see. Remember when Credit Suisse was taken over by UBS Well imagine this I Want you to pretend you are UBS which is also a Swiss bank now I Want you to imagine somebody knocks on your front door you know with an iPad like a solar sales person, right? Except now they're trying to sell you a bank they say dear, UBS you dare you would you be interested in buying Credit Suisse It's a massive bank and uh, they got some toxic assets. Well you're gonna be like, well, how am I gonna financially protect myself from that one I'm gonna need a lot of time to go do due diligence on that and then, well, this is where of course then what kind of response do you get? Oh fear not, how about if you pay this price A will take nine billion dollars of losses and then if you make money after that good on you. If you lose money after that, oh well, but uh, we'll just basically guarantee the first nine billion in losses.

Please take this back before everything collapses, Then after that, if there are gains, you can have them. If their losses, that's on you. But would you be willing to take the deal then and then you're like damn five build. After a quick glance, that should cover a lot of losses.

Sure, let's do the deal right. This is a kind of negotiating that happens, and I'm sure it's obviously a lot more detailed and involved than that, but the point is, the big banks are only going to buy the small ones if it's a good deal. And so the Swiss National Bank of the Swiss government bailed out essentially the Credit Suisse deal to make it palpable for UBS to buy them. It's very similar to the FDIC taking a 13 billion dollar loss on the First Republic takeover by JP Morgan JP Morgan's taking him over, but FDIC is still getting stuck with a 13 billion dollar bag.

Signature Bank left the FDIC with a two and a half billion dollar bag. Silicon Valley Bank left the FDIC with a 20 billion dollar bag. Well, if you add all this stuff up, somebody's going to have to pay for it. and it's either going to be the taxpayers who are going to pay to bail out and essentially refund the FDIC or it's going to be everybody else at banks that aren't failing who are going to have to pay higher FDIC fees.

And that's corporate socialism. Because realistically, what should be happening is these Banks should fail. If there is a deficit of 13 billion dollars or say 10 of assets, then anybody who has more than 250 000 of deposits should take a haircut of 10 15 20 to make sure that not the rest of the world has to take a loss for the failures of that bank. Of course, that's just one argument.

that's the harsh capitalism point of view. Other people say, well, how could you expect depositors to know about the bank's Financial conditions. Oh well. maybe because the banks actually post their financials every single quarter and then people say, put, that's not the responsibility of the depositor.

the government should do it fine. Somebody should do something. But ultimately, this is what's happening. Big banks are getting good deals small banks are going to put and then there is a lot of finger pointing.

But it's not just the Goldman Sachs who's getting a finger pointed at them or The Regulators or the FDIC there's actually another entity as well. I Do Want to remind you though, that if you want to be more productive, to make sure you can maximize your ability to make money during this crisis, check out the How To Make More Money and Get Sh9t done faster program. We are releasing an entire AI segment in that course on June 1st. Anyone who's already an existing member is getting all of that for free.

It's the Elite Hustlers course with a new name right here and we are adding a ton of lectures on June 1st. To actually really not just give you tools we don't want to give you pickaxes, We want to show you how you can actually solve real problems and become more productive by incorporating artificial intelligence into your life as either an employee, someone doing side hustles, or an entrepreneur. I Want to make you as productive as possible and that is the point of this program. And I encourage you to join before May 5th because the pricing will be going up at the end of May 5th since we are on pre-sale for that AI segment and the AI course which we're very excited about.

If you have questions for a bundle up, email us at Kevin Meet Kevin.com So who else is being blamed? Well, potentially KPMG They're the auditor for a lot of banks. In fact, by some accounts they are the actually just straight up they are the largest banking auditor and guess which companies they've audited Silicon Valley Bank Signature, First Republic and now Pac West And so now questions are being raised about the capability of this auditor to actually well audit and do their job. especially since KPMG gave a clean financial statements for all of these three. Banks as recently as February before the banking crisis and so now there's a lot of question about the staff's independence and potentially red flags here.

Which boy, doesn't that sound a whole lot like what happened in 2008 where rating agencies were basically stamping toxic bonds as AAA even though they weren't AAA Hmm. After all, it is the banks who choose the auditor. Technically, the auditor wants to do a good job to preserve their reputation. But then again, who would think that after the Great Recession we'd end up having another banking crisis.

So the real question now is how does this affect the whole economy And you, well, some say you just have to look again at Commercial Real Estate which is already 50 vacant and already trashed. potentially down 40 in value because of Covid, But now consider what's going to happen to all of these Banks after they failed after all in a study by Bloomberg 60 of First Republic Branch branches, posts, outposts are less than a five minute walk from Chase. Well, Chase just bought First Republic So what are you going to do with all those other offices and branches? In 16 cases, the First Republic Branch was just a one-tenth mile away from Chase. Now some suggest maybe these will be converted to wealth Center Offices Charlie Munger says hey, you know Warren Buffett's buddy a lot of trouble in Office Buildings A lot of trouble shopping centers, a lot of troubled properties out there, a lot of Agony out there he says.

but also as the banking crisis worsens. Not only do you now crimp lending on Commercial Real Estate and investment real estate potentially driving up the amount of inventory that ends up coming to Market driving prices down further, but you remove new investors from the market while at the same time as Banks themselves collapse. Not only are you affecting all the other office real estate via a tighter lending standards and potentially liquidations of properties, but also you yourself are now adding to inventory because we just need less offices in the banking space. So what is the impact to you? Well, the impact is, hurry up and wait to see what happens to the real estate market.

So far in Q1, it actually seems like it's doing okay at least residential is Now There could be some stresses around hey, when is your neighborhood Bank going to default But then, with how much our deposits have essentially been universally guaranteed and how many of us don't have 250 000 in cash in the bank anyway, it probably really doesn't matter. Now it is probably a good opportunity to wake up and go, oh, how much of a yield are you actually getting on the cash you have deposited? And if you're only earning a quarter of a percent, maybe it's time to move some of that money and diversify it over to other platforms or money market funds that could offer you a higher yield like a high yield savings account or a Robin Hood or a wealth. Whatever. This video is not sponsored or brought to you by anything other than this beautiful course uh and uh, the bundle coupon that you can get by emailing us at Kevin.com Now one of the ways you could potentially solve this and how else this could potentially impact you is that if the Federal Reserve started cutting rates, then losses that these Banks would ex would be expected to diminish substantially Because as rates go down, the value of the existing loan portfolios goes up and those FDIC losses potentially get limited those unrealized losses at Banks.

Now once you lose confidence though, it can be very hard to rebuild faith in Banks So the banking dominoes may continue to fall and the stress for commercial real estate May remain as well as if we do see an increase in inventories. We could see some real pressure on real estate valuations though Again, we haven't seen that happen yet. But if some of these things happen, that is more banking failures, tighter lending conditions, and stress in real estate at the same time as inflation starts trending down. I Would expect the bond market could actually end up being correct and we could see rate cuts from the Federal Reserve as soon as July.

So buckle up! One thing that is guaranteed around here is entertainment and if you appreciated this video and this Insight consider sharing the video subscribing liking and leave me a comment down below. Thanks so much! Wish you the best goodbye Thank you.