Fears about the integrity of American banking appear to be driving depositors away from holding their cash at banks, with commercial deposits having dropped by $105 billion in the two-week period that ended on March 29.
This is the highest drop ever recorded since Federal Reserve data first started being compiled back in 1973, by the way. And the more than $45 billion decrease in deposits that occurred in the second of those two weeks primarily occurred at smaller banks.
“The pullback in total lending in the last half of March was broad and included fewer real estate loans, as well as commercial and industrial loans,” Bloomberg reported about the matter.
(Related: Last fall, 19 states launched an investigation into banks with ties to the climate cult.)
Credit conditions have worsened right back down to “pandemic” levels
What happens next as far as this trend goes will largely be determined by the Fed’s so-called H.8 report, which provides an estimated weekly aggregate balance sheet for all commercial banks in the United States to use for evaluating credit conditions.
Economists are said to be closely monitoring this report as they anticipate that credit conditions will continuing to weaken over the next six months. Right now, credit conditions are already as dismal as they were at the onset of the Wuhan coronavirus (Covid-19) “pandemic,” and banks are likely to become increasingly more cautious about extending credit in the coming months as things further unravel.
Even though we are technically already in a recession based on traditional indicators, the government continues to tell the public that we are not there yet but could be soon due to all these financial issues.
JPMorgan Chase & Co. head Jamie Dimon wrote in his bank’s annual letter that the ongoing bank failures have “provoked lots of jitters in the market and will clearly cause some tightening of financial conditions as banks and other lenders become more conservative.” In other words, the country’s financial situation is only going to get worse as time goes on.
According to the Fed, lending at the nation’s 25 largest domestically chartered banks decreased by $23.5 billion in the last two weeks. During the same time period, lending decreased by $73.6 billion at smaller commercial banks, while lending by foreign institutions in the U.S. fell by $7.5 billion.
“The biggest 25 domestic banks account for almost three-fifths of lending, although in some key areas – including commercial real estate – smaller banks are the most important providers of credit,” Bloomberg reported.
In the week ending on March 22, domestically chartered banks made divestments to non-banking institutions that affected $60 billion in loans, according to the Fed. This means that those loans are no longer held by commercial lenders.
“Meanwhile, so-called ‘other’ deposits, which exclude large time deposits, have fallen $260.8 billion at commercial banks since the week ended March 15,” Bloomberg reported.
“At domestically chartered banks, they declined $236 billion, mostly reflecting a drop at the 25 largest institutions. Deposits at small banks fell $58.1 billion.”
In the two-week period covered by the latest report, the following other changes occurred:
- Commercial and industrial lending, which is considered to be a closely followed gauge of economic activity, dropped by $68 billion
- Commercial real estate loans plummeted by $35.3 billion
- Total assets, including vault-held cash and balances due from depository institutions and the Fed, decreased by nearly $220 billion
- Total liabilities dropped by more than $188 billion
In the comments, someone pointed out that while all this is happening, real estate purchases have tanked “due to higher interest rates and higher home prices.”
“Perhaps there is some relationship between the two?” this person wrote.
Is the financial system as we currently know it about to implode? Find out more at Collapse.news.
Sources for this article include: