Banking Crisis: What REALLY Happened?! Hearing Tells All!

The recent banking crisis in the United States has millions of people around the World asking questions how did it happen Why were some bailed out and not others Is my bank at risk now these questions Were answered in over eight hours of Testimony from U.S Regulators who were On the front lines when the banks Collapsed what they said revealed some Scary things about the banking system So today I'm going to summarize these Hearings explain what was said and tell You what it means for the future of that Banking system this is a video you don't Want to miss I'll start by saying that I'm going to Keep things short for the sake of time As such I'm going to have to leave out a Few bits that I would perhaps otherwise Have included don't worry I won't leave Out any juicy stuff and if you want the Full story I'll leave the link to both Banking hearings in the description as Always Now for context after the collapse of Silvergate bank which we covered the Collapse of Silicon Valley Bank or svb Which we covered and the shutdown of Signature Bank which we covered U.S Politicians demanded that the U.S Regulators involved with these Bank Closures testify before Congress The U.S Regulators in question were Martin Gruenberg the chairman of the

FDIC which provides Deposit Insurance Michael Barr Vice chairman for Bank Supervision at the fed the U.S Central Bank And Nelly Lang under Secretary of Finance at the U.S treasury Department Which manages the country's finances All three testified to U.S politicians In the Senate and then in the House of Representatives last week as I mentioned In the introduction their testimony Totaled over eight hours across two days Now obviously there was quite a bit of Overlap in what they said but it was Different enough to Warrant a breakdown Of both So without further Ado let's dig in The Senate hearing started with opening Statements from the Top members of the Committee and from the witnesses Senate Banking committee chairman Sherrod Brown Was the first to go He blamed the banking crisis on Venture Capitalists who allegedly caused svb to Collapse after telling everyone to Withdraw Sherrod also blamed the Shutdown of Signature Bank on FTX which Makes no sense given that FTX related Accounts accounted for less than one Percent of signature's total deposits if You watched our video about the shutdown Of Signature Bank you'll know that it Was closed by anti-crypto regulators Sherrod thanked these Regulators for

Acting so prudently and said that the Ordeal demands both a review of banking Regulations and Deposit Insurance he Also said that any recent compensation Of the CEOs of the banks that went down Should be clawed back and that he wants All of them to testify too Next up was Tim Scott who underscored The fact that they need to investigate What happened before they start blaming Bank CEOs or The Regulators even so Tim Highlighted the fact that the issues Which brought down svb had been on the Fed's radar for over a year and yet the FED did nothing Tim blamed the fed's lack of oversight On Michael's focus on climate change Instead of financial stability Tim also argued that the banking crisis Is due to the inflation caused by the Biden Administration which resulted in Higher interest rates which led to Unrealized losses which increased the Risk of Bank runs As for the witnesses Martin was the First to go he gave an overview of the Events that occurred over the weekend of The 10th of March namely that svb Collapsed Signature Bank was shut down And depositors from both Banks were Protected under an emergency Systemically important Bank designation Martin revealed that the FDIC will be Publishing a report in May which will

Detail exactly what it did during the Crisis what it could do better next time And whether there should be changes to Deposit insurance he finished by saying That banks with more than 100 billion Dollars in assets are risks to financial Stability The next witness to speak was Michael he Started by saying that the U.S banking System is quote strong and liquid and Assured everyone that quote the FED is Committed to ensuring all deposits are Safe in other words the FED will bail Out depositors if needs be so please Don't panic please Michael admitted that the FED didn't Seem to have appropriate oversight of Svb and then said something significant Quote risks are high with banks with Non-traditional business models Regardless of size in other words Banks Working with the crypto industry are Risks and must face extra scrutiny Finally it was Nellie's turn and she Recounted the crisis in detail on the 9th of March 42 billion dollars was Withdrawn from svb on the 10th of March Regulators closed svb knowing it Wouldn't survive the 100 billion dollars Of pending withdrawals On the 12th of March signature was Closed and depositors from both Banks Were bailed out Nelly also explained the measures that

