Are You Ready? The New Banking Rules That Signal A Financial Crash transcript

Hello everyone, Economic Ninja here. I've got a really big story I believe that is just starting to brew and this is banking regulations and rules being set forth by the FDIC and the OCC, which stands for the Office of the Currency Comptroller or sorry, Comptroller of the Currency. And this has to do with both of these agencies refocusing on bank supervision on material financial risk. So, let me read this to you and let's start thinking together about why the FDIC and OCC want to start finalizing these rules.

We know that they have streamlined back in January the process in which a bank can fail and be repurchased. All the assets get sent to another bank. It is less than 24 hours now. It's fast and I believe it's because we're going to start seeing in the next 12 months a lot of bank failures coming out. So, it says both of these agencies on August 27th finalized a rule. Oh, and real quick, thank you to everybody that's been hitting the subscribe button.

I'm trying to get over 590,000. That's a very big milestone on YouTube. Thank you to everybody that's been hitting subscribe as you've been unsubscribed. It says here they finalized a rule that establishes new standards for determining when a bank has engaged in unsafe or unsound practice and when examiners may issue a matter requiring attention. That's a document then sent to the FDIC. The rule is intended to refocus supervision on material financial risk and away from less consequential concerns involving policies, procedures, documentation, reputation risk and other non-financial matters.

Now, this rule it says is very significant because the term unsafe or unsound practice has long been used by the agencies without a regulatory definition. Section 8 of the Federal Deposit Insurance Act authorizes various enforcement actions based on such practices, but the statute itself does not define the term. Isn't that interesting? So, even today after the Great Recession, that crash, and Dodd-Frank, and all this supposed reform, we're still in a situation where these agencies still have not defined these things because, I believe, it would bring a lot of attention, scrutiny, to these banks.

Now, it says here that they're creating a new standard for unsafe or unsound practices. Now, under the final rule, an unsafe or unsound practice must be contrary to generally accepted standards or of prudent operation, and either likely be, if continued, to materially harm the institution's financial condition, or present a material risk of loss to the deposit insurance fund, or have already materially harmed the institution.

So, what does that state? Well, really, they only care about um a bank doing unsafe practices not to save you, but uh the fact that it may hurt the FDIC because they may need to use that insurance because they screwed up, and the FDIC knows how valuable the perception of the insurance fund is for depositors to feel safe putting their money on loan with certain banks. The FDIC is hugely underfunded, and this came under scrutiny under the uh last crisis when Silicon Valley Bank went down along with a handful of other banks a handful of years ago.

The truth is, the FDIC doesn't have that much money to deal with this, and government and Congress are going to have to step in to backstop the next financial crisis in the banking sector. Now, real quick, if you want to take advantage of this crash, and you want to know and be ahead of the game when it comes to gold and silver precious metal cycles cuz we just had a massive run. A lot of people in the channel made a lot of money.

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Now, back to this >> real quick. >> There's a second set of standards for MRAs. This final rule establishes a somewhat lower threshold for an MRA. An MRA may be issued when a practice is contrary to generally acceptable bill standards of prudent operation. Um this is, in my opinion, we are seeing the groundwork for the next banking crisis to play out at the beginning of after a stock market downturn. And not a crash, but just a 15-20% downturn this fall and into winter, which will expose a lot of these banks that are pretty much swimming naked with uh unrealized bond losses that they've been holding on to for a long time.

Uh very tight margins and a consumer that can no longer borrow because borrowing costs are so crazy. Remember, banks make a lot of their money from loaning out money. So, if they can't do that and businesses are failing, people are failing, mortgages are failing, this all this stuff is going on at once, you're going to see banks crash. And as that happens, we're going to see how much money the FDIC actually has. Hey, real quick, just want to thank you to all for hitting the subscribe button.

Thank you for sharing these videos all over. I cannot believe how fast our Facebook page is growing. Thank you so much. You are all amazing. The Economic Ninja Got to find that button. is out.