- The question for the financial crisis of 2008 was the big banks too big to fail? Now, a new worry surfaces within the banking sector. Could smaller, regional banks collapse the system?
- JFL
Cockroaches...
...when you see one, there are more. This is the quote from the CEO of JP Morgan Chase, Jamie Dimon in reference to the large charges suffered by Western regional banks. He considers these small banking institutions as cockroaches, but in his condescension, there is a worry and truth.
We, at Evolution do not trust Wall St. investment banks. They lie with a smile, especially concerning the precious metals. In their dark soul they oppose sound money. They are for fiat and the Federal Reserve. This does not mean that they are not intelligent. They are. They have a deep understanding of economics and they are connected to influence their agenda. With that said, we see in his above quote, the worry and truth of contagion. Banks, large and small, buy each other's paper. This connects them. What was revealed last Friday will reverberate as more details and banks reveal their connection. We already see a growing number of institutions that are taking losses.
Jeffery (JEF), an investment firm has loans to two banks, ZION (ZION) Bankcorporation and Western Alliance Bankcorporation (WAL). The two banks and the financial firm lost over $100 billion in stock value due to their charges concerning bad loans last Friday. Zion and Western Alliance are tied to California Bank Trust to which started the chain reaction due to unpaid debt. We feel there are more cockroaches hiding somewhere?
Related Aspect
JP Morgan Chase have their own bad loans. The firm is too big to feel deep pain from their losses to Tricolor Holdings, but other players might not be so fortunate. The auto parts maker is not the only one to suffer unpaid debt or other economic problems. Delinquencies on auto loans are rising along with the price of vehicles and lending terms to acquire one from dealers. In the last decade, consumers continue to struggle to make ends meet. Delinquencies have surged over 50% concerning vehicle lending. It is no wonder since it was announced last week that new vehicles have crossed the $50,000 barrier on average price.
The buyer finds insurance costs are higher along with costs for upkeep. Because they chose a longer term for lower monthly payments, they find that after 7-years they need a new car, but they still owe on their last purchase. If they trade in and rollover their debt into a new debt structure, they will be trapped into this never ending debt cycle. We can see this as Americans now carry over $1.6 trillion in auto loan debt.
Back to Tricolor Holdings. The Fifth Third Bank (FITB) is connected to the blues tune of $200 million in potential losses. Ouch! Thank God for busses and they discount if you purchase a monthly pass...Peace.
