The TreeceCo Report
This week I read an article stating that a new mandate would compel banks to hold $100 billion more in liquid assets than they have had to previously. This certainly caused a red flag to go up in my mind, as it is another clear indicator that the solvency of banks is to be worried about.
Call me a broken record, but banks are one of the worst places to leave your money. The assets big banks will be required to hold must be easy to convert to cash to avoid creditor demand. When you deposit money in a bank, remember that the FDIC has stated you are an unsecured lender to that bank.
Chairman of the Federal Reserve Janet Yellen called the new mandate "another important step to enhance the safety and soundness" of big banks. This implementation is the result of the Basel III international regulatory framework. Basel III states that banks must hold enough assets on hand to be able to withstand a panic of 30 days.
The article stated that this is an attempt to avoid the bailouts that resulted in the 2008 economic decline. But we know that bailouts will not happen again. If you've been reading our newsletters or coming to our seminars you've heard about how bail-ins will happen. At some point the government will no longer be able to bail out banks.
If banks had to meet the requirement that the new rule mandates today, they would fall $100 billion short. Where will the extra liquidity come from?
Why do you have your money in banks and credit unions when so many questions about their solvency resound?
You cannot get your money out the bank quick enough! Granted, inflation is eating your money in the bank anyway, but I'd rather have it in my mattress being eaten by moths and inflation than allowing ubiquitous global bankers to determine what happens with my money.
I joke about this, but there are much safer ways to grow your
money than in banks, credit unions, mutual funds, or the stock market. You can actually have a guaranteed return in any economy with security backing up that promise. Call our office to schedule a meeting to discuss this.