The fed and other Regulators took Besides protecting depositors under the Systemically important designation the FED introduced the bank term funding Program or btfp which allows Banks to Borrow against their collateral to honor Any excess customer withdrawals note That you can check out our video about The collapse of svb if you want to Understand exactly why it went under Link will be in the description Now once the opening statements were Finished the question period began note That I skipped over some of the Politicians and some questions either Because the questions were redundant or Just not worth covering Anyways the first to go with questions Was shared He asked Michael whether the FED dropped The ball to which Michael said yes the Fed was aware that there were issues at Svb as early as November 2021 but did Nothing hence why he is investigating Michael also confirmed svb was very Badly managed The second to go was Tim and he asked Whether there was a future for small and Medium-sized Banks given the flight of Deposits to larger banks that are Considered too big to fail because of The crisis Martin said that deposits at Small and medium-sized Banks remain Stable which isn't entirely true in any

Case Martin revealed that two Regional Banks had offered to buy svb on the Weekend it went down for reference this Would have eliminated the need for a Bailout and could have resulted in less Of a crisis Tim asked why the offers weren't Accepted Martin couldn't give a clear Answer yikes Now the third to go was Mike crapo and He pointed out that the FED has some Authority over small and medium-sized Banks in the Dodd-Frank Amendment from 2018. for reference the Dodd-Frank Act Was passed in the aftermath of the 2008 Financial crisis and it created Stringent requirements for big Banks Many have blamed the recent banking Crisis on the 2018 amendment when all it Really did was increase the definition Of big bank from 50 billion dollars in Deposits to 250 billion dollars in Deposits Martin's earlier statement About banks with more than 100 billion Dollars being a risk to financial Stability implies that the cutoff should Be 100 billion not 250 billion Regardless the other thing the 2018 Amendment did was give the fed the Flexibility to increase requirements on Banks that had more than 100 billion in Deposits both svb and Signature Bank had More than 100 billion dollars in Deposits and yet the FED didn't use its

Powers to increase their requirements What's more is Michael agreed the FED Had the potential to do this but tried To argue that the feds still can't go After small Banks which presumably means Those with less than 100 billion dollars In deposits again this is not relevant Because svb and signature were both Large enough to allow for more fed Oversight anywho the fourth to go was Catherine Cortez masto and she asked a Good question Shortly before svb collapsed its Executives sold millions of dollars in Svb stock and just a few hours before it Collapsed employees were given large Bonuses Catherine asked if this money Would be clawed back I.E returned Martin Danced around the question but admitted During the second banking hearing that The FDIC doesn't have the power to claw Back these sales and bonuses put simply Svb insiders will be keeping all of the Money they gave themselves before the Bank collapsed something they must have Known about now if you think that's Concerning consider the question from Bob Menendez He asked Michael whether the collapse of Svb and signature actually posed a Systemic risk to the banking system and Demanded a yes or no answer Michael failed to give a yes or no Answer and failed to Define what

Systemic risk means The sixth to go was John Kennedy and he Forced Michael to reiterate that the FED Could have had more oversight of svb and Signature with the discretionary Powers It had been given in the 2018 Dodd-Frank Amendment he tried to force Michael to Admit that it wouldn't have mattered Anyways this is because the fed's stress Tests weren't assessing whether Banks Could survive a bank run after their Assets lost value due to rapidly Rising Interest rates so even if the FED had Subjected svb and signature to more Stringent requirements it still may not Have prevented their collapses now I'd Be remiss if I didn't mention a question From Tina Smith she asked Michael if There are other banks in the United States that are at risk of similar runs Michael essentially said no which Apparently isn't true you'll know this If you watched our video about the other 190 banks at risk of similar runs I'd Also be remiss if I didn't mention a Hypocritical comment from Bill Haggerty He began by asking for a moment of Silence because of yet another mass Shooting and put a political spin on it Bill continued by saying that quote I Know politicians like to take advantage Of a crisis I wish I was joking anyhow The ninth to go was John tester and he Asked Michael whether the FED had sent

Someone to physically check on svb after They found out it was having issues Michael said there was supervision During the pandemic but said he couldn't Confirm whether someone had physically Gone to svb Even John exclaimed that he couldn't Believe how messed up this is I suppose It has something to do with the CEO of Svb being on the board of the San Francisco fed but let's not go there yet Okay the tenth to go was Steve Danes and He turned up the heat with his comments And questions he slammed the FED for Refusing to escalate the concerns it had About svb even though the FED had known About svb's issues since 2019. note this Is much earlier than the November 2021 Date given by Michael speaking of which Steve asked Michael Point Blank whether He or someone else at the FED would fire The employees who were negligent here Michael couldn't provide an answer which Made Steve understandably angry I mean You'd imagine people at the FED are Accountable for their decisions Steve then asked Michael if he had Visited the San Fran fed last year Michael said he didn't remember and that He may have appeared virtually Steve said he had proof that Michael had Been there in some capacity and that Michael spent the whole time talking About climate change not a word on svb

Kristen Cinema kept the fire going with Her comments and questions she confirmed That the Fed was aware of the issues at Svb as far back as 2019 not November 2021 as Michael had claimed This prompted her to ask Michael when he Became aware of the issues at svb he Said it was only earlier this year Now the last Senator I'll summarize is Tom Tillis he didn't really ask any Questions he just addressed the elephant In the room quote I'm not a conspiracy Theorist but it looks like there was a Close relationship between the San Fran Fed and svb it's sad that he needed that Disclaimer to State the obvious Now if this first banking hearing felt Short that's because it was indeed it Lasted a mere two and a half hours the Second banking hearing with politicians From the House of Representatives is Where things got lengthy and spicy five And a half hours of U.S Regulators being Grilled lovely stuff let's dig in As with the Senate hearing the house Hearing began with opening statements From the top politicians on the Committee and from the witnesses which Were again Martin Michael and Nelly House Financial Services committee Chairman Patrick McHenry was the first To speak like Tim Patrick underscored The importance of understanding what Happened before rushing to introduce new

Banking regulations He likewise slammed Michael for focusing On climate change at the fed and said That he wants to understand everything About how U.S Regulators responded to The crisis next up was Maxine Waters and She revealed that this will be one of Many house hearings about the banking Crisis she noted that svb was the Largest bank run ever but insisted this Wasn't the beginning of another Financial crisis she also thanked The Regulators for their quick actions French hill and Bill Foster also made Short opening statements French repeated The robust argument that the banking Crisis is ultimately due to excessive Government spending and the fed's Reaction to the resulting inflation As For Bill he just said that bank runs Happen much faster than they once did When it comes to the witnesses this time Michael was the first to go he basically Repeated his opening statement from the Day before as did Martin and Nelly the Only difference was that Martin seemed To emphasize the fact that Signature Bank was shut down by New York's Financial Regulators not the FDIC with The opening statements out of the way The question period began and Patrick Was again the first to go he asked the Witnesses when they became aware that Svb was experiencing issues they all

Said Thursday the 9th of March the day Before svb collapsed this prompted Patrick to ask about a February Presentation by the FED which discussed The financial issues that svb was facing And asked Michael why the FED didn't act Sooner if they knew svb was in deep Trouble Michael said that the Fed was Doing a review on svb and didn't finish It in time The second ago was French and he gave Michael some reprieve with his comments He reminded everyone that the FED didn't Have a vice chair for supervision Between January 2021 and July 2022 when Michael got the job he also reminded Everyone that the San Fran fed is Fundamentally to blame on that note you Should know that Michael was one of the Architects of the Dodd-Frank Act Dodd-Frank just so happened to include The creation of Vice chair for Supervision at the FED which Michael now Holds you can learn more about Michael's Background using the link in the Description I digress The third to go was Nadia Velazquez she Noted that Jerome Powell recently Admitted that the FED had considered Pausing raising interest rates because Of the banking crisis she asked Michael How the FED will balance inflation with Financial stability Michael said they Will continue to be data dependent note

That I chose to cover this question Because it was literally the only one About monetary policy I also need to Cover comments from Brad Sherman because They were comically anti-crypto Brad was Outraged that crypto had pumped in Response to the banking crisis news Flash Brad it's not our fault that Bitcoin was literally designed as a Response to the bank bailouts which Followed the 2008 financial crisis In all seriousness bill of his anger Then asked Nelly when the minutes of the Emergency meetings held by the financial Stability oversight Council or fsoc Which includes the fed the treasury and Other Regulators will be released Nelly Didn't specify when they will be made Public spooky the sixth to go was Anne Wagner and she got a similarly spooky Response to her question she asked Michael exactly how many warnings the FED had sent svb Michael admitted that They had sent svb about half a dozen Warnings since 2021 and admitted that The FED failed to escalate it scrutiny Note that the fed's failure to act in Advance was a huge point of contention For politicians on both sides of the Aisle during both banking hearings now The seventh to go was Tom emmer and he Speculated that the banking crisis was Somehow related to the crypto Crackdown He asked Martin whether the FDIC would

Be selling off signature Banks crypto Related assets given that it had been Reported that the FDIC wouldn't be doing So Martin seemed to reveal that the Signet Payment system had already been sold Which came as a surprise to well Everyone that's why his comments made The crypto headlines now unfortunately Martin didn't reveal who had purchased Signet if indeed anyone had let's just Hope it's not a mega Bank like JP Morgan But back to Tom to his credit he Speculated that the takedown of Signature occurred in part because Signet was seen as a competitor to the Fed's FED now payment system which is Scheduled for release in July this is Something we've speculated about as well And it's nice to know word has gotten Out the eighth to go was Barry Loudermilk he asked Nelly about Janet Yellen's mixed messages regarding the Safety of Bank deposits Nelly said that The treasury will do everything Necessary to keep deposits safe and will Label small to medium-sized Banks as Systemically important to that end if Necessary Barry asked Nelly to explain when that Determination gets made but of course She didn't have an answer The ninth to go was Ralph Norman he Asked the witnesses whether it was right

To deem svb and signature as being Systemically important Michael explained That it was a unanimous decision made by The Regulators involved and that it was The right decision without it it would Have been much worse the tenth to go was Warren Davidson he pointed out that the FED had the ability to scrutinize svb Even closer due to the aforementioned Dodd-Frank amendments when Michael Admitted that they failed to use these Powers Warren proclaimed that it was the Regulator that failed not the bank Regulations Warren then asked Michael about his Speech the day before svb collapsed if You watched our video about that speech You'll know Michael said that stable Coins were creating Financial stability Risks but in the end it was the banks Warren asked Michael if he would take His comments back if he could all Michael said was quote we need humility Now if you thought that was spicy Consider Rashida talab's line of Questioning She asked Michael about svb's Executives Selling shares and its employees getting Bonuses shortly before the bank Collapsed Michael said he didn't know The details to which Rashida said quote How can the media know but not you Michael didn't have an answer Now the 12th to go was Richie Torres he

Spent his time talking about commercial Real estate For those unfamiliar most commercial Real estate loans in the United States Were made by small and medium-sized Banks newsflash but commercial real Estate hasn't been doing too well lately Richie asked Martin if it was true that The FDIC still hadn't managed to sell Signatures 30 billion dollar pile of New York City commercial real estate loans Michael confirmed this was the case Which begs the question of what will Happen to commercial real estate in NYC If the FDIC can't find a buyer I must Also tip my hat to William Timmons who Accurately identified ESG investing as One of the drivers of inflation which is Causing the banking crisis by extension You should know that the eu's upcoming ESG regulations could have a global Impact more about them in the Description moving on The 14th to go was Sylvia Garcia she Asked Michael whether the banking crisis Will make it harder for people to get Loans to buy homes and Michael confirmed This is likely She also asked Nelly if crypto was in Any way to blame for the banking crisis Nelly said no and this admission made The crypto news The 15th to go was Andrew garbanino he Asked Martin why signature was closed

Martin said that New York's Financial Regulators didn't believe it would be Capable of opening its doors the next Day he also asked Martin about the sale Of signatures Signet and Martin repeated That it was in process The 16th to go was Wiley nickel he asked Martin why it took so long for svb to be Acquired for those who don't know svb Was bought by First Citizens Bank last Week Martin claimed that svb was too big For anyone to buy it quickly but you'll Recall Martin earlier said there were Two willing buyers Now the 17th to go was Brittany Peterson She asked Martin how they can stop these Bank runs from happening again Martin Said that explaining how Deposit Insurance Works would be a good place to Start I reckon the only reason they Don't is because people will find out About the bank Balin laws more about Those in the description now the 18th to Go was Stephen Horsford he asked Martin If the FDIC will increase the 250k Amount that's covered under Deposit Insurance Martin said it was something They're considering Stephen revealed That people in his district are already Having issues getting loans because of The crisis The 19th to go was Sam none he asked Michael if Capital requirements for Small and medium-sized banks will be

Increased Michael said no but I suppose That depends on your definition of small And medium-sized Banks recall that There's now debate around the 250 Billion dollar definition of big Bank The 20th to go was Erin Houchin she Asked Michael to explain what the fsoc Does which is of course to monitor Financial stability She then asked if climate change is part Of this mandate because five pages of The fsocx December meeting was about it Yet there was no discussion of bank run Risks that reminds me if you watched our Recent video about Jerome Powell's press Conference you'll know a reporter asked Him how it was possible that the FED Didn't see the banking Crisis coming When they had discussed Bank Run risks At their previous meeting as per the Minutes he didn't have an answer Now the last house politician I'll Highlight is Scott Fitzgerald that's Because he made a comment that Adequately sums up the response to the Banking crisis by the fed the FDIC and The treasury Department quote I'm not convinced that you know how to Identify banks that are at risk all of Which brings me to the big question and That's what all this means for the Future of the banking system in short it Suggests that Regulators are either Woefully ill-equipped to address banking

Crises or allowing them to occur for Unknown reasons the worst part is that This phenomenon isn't unique to the USA Macro analyst Andreas steno Larsen Recently revealed that he was unable to Calculate how exposed European banks are To commercial real estate this is Because only about a third of European Banks report this exposure and Andrea Said it's something the European Central Bank is concerned about Not only that but just a few days ago The ECB started to sound the alarm about A potential trillion dollar liquidity Crisis arising from commercial real Estate put simply investors might try to Withdraw from European commercial real Estate funds forcing them to sell their Real estate assets at a massive loss Believe it or not but the ECB advised Commercial real estate funds to limit The amount of investor withdrawals this Is exactly what Blackstone did with its Own real estate Fund in the United States just a few months ago and it Underscores just how bad it's getting in The commercial real estate sector When you combine this with the apparent Exposure of European Banks to commercial Real estate it sets the stage for Another 2008 style financial crisis Caused by well mostly empty office Spaces Central banks will inevitably respond by

Flooding the financial system with money But they might not at first that's Because inflation is too damn High Stimulating when inflation is still high Will lead to more inflation and risks Hyperinflation that's why it's likely That the central banks will try and plug The hole by introducing another Emergency lending facility that lets Banks use their real estate loans as Collateral what I'm wondering is what Happens if these real estate loans can Never be paid back and this is where Things could start getting seriously Ugly In the United States there's a type of Loan called a non-recourse loan number Course loans are very common in Commercial real estate and here's how They work Suppose you borrow 10 million dollars to Buy an apartment building now imagine The value of the apartment building Drops to 7.5 million dollars and let's Say you're unable to make your loan Repayments for whatever reason You default and the bank repossesses and Resells the building to someone else now With a regular loan you would still owe The bank 2.5 million dollars because the Building the bank took back is only Worth 7.5 million and you borrowed 10. With non-recourse loans however the bank Takes ownership of the building and you

Don't have to pay back the difference You just lose the building so a question What happens if the FED suddenly becomes The owner of a bunch of non-recourse Loans well logically the FED then Becomes the owner of the commercial real Estate for those loans in a scenario Where commercial real estate gets Crushed the government becomes one of Its biggest owners we could see the same Thing happen elsewhere in the world as Well Now chances are that governments would Then convert this real estate into Low-cost living quarters something the People desperately want it would go from Office Space pods into well literal pods Say that sounds a lot like the great Reset more about that in the description And that's all for today's video folks If you watched until the end then well I Reckon it was good enough to deserve a Like don't you think perhaps it was even Good enough for you to subscribe to the Channel and ping that notification Bell So you don't miss the next one maybe You'll even share it with your friends And family which would be lovely And if you happen to be looking for a Hardware wallet to store some digital Assets that can't be seized you can Check out the coin Bureau deals page in The description for a juicy discount You'll also find thousands of dollars of

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