Is The US Banking System Safe? – 15 Years Later! - Prof. Jim Quinn, The Burning Platform

By Jim Quinn / The Burning Platform

“We’ve got strong financial institutions…Our markets are the envy of the world. They’re resilient, they’re…innovative, they’re flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong.” – Henry Paulson – 3/16/08

“I have full confidence in banking regulators to take appropriate actions in response and noted that the banking system remains resilient and regulators have effective tools to address this type of event. Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out . . . and the reforms that have been put in place means we are not going to do that again.” – Janet Yellen – 3/12/23

With the recent implosion of Silicon Valley Bank and Signature Bank, the largest bank failures since 2008, I had an overwhelming feeling of deja vu. I wrote the article Is the U.S. Banking System Safe on August 3, 2008 for the Seeking Alpha website, one month before the collapse of the global financial system. It was this article, among others, that caught the attention of documentary filmmaker Steve Bannon and convinced him he needed my perspective on the financial crisis for his film Generation Zero. Of course he was pretty unknown in 2009 (not so much anymore), and I continue to be unknown in 2023.

The quotes above by the lying deceitful Wall Street controlled Treasury Secretaries are exactly 15 years apart, but are exactly the same. Their sole job is to keep the confidence game going and to protect their real constituents – the Wall Street bankers. And just as they did fifteen years ago, the powers that be once again used taxpayer funds to bailout reckless bankers. Two hours before the only solution the Feds know – print money and shovel it to the bankers – Michael Burry explained exactly what was about to happen.

When Biden, Yellen, and the rest of the Wall Street protection team tell you the banking system is safe and they have it under control, they are lying, just as I said fifteen years ago.

“Our economy and banking system is so complex and intertwined that no one knows where the next shoe will drop. Politicians and government bureaucrats are lying to the public when they say that everything is alright. They do not know. Should you believe a governmental agency that wants the public to remain in the dark to avoid bank runs, or an independent analysis based upon balance sheet analysis?”

Back in the days of The Big Short, before the public knew about toxic subprime mortgages issued by criminal bankers and packaged into derivatives given a AAA rating by the greedy compliant rating agencies, the Wall Street cabal knew time was growing short, but that didn’t keep the lying bastards like John Thain (Merrill Lynch), Dick Fuld (Lehman Brothers), Angelo Mozilo (Countrywide), Kerry Killinger (Washington Mutual), and others from pretending their institutions were healthy and profitable – right up until the day they collapsed. Lying is in the DNA of every financial executive, politician, government bureaucrat, and Federal Reserve hack.

The quote from Hemingway seemed pertinent in 2008 and is just as pertinent today.

There are many similarities between what was happening in 2008 and what is happening today. Bear Stearns went belly-up in March 2008 and was taken over by JP Morgan in an arranged marriage by Bernanke and the Fed. The usual suspects assured the country this was a one off situation and the banking system was strong. The Wall Street banks had been reporting huge profits because they were hiding the massive losses on their balance sheets. If they didn’t foreclose, they didn’t have to write-off the mortgages. The toxic debt just kept building.

In the summer of 2008 the banks started to report losses, but assured investors it was only a one time hit. All was well. The week I wrote my article Wall Street bank stocks had soared 20% or more because their reported losses for the 2nd quarter were less than expected. My article cut through all the BS being shoveled by the likes of Larry Kudlow, Jim Cramer, the Wall Street CEOs, and the supposed analyst experts who still had buy ratings on these bloated debt pigs. My assessment was somewhat contrary to the CNBC lies:

“I would estimate that we are only in the early innings of bank write-offs. The write-offs will at least equal the previous peaks reached in the early 1990s. If a large bank such as Washington Mutual or Wachovia  were to fail, it would wipe out the FDIC fund. If the FDIC fund is depleted, guess who will pay? Right again, another taxpayer bailout. What’s another $100 or $200 billion among friends.”

Merrill Lynch was reporting billions in losses and issuing new stock to try and survive. They were clearly in a death spiral and I saw the writing on the wall:

“How long will investors be duped into supporting this disaster? You can be sure that the other suspects (Citicorp, Lehman Brothers, Washington Mutual) will be announcing more write-downs and capital dilution in the coming weeks.”

By the end of September Lehman Brothers and Washington Mutual were gone. Merrill Lynch and Wachovia were acquired for pennies, and Citicorp became a zombie bank sustained by the Fed for years. My article was dire and my analysis showed we were in for years of pain and the worst drop in housing prices in history:

“There are $440 billion of adjustable mortgages resetting this year. That means that the majority of foreclosures will not occur until 2009. This means that the banks will still be writing off billions of mortgage debt in 2009. The reversion to the mean for housing prices and the continued avalanche of foreclosures is not a recipe for a banking recovery. Home prices have another 15% to go on the downside.”

“The consumer is being forced to cut back on eating out and shopping. The marginal players will fall by the wayside. Big box retailers, restaurants, mall developers, and commercial developers are about to find out that their massive expansion was built upon false assumptions, a foundation of sand, and driven by excessive debt.”

It seems I was quite accurate in my assessment, as home prices went down more than 15%, not bottoming until 2012. This global financial collapse brought an end to the big box expansion phase, as many went under, and the survivors concentrated on their existing stores. We entered the worst recession since the 1930s. The most interesting part in going back to my 15 year old article was the psychology of the crowd revealed in the comment section. Despite my use of unequivocal facts, I was branded a doomer, overly pessimistic, and an idiot. Many commenters said the Fed would save the day and it was time to buy the dip. If they had bought the dip on the day of my article, they would have lost 44% over the next 8 months during a relentless bear market.

The question now is whether the current situation is better or worse than the situation we faced in 2008. There are some factual items which may help in assessing where we are. In August 2008 the national debt was $9.5 trillion (67% of GDP). Today it is $31.5 trillion (130% of GDP). Total household debt was $12 trillion in 2008 and stands at $17 trillion today. The Fed’s balance sheet was $900 billion in 2008 and now stands at $8.3 trillion. Inflation was at a 17 year high in August 2008 at 5.9% and stands at 6.0% today. GDP was growing at 3.2% in 2008, versus 2.7% today. An impartial observer would have to conclude our economic situation is far worse than 2008.

https://www.theburningplatform.com/2023/03/15/is-the-u-s-banking-system-safe-15-years-later/

‎***Support BeforeItsNews By Trying HerbAnomic Natural Health Building Products Including Humic & Fulvic Liquid Trace Mineral Complex & UltraCur Bio-Available Curcumin—NOW NEW HNEX HydroNano Extracellular Oxygen Delivery System Product–SEE BELOW! ‎‎ ‎‎Click Here‎‎ For More Information & To Order!***‎

Click Here