VIDEO: Government Losing Control Over Bank Crisis
Welcome back to Wealth & Wisdom, my weekly video update for Weiss Ratings Members.
We have a very special treat for you today: a timely interview with Dr. Martin Weiss, founder of Weiss Ratings.
Since 1971, it has been the nation's leading provider of 100% independent grades on stocks, bonds, mutual funds and financial institutions, as well as the world's only ratings agency that grades cryptocurrency. And today, we are going to be focusing on — you guessed it — financial institutions.
In fact, Martin began rating banks in the early 1980s and predicted the wave of bank failures that would sweep the nation for nearly 15 years. Later, during and after the Great Financial Crisis of 2007–2008, 465 banks failed, catching millions of Americans off guard.
However, with his bank ratings, Dr. Weiss was able to warn people in advance about 464 of those looming failure, which is a stunning accuracy rate of 99.8%.
Then, on Dec. 3, 2007, Dr. Weiss published an alert warning that Bear Stearns had sunk its balance sheet even deeper in the hole, with $20.2 billion in dead assets, or about 155% of its equity, and was threatened with insolvency. Bear Stearns collapsed just 33 days later.
Around the same time, he published another article warning that Lehman Brothers was in similar shape because of an even larger $34.7 billion pileup of dead assets, or about 160% of its equities. Lehman Brothers collapsed 182 days later.
Now, a new banking crisis is upon us. We have just witnessed the largest bank failure since the Great Financial Crisis.
The crisis seems to be spreading globally, and that's why Dr. Martin Weiss is here with us today — to share his perspective on what is still to come, the history behind it all and the astute insight that he has on the banking sector.
We covered a lot of ground during our interview today, so let's get into it:
During our interview, Martin and I discuss:
- Why Silicon Valley Bank is NOT in fact the largest bank failure since the Great Financial Crisis nor the second largest in U.S. history.
- What actually happens when the government steps in and bails those banks out.
- How history has shown time and again that the weakness of the bureaucratic systems in place and the dishonest accounting led to these failures and disasters by creating systemic risk.
- How over the years, the government has intervened and created a huge vulnerability in the markets and what it actually has to do in order to move on from these crises and hold true to the promise that "every bank is safe."
- The major mistake the government made back in 2008 and why their actions have now created more risk and more susceptibility to these kinds of problems and failure.
- The details of the SVB crisis and how the White House, Federal Reserve and Federal Deposit Insurance Corporation handled it.
- The two possible scenarios that can play out from this situation and what can result from each one.
- How Weiss Ratings rates banks based on their own merits, regardless of what the government "guarantees."
And much more!
Click here to watch the video now.
To your Wealth & Wisdom,
Kenny Polcari
Host
