2024 will be the year more banks fail than ever before. Is your Money Safe ?
In recent years, the global financial landscape has been marked by unprecedented challenges, from economic downturns to regulatory changes and technological advancements.
As we step into the year 2024, experts are increasingly concerned about the looming specter of bank failures, reminiscent of the 2008 financial crisis.
In this post, we’ll explore the potential for more bank failures, with a particular focus on SVB bank and other big institutional players.
We’ll also discuss how diversifying your portfolio with real assets like gold and silver through a Precious Metals IRA can help safeguard your wealth in uncertain times.
The Ominous Shadows of 2024
As we slide into 2024, signs of trouble within the financial sector are becoming more apparent.
Many experts and analysts have raised alarms regarding the fragility of the banking industry, citing concerns about increased leverage, risky investments, and a potential downturn in the economy. One bank that has been under the spotlight is Silicon Valley Bank (SVB).
The banking crisis isn’t over, and its next chapter will involve one of the world’s most important central banks, according to “Rich Dad Poor Dad” author Robert Kiyosaki.
SVB Bank Failure: A Potential Catalyst
Silicon Valley Bank, known for its focus on technology and innovation sector clients, is facing mounting challenges that could spell trouble in the near future. As the tech industry grapples with market fluctuations and regulatory scrutiny, SVB’s exposure to these volatile markets poses a significant risk. Investors should closely monitor SVB’s financial health and consider diversifying their holdings.
Echoes of 2008: A Haunting Reminder
The events of the 2008 financial crisis still linger in our collective memory. The collapse of Lehman Brothers, followed by a cascade of bank failures and a worldwide recession, left many investors reeling. The parallels between 2008 and the current financial climate are unsettling. It’s essential to remember the lessons learned from that crisis and take proactive steps to protect your assets.
Here are the seven largest bank failures
| Bank name | Bank failure date | Assets* |
|---|---|---|
| Washington Mutual Bank | Sept. 25, 2008 | $307 billion |
| First Republic Bank | May 1, 2023 | $212 billion** |
| Silicon Valley Bank | March 10, 2023 | $209 billion** |
| Signature Bank | March 12, 2023 | $110 billion** |
| IndyMac Bank, F.S.B. | July 11, 2008 | $31 billion |
| Colonial Bank | Aug. 14, 2009 | $26 billion |
| First Republic Bank-Dallas, N.A. | July 29, 1998 | $17 billion |
*Assets rounded to nearest billion
**From the Federal Reserve as of Dec. 31, 2022
*** This list only includes failures and does not include banks that were provided assistance.
The Factors Behind Bank Failures
Bank failures can result from various factors, and it’s crucial to analyze them objectively:
1. Economic Downturns
Historically, economic downturns have been a significant driver of bank failures. When the economy contracts, individuals and businesses may struggle to meet their financial obligations, leading to increased loan defaults. Banks with high exposure to risky loans are particularly vulnerable in such scenarios.
2. Risky Investments
Banks that engage in overly speculative or risky investments can find themselves in precarious situations. These investments can result in substantial losses, eroding a bank’s capital and potentially leading to insolvency. This led to the fall of SVB in 2023.
3. Regulatory Challenges
Stringent regulatory changes can impact a bank’s profitability and stability. Banks may need to adapt to new rules and requirements, which can be costly and time-consuming. Failure to comply with regulations can lead to penalties and reputational damage.
4. Technological Disruptions
The financial sector is experiencing rapid technological advancements. Banks that fail to keep up with digital transformation may lose market share and struggle to compete effectively.
Why You Should be Concerned About More Bank Failures Arise
It’s essential to acknowledge that concerns about more bank failures aren’t rooted in fear but rather a prudent assessment of potential risks:
1. Increased Leverage
Some banks have been criticized for taking on high levels of leverage, which can amplify losses during economic downturns. This practice can make them more vulnerable to financial shocks.
