The Banking Crisis and Anti-Crypto Saga Behind Failure of Financial Institutions

There is ongoing discussion and argument about the current worldwide banking crisis. For example, Michael Burry, a hedge fund manager who previously predicted the economic crisis of 2008, is likening the situation to the fear of 1907.

Robert Kiyosaki, Rich Dad Poor Dad author, has recently cautioned about injecting more fake money into the American economy. Additionally, Barney Frank, a previous member of the United States House of Representatives and a board member of Signature Bank, has expressed his belief that regulators may have intended to send an “anti-cryptocurrency message” concerning the bank’s recent collapse.

The well-known hedge fund chief, Michael Burry, famous for accurately predicting the 2008 financial saga, has compared the present banking chaos to the fear of 1907. However, he highlighted that the panic subsided, and the markets reached their lowest point three weeks after Morgan J.P. intervened.

Moreover, Burry noted that a similar intervention was made over the weekend, suggesting that a “stand was made” to tackle the current situation. Finally, Michael Burry tweeted his observations following the failure of some major banks in the United States, such as Signature Bank and Silicon Valley Bank.

The regulators shut down Silicon Valley Bank on Friday, while Signature Bank was closed by the New York State Department of Financial provisions several days later. Although Burry received support from certain individuals on social media, many others noted that the current scenario is distinct because the Federal Reserve System was absent in 1907.

In another tweet, Burry expressed a different sentiment, stating that the ongoing crisis could be resolved rapidly and that he does not perceive any significant peril. However, he had previously cautioned about the possibility of a prolonged multiple-year recession and a further surge in inflation in the United States economy.

Anti-Cryptocurrency Saga

During an interview, Barney Frank, from Massachusetts, a previous partner of the United States House of Representatives and a key co-supporter of the Dodd-Frank Act, shared his thoughts on the recent collapse of Signature Bank.

Frank, a board partner of Signature Bank, expressed his surprise at the institution’s failure and stated that he believes regulators were attempting to convey a forceful anti-cryptocurrency message.

According to Frank, apprehension arose last week when customers of Signature Bank started moving their assets from the New York-based bank to bigger financial institutions like Citigroup and J.P. Morgan.

While he perceived no concrete rationale for the bank’s seizure and closure, he suspected that United States regulators could use the incident to convey a message.

Frank suggested that regulators may have been trying to send a forceful anti-cryptocurrency message, stating, “I think what transpired was that authorities desired to send a very robust anti-cryptocurrency message.” He believed that Signature Bank became a poster boy for this message, as there was no bankruptcy based on the bank’s fundamentals.

Frank reported a deceleration in withdrawals on Sunday, and executives at Signature thought the problem had been resolved. He also stated that the bank’s higher-ranking employees tried to examine all possible solutions to address the liquidity challenges faced by the financial institution.

Frank supported the Dodd-Frank Act in 2010, which significantly modified the way banking and financial regulation are conducted in the United States. However, some American banks are no longer subject to the Dodd-Frank regulations, as parts of the policy framework have been revoked.

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

✉ Contact | Disclaimer