Unfortunately, consumers do not have a straightforward method to tell if a bank is potentially in trouble given its investment mix, Stephens confirmed. “It’s hard to predict, and as we have seen in Silicon Valley, it’s happening very, in a short time. Instead of worrying about it, so long as you are protected, you are guaranteed by the federal government. I would not waste an excessive amount of sleep trying to grasp the bank’s financial transparency. I feel in relation to banking, we don’t desire to go down the too-big-to-fail path because we all know nobody is simply too big to fail.”
Which banks will fail in 2023?
Having said that, Stephens noted that he had examine 186 banks that could be overly exposed to a devaluation of presidency bonds. Actually, Social Sciences Research Network published a report suggesting that many banks might be susceptible to failing in a similar way to Silicon Valley Bank. The report’s premise stated that the banks on the list could face serious trouble if half of their depositors ripped out their funds. Worse still, the researchers concluded that the FDIC won’t have the ability to completely cover affected consumers if such a large withdrawal of deposits occurred.
“My personal belief is that if we witnessed a large bank collapse, the complete economic system can be in danger, so I do not believe that may occur,” Stephens said. “I feel as we have seen with the GFC and most recently during COVID, the federal government will print as much money because it must print to bolster the system.”
But that creates its own problems, he noted: “And that really creates an even bigger and more dangerous problem because each time they print money, it devalues all the cash we have already got,” he said. “And that is another excuse why you do not need to speculate entirely in money.”