2. Market Volatility
In today’s interconnected global economy, market volatility can have far-reaching effects. Banks with significant exposure to volatile assets, such as Silicon Valley Bank (SVB) with its focus on tech markets, face added risks when these markets fluctuate.
3. Lessons from History
The financial crisis of 2008 serves as a valuable lesson. It demonstrated that seemingly stable institutions can face severe problems when underlying issues come to light. Vigilance is warranted to prevent similar crises.
Staying Informed and Prepared
Rather than inducing fear, our intention is to encourage vigilance and preparation. In uncertain times, it’s wise to diversify your investment portfolio, consult with financial advisors, and monitor the health of financial institutions in which you have an interest.
By staying informed and making well-informed financial decisions, individuals and businesses can better navigate the complex financial landscape and protect their assets, should challenges arise. Remember, knowledge and prudent planning are powerful tools for safeguarding your financial future.
Bank failures have been uncommon in recent history
Around 867 days passed between Almena State Bank’s failure on Oct. 23, 2020, and Silicon Valley Bank’s failure on March 10, 2023.
This means that the Silicon Valley Bank and Signature Bank failures were actually the first of President Biden’s term. And there were 16 when President Trump was in office.
Even those 16 failures during President Trump’s term aren’t a lot compared with years such as 2012-2014. And 2009 and 2010 were definitely special circumstances with the Great Recession.
| Year | Number of bank failures | Year | Number of bank failures |
|---|---|---|---|
| 2023 | 3 | 2011 | 92 |
| 2022 | 0 | 2010 | 157 |
| 2021 | 0 | 2009 | 140 |
| 2020 | 4 | 2008 | 25 |
| 2019 | 4 | 2007 | 3 |
| 2018 | 0 | 2006 | 0 |
| 2017 | 8 | 2005 | 0 |
| 2016 | 5 | 2004 | 4 |
| 2015 | 8 | 2003 | 3 |
| 2014 | 18 | 2002 | 11 |
| 2013 | 24 | 2001 | 4 |
| 2012 | 51 |
Always make sure your money is FDIC insured
It doesn’t matter whether it’s a year with no bank failures or 2010, with 157 failures — it’s crucial to always make sure your money is at an FDIC-insured bank, within FDIC insurance limits and following the FDIC’s rules.
This current crisis — as well as the Great Recession — taught us that even big banks can fail.
Diversify to Strengthen Your Portfolio
Diversifying your investment portfolio is a time-tested strategy for mitigating risk during periods of economic uncertainty. One avenue to consider is investing in precious metals like gold and silver through a Precious Metals IRA. Here’s why:
1. Hedge Against Inflation
Gold and silver have a long history of preserving wealth during times of inflation. When the purchasing power of paper currencies declines, these precious metals tend to hold or even increase in value.
2. Safe Haven Assets
During economic downturns, investors often flock to safe-haven assets like gold and silver. These metals can provide stability and act as a store of value when other investments falter.
3. Portfolio Diversification
Adding precious metals to your portfolio can reduce its overall volatility. They have a low correlation with traditional asset classes like stocks and bonds, making them an effective diversification tool.
4. Tax Benefits of a Precious Metals IRA
Investing in gold and silver through a Precious Metals Individual Retirement Account (IRA) offers tax advantages. You can defer taxes on gains until you make withdrawals, potentially saving you money in the long run.
Secure Your Future
As we look ahead to 2024, the possibility of more bank failures is a sobering reminder of the fragility of the financial sector. SVB’s situation and the echoes of 2008 serve as stark warnings. To protect your wealth and secure your future, consider diversifying your portfolio by investing in real assets like gold and silver through a Precious Metals IRA. This strategic move can help you weather the storm, whatever challenges the year may bring.
Don’t wait until it’s too late. Consult with a financial advisor to discuss your options and take proactive steps to safeguard your financial future. Remember, preparation is the key to financial resilience.
