Ep. 44 - The Banking Crisis Simplified
With all the noise in the news, are you curious about what's really happening in the banking industry right now? Then you'll want to listen to this episode! We delve deeper than before into the recent collapse of two major banks and how it's affecting the industry at large. We explore the impact of rising interest rates on banks' investments in long-term notes and explain essential terms like âheld-to-maturityâ and âunrealized lossesâ in easy-to-understand language, so you can better grasp what's going on and disseminate the information to others. Plus, we discuss potential solutions to the industry's problems and how rising interest rates and work-from-home policies affect the real estate market!
Join us, and letâs dissect this fascinating situation from a simplified lens.
[00:01 - 05:58] The underlying problems behind the collapse of Silicone Valley Bank and Signature Bank
[05:59 - 16:17] The Federal Reserve implements a buyback program to address banks' âheld-to-maturityâ assets and potential runs on deposits
[16:18 - 22:16] More banks facing potential collapse as 1.7 Trillion in unrealized losses on balance sheets are revealed
[22:17 - 27:12] Things are on a razorâs edgeâthe dangers of the financial system and the need for action to prevent a domino effect
[27:13 - 33:52] Federal Reserve's tightening phase could lead to commercial lending problems and affect the real estate market
Quotes:
"I think that we've seen a lot of fancy words being thrown out, and at the end of the day, this is still a very simple concept." - Quinton Harris
"There is 1.7 trillion in unrealized losses on the bank's balance sheets. That's why we're doing three episodes on this and why this is so significant. We're trying to understand it and help everybody else understand it." - Quinton Harris
âThe Federal Reserve wants to tighten the system⌠Thatâs how they want to fight inflation⌠Youâre squeezing the money supply, which disincentivizes the banks from lending money out. So, the remedy is not there.â - Quinton Harris
Resources Mentioned:
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