The United States effectively nationalizes the banking system

[ad_1]

The beauty of bitcoin is that it doesn’t need a marketing team: governments, central banks, banks, and regulators have offered free bitcoin promotion in recent months (and years), showing why it has need for a monetary system independent of the state. And the bankruptcy of First Republic Bank and its state-sponsored takeover by JP Morgan once again strengthens the case for Bitcoin.

At least that is the thesis of Arthur Hayes, co-founder of BitMEX, and he is not the only one. Via Twitter, Hayes wrote: This JPM/FRC deal means US regulators have decided to nationalize the banking system.

Bitcoin’s Case Grows

Analysts from The Kobeissi Letter drew attention to the scale of the government subsidy for JP Morgan, which under current law should not have taken over FRC at all. JP Morgan was already the largest deposit bank in the US before the FRC deal, holding more than 16%.

See more

Percentage of deposits controlled by US banks:

1. JP Morgan: 16.1%2. Bank of America: 14.8%3. Wells Fargo: 10.9%4. Citibank: 5.8%5. American bank: 3.4%6. Truist: 3.4%7. PNC Bank: 3.3%8. TD Bank: 2.9%9. Charles Schwab: 2.7%10. First capital: 2.6%

The top 15 banks control 75% of

The Kobeissi Letter (@KobeissiLetter) April 30, 2023

More shockingly, the banking giant announced that the acquisition of First Republic would generate a one-time profit of $2.6 billion. Additionally, they expect to make a profit of over $500 million annually from the deal. This all comes as the FDIC covers $13 billion in losses and provides $50 billion in funding.

You witness the product of a faulty system, writes The Kobeissi Letter. Ultimately, the Fed is afraid that more banks will fail. US regulators want to make sure the acquisition of First Republics goes smoothly to avoid eroding confidence in the banking system (and renewed confidence for Bitcoin).

Big banks like JP Morgan claim they saved the day. However, JP Morgan’s takeover of the First Republic was entirely to their advantage. They will make $5.1 billion in profits in 5 years. Why would the big banks want the crisis to end?, analysts say.

In this sense, Caitlin Long, founder and CEO of Custodia Bank, which respects cryptocurrencies, also issues severe criticism:

TOO BIG TO FAIL BANKS are getting too big to fail. JPM got government compensation to buy FRC and its share price is up in the pre-market. Again, watch what federal banking regulators actually do, not what they say. They really really like their TBTF banks, although they say otherwise.

US regulators are nationalizing the US banking system

And the US banking crisis is far from over. The stock prices of many regional banks fell sharply again yesterday.

See more

U.S. Regional Bank Stocks Today:

1. Valley National, $VLY: -20%2. Metropolitan Bank, $MCB: -18%3. HomeStreet Bank, $HMST: -18%4. HarborOne, $HONE: -11%5. PacWest, $PACW: -10%6. Citizens Financial, $CFG: -7%7. Zions Bank, $ZION: -4%8. KeyCorp, $KEY: -4%9. M&T Bank, $MTB:

The Kobeissi Letter (@KobeissiLetter) May 1, 2023

Arthur Hayes thinks more banks will collapse. The big beneficiaries will be TBTF banks, which, according to the founder of BitMEX, are effectively nationalized because they have a government lien on their entire deposit base.

They will not be allowed to fail whatever decisions they make. Socialized losses, privatized gains, that’s a lot, but writes Hayes, who says the eight TBFT banks will have to absorb any other banks that can’t cope with the current market environment of too-rapidly rising interest rates. .

According to the founder of BitMEX, the government will grant further exemptions, just as the OCC lifted deposit concentration limits and the FDIC loaned JP Morgan $50 billion to pressure them into a takeover. But a deal will still be struck, predicts Hayes.

If you’re not one of the 8 TBTF banks, you’re screwed as long as inflation is sticking to those high and possibly rising levels. []

Due to the US debt ceiling debacle, no bank can be bailed out by the government. This is the perfect point of political paralysis to capitalize on another likely several non-TBTF banks killed by the FDIC.

At press time, Bitcoin price was $27,998.

BTC price, 2 hour chart | Source: BTCUSD on TradingView.com

Featured image from iStock, chart from TradingView.com

[ad_2]