Letter: Americans should worry about next banking crisis

Every time average Americans walk into a bank, they see a sign, prominently displayed saying the FDIC insures their deposits up to $250,000.

This all changed in March 2023, when the Biden Administration bailed out the Silicon Valley Bank to the tune of $16.1 billion. In a CNN article from June 23 (cnn.it/4eUoWUg), it was noted from actual FDIC documents that companies were bailed out from over $3 billion to many hundreds of millions of dollars.

Fortune magazine stated that of the 12 SVB board members, only one had investment banking experience, and the large depositors were made up of Biden, Obama and Clinton donors. SVB’s assets could not cover their commercial real estate loans, and they went bust. While the Biden Administration said at the time no tax dollars were used, every depositor or credit card holder has seen their ATM fees, credit card interest rates and late fees go up.

Last week Chase Bank, with 87 million depositors, said it would start charging fees for its checking accounts. This is in response to the Biden administration limiting bank late fees to $8.

This history is important now and the coming year, as banks across the U.S. have over $1.75 trillion in loans coming due to refinancing from now to the end of 2025. The origination loan interest was anywhere from almost 0 percent to under 4. These loans, if refinanced, will be at a much higher rate.

In a data analysis study from Florida Atlantic University dated June 3, the Q1 2024 industry-average benchmark for total CRE exposure was 139% of total equity. Sixty-seven banks have exposure to commercial real estate greater than 300% of their total equity, as reported in their first quarter 2024 regulatory data and shown by the U.S. Banks.

Banks with less than $10 billion in total assets are facing similar risks due to their commercial real estate exposure. Among banks of any size, 1,871 have total CRE exposures greater than 300%, 1,112 have exposures greater than 400%, 551 have exposures greater than 500% and 243 have exposures greater than 600%.

It won’t matter who wins the election. This crisis cannot be stopped.

Craig Nichols



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