Banks still on edge of failure - Bitcoin anyone?

Banks still on edge of failure - Bitcoin anyone?

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Since the big bank failures early in 2023, and the take-over by UBS of Credit Suisse, all had gone relatively quiet until just recently, when New York Community Bank shares plummeted on suspicions that it was about to fail. Amid these bank woes, bitcoin is becoming the most popular asset on the planet to hold.

When banking collapses began

When Silvergate Bank, Silicon Valley Bank, Signature Bank, and First Republic Bank all collapsed in March 2023, there was much consternation that contagion from these collapses might spread to other banks.

As it was, the Federal Reserve, the US Treasury, and the FDIC, all stepped in and all investors were made whole. It did seem more than a little odd that three of the banks were the last three major US banks that were crypto friendly, and it might be wondered if this could be a reason why they were allowed to fail.

One year further down the line, and a swathe of banks are still on life support, only kept alive because the Federal Reserve took their underwater treasuries and put them on its own balance sheet - at least for the time being.

NYCB on the edge

However, it seems that the cracks are starting to appear again, and the latest bank to be in severe trouble is New York Community Bank. This bank is the 28th largest bank in the US, and it has $116 billion in assets. It even took over the best-performing parts of First Republic, when that bank failed, but it appears that their integration has not been well handled.

The reason for the potential failure of New York Community Bank is the same story as for many other regional banks. Its main business is in real estate, and all know how badly loans in this sector are doing. It’s a toxic situation, and it is to be wondered how banks with big exposure to real estate will extricate themselves from it.

Not all is lost though at the bank, given that former Trump advisor Steve Mnuchin has accepted a position on the board after he and others have come to the bank’s rescue with a $1 billion dollar rescue plan.


Source: Coingecko/Trading View

Looking at the chart for NYCB, there is probably a lot that needs to be done to save this bank, if indeed that is what Mnuchin and Co. actually want to do. Since July 2023, the bank has lost as much as 87% of its share value. This has reduced slightly after the Mnuchin news.

Bitcoin can’t be printed by central banks

Looking at the bigger picture, NYCB is just a tiny part of a banking system that is failing en masse, and that is pulling economies down, to say nothing of treating clients abominably by greedily leveraging their deposits in pursuit of profits.

Even if your bank is not failing right now, if you have money in the bank, it is losing its purchasing power as fast as central banks can print it. There is only one endgame for this, and that is total collapse. How long this might take to happen is anyone’s guess, but happen it will, given that no fiat currency has ever avoided going to zero in the history of the world thus far.

Bitcoin is hard, sound money. More of it can’t be printed, and no government can manipulate it. You can send it to anyone, anywhere in the world, and there are no banks that can tell you that you can’t do so, and there are no middlemen to take their slice of your transaction. Educate yourself before it is too late.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. 

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