Folks, a Key Bank just failed. It took about 48 hours, but it's Now official. The Silicon Valley Bank collapsed this morning was the second largest bank failure in U.S history and the largest bank failure since 2008. Or as the media and the regulators and the politicians are going to say, just a small pansy collapse and the ones that come after that, don't even worry about those.

Prior to this collapse, this was the 16th largest Commercial Bank in America and a systemically important bank for one of the most important economic powerhouses of the US Silicon Valley. And folks, we and many others have been warning about this for a year plus now and the heat is turning up. This is what happens when you are raising rates at an unprecedented Pace in a financial environment that has been built and rebuilt to only be accustomed to much much lower rates. But I do want to give a strong kudos to Jerome.

Take your job, take your house, and now take your Bank Powell Yes, he has officially taken his first bank, but unlikely to be the last bank. Well, technically he's taken other Banks too. But the this is the first one that people actually care about. And the thing is, it's a relatively medium-sized Regional Bank 16th largest isn't really gigantic, but it's not small chickens either because of the impact this has and the number of businesses that actually bank with this.

And the thing is, if this can fall, a lot of the other small to mid-sized banks are going to be on edge as well. And hey, a lot of people are like no, no, no, the banking standards are so much higher now than they were 2008. This is only going to be one isolated bank that collapses in addition to the other ones. And hey, it is true.

we did increase regulatory standards on banks quite a bit after 08, but hey, guess what? The small to mid-sized Banks of which there are many now because of that regulation, while the mid to small size Banks Well, they don't have the same regulatory standard as the mega Banks The irony here is not only is the Fed engineering that's collapsed, but this is the same Fed that substantially substantially eased regulatory standards on smaller Banks back in 2018 in the first place aka the FED lowered preparation standards and then forced a crisis that those same Banks needed to be prepared for. It's kind of like telling your friend hey, it's not going to be rainy outside today, so don't even worry about bringing an umbrella. you're not going to get wet and then go in and bring in a big bucket of water and pouring it over his head. Sure! I guess it wasn't the rain that made you wet, but the truth is folks, this Svb failure is terrible and it's a terrible Omen and it risks undoing a ton of other similarly structured Banks and creating a toxic contagion that may be worse than anything we have seen since 2008.

I Want to explain exactly what happened here, why they were seeing Bank runs and why this risks spreading because a lot of the people that are telling you right now this isn't going to spread while they're going behind the scenes and selling all of their shares of similar Banks and even big Banks So again, you could hear all this stuff about oh, everything is fine and dandy berries and Roses the financial system has never been stronger as Bank after Bank collapses or you could actually look at what they're doing behind the scenes and you could actually look at the data yourself and quick plug if you are not on our free email list yet and what the next research report that will be out in a couple days, make sure to sign up with the link down below as soon as possible and give us your email. You're Gonna Love what we have in the next report. You do not want to miss that. Anyways, let's go ahead and start with what happened Bloomberg Just reported Silicon Valley Bank became the biggest U.S lender to fail in more than a decade after a tumultuous week that saw an unsuccessful attempt to raise capital and a cash Exodus from the tax startups that had fueled the lender's rise, Regulators stepped in and seized it Friday in a stunning downfall for a lender that had quadrupled in size over the past five years and was valued at more than 40 billion as recently as last year, CNBC reported that Silicon Valley Bank has been closed by Regulators which have taken control of the bank's deposits.

The Federal Deposit Insurance Corp announced Friday the California Department of Financial Protection and Innovation closed Svb and named the FDIC as the receiver now. I managed to find a picture of the head receiver over at the FDIC And don't you worry, your funds are real, real safe. he'll be making sure those deposits are all there. He'll be doing some real good.

Alameda Research all over those deposits. In my opinion, only SBF can save Svb. But in all seriousness, the FDIC said in the announcement that ensured depositors will have access to their deposits no later than Monday morning. Svb's Branch offices will also reopen at that time, but get this under the control of the Regulator.

This is some Financial apocalypse type stuff right here. When a bank goes into receivership, that means the bank's deposits will be assumed by another big healthier bank or the FDIC will pay depositors up to the insured limits. And what they are saying here is that Fvb's branches are going to be opening in the hands of the regulator. on Monