Congress Sweats the Small Stuff as Four Wall Street Mega Banks Have a Combined $3.3 Trillion in Uninsured Deposits

Editor’s Update: The FDIC has confirmed that none of the $622.607 billion in deposits in foreign offices/branches of Citibank are FDIC insured. See the stunning information in the ninth paragraph below. By Pam Martens and Russ Martens: March 30, 2023 ~ On Tuesday, Martin Gruenberg, the Chair of the Federal Deposit Insurance Corporation (FDIC), the federal agency that serves as both a bank regulator and the overseer of the federal insurance program for U.S. bank deposits, testified before the Senate Banking Committee. The dangers of U.S. banks holding large amounts of uninsured deposits came up repeatedly in his testimony. For example, Gruenberg’s written testimony included these details about the ongoing banking crisis: “…on Friday, March 10, a number of institutions with large amounts of uninsured deposits reported that depositors had begun to withdraw their funds.” And this: “The FDIC estimates that the cost to the DIF [Deposit Insurance Fund] of resolving … Continue reading →

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Weird Things Are Happening at Silvergate Bank and First Republic Bank

By Pam Martens and Russ Martens: March 29, 2023 ~ Silvergate Capital, the parent of Silvergate Bank – which has lost 90 percent of its share price year-to-date and announced it is winding down and liquidating — is still running a website that is putting a rosy glow on the bank’s operations. For example, under the heading of “Banking for the future,” the Silvergate website shares this: “Silvergate Bank has served entrepreneurs in unique and niche industries for over 20 years. Recognizing digital currency’s potential during the sector’s infancy, we built strong relationships with pioneers who were turned away by traditional banks. This solidified our position as industry-leading partners and innovators which remains true today.” Wait. What? (What ever happened to the Federal Trade Commission’s Truth in Advertising Law? Those so-called “strong relationships” with digital currency firms turned into highly-fickle hot money once markets learned that Silvergate had been doing highly questionable … Continue reading →

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As Senate Banking Committee Convenes Hearing on Exploding Banks, an FDIC Chart Shows the Banking Crisis Is Far from Over

By Pam Martens and Russ Martens: March 28, 2023 ~ Senator Sherrod Brown (D-OH), the Chair of the Senate Banking Committee, will convene a hearing this morning at 10 a.m. to take testimony from federal bank regulators on why the second and third largest bank failures in U.S. history occurred within two days of each other this month. (A number of other regional banks have seen their share prices plunge this month.) The two banks that failed and were taken over by the Federal Deposit Insurance Corporation (FDIC) were Silicon Valley Bank (SVB) and Signature Bank. Both had experienced bank runs in March and both had extreme exposure to uninsured deposits. One of the witnesses at today’s hearing, Martin Gruenberg, Chair of the Federal Deposit Insurance Corporation (FDIC), explains as follows in his written testimony for today’s hearing: “A common thread between the failure of SVB and the failure of Signature … Continue reading →

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The Banking Crisis Knock-On Effect Has Been a Stampede into Government Money Market Funds – Foiling the Fed’s Effort to Raise Market Interest Rates

By Pam Martens and Russ Martens: March 27, 2023 ~ On Sunday, Financial Times reporters Brooke Masters, Harriet Clarfelt and Kate Duguid published an article under the headline: “Money market funds swell by more than $286bn as investors pull deposits from banks.” This article needs some important clarifications. First is the fact that money market funds had to be bailed out by the government during both the 2008 financial crisis and the more recent financial panic of 2020 stemming from the COVID pandemic. On September 19, 2008 (four days after Lehman Brothers was placed into bankruptcy), stocks were crashing and investors were in a panic, the Department of the Treasury announced that it would provide a guarantee for money market mutual funds, standing behind more than $3.5 trillion in money market fund assets. In mid-March 2020, as the share prices of mega banks on Wall Street were plunging in price and … Continue reading →

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Powell and Yellen Say the Banking System Is Sound as Another Global Bank Teeters

By Pam Martens and Russ Martens: March 24, 2023 ~ The reassurances of Federal Reserve Chairman Jerome Powell and U.S. Treasury Secretary Janet Yellen that the U.S. banking system is sound, stand in sharp contrast to what is happening in markets. This week, the shorts have found another easy new global bank target to try to take down after making a bundle of money betting against Credit Suisse, which was taken over for 82 cents a share on Sunday by its Swiss competitor, UBS. This time the global banking target is Deutsche Bank, a global behemoth we have warned about ad nauseum here at Wall Street On Parade. Deutsche Bank was a $120 dollar stock prior to the financial crisis in 2008. It closed yesterday at $9.65 in New York and is down another 10 percent in early morning trading in Europe. The weakness in Deutsche Bank is spilling over into … Continue reading →

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