Bank Chatter

 I sat and reviewed yesterday a FDIC story related to banks.  Current data....from FDIC....says that US banks are holding $515-billion in unrealized losses.

The question being laid down....with dozens of banks in potential failure status...when will the chaos officially start?  Before the election, shortly after the election (before Thanksgiving), or going into January?

I'm of the mind it's a zero chance that the chaos will start before the election.  

If this were to occur after the election or until Christmas....it'd crap-out the US Christmas buying season, and make the situation ten times more worse than believed.

So I'm of the mind this fantastic melt-down  of the banking sector (dozens of bank failures) will occur shortly after 1 January 2025.  Reasoning?  I think the fixes being discussed behind  closed doors....require the Biden-crew to support, and they'd rather have them issuing  orders....than the Trump-crew.

So does any of this affect the little-guy? As long as what you  have in the bank is $250,000 or less....you are covered by FDIC.  If you have more than $250,000 in this billions of losses mess...then you might only get 25-to-50 percent of your lost money covered.  

The scenario to discuss?  Lets say your retired parents had $750,000 in a CD account...paying 5-percent, with a bank failing.....with $100,000 in savings and $10,000 in checking....then FDIC probably will only cover about $350,000 to $400,000.  The rest?  Lost. 

Another scenario?  You bought bonds via a bank....say $1-million worth.  The majority of that will be lost.

My advice....ensure you have $250,000 or less with each individual bank or credit union.  Even if you have to open a dozen bank accounts across three states....it's the only way to be 'safe'.

To the final issue....does FDIC have enough funds to cover ALL losses?  Well....no one is really suggesting that idea any more.  The fed could print more money.  But this would trigger more inflation (going into 2025).  The fed could suggest a 'fee' situation.....if you had more than $250,000 in a bank....maybe you ought to be paying $1,200 a year  for the privilege of hefty accounts (yeah, it'd be crazy stupid to make such a fee). 

Just another thing to worry about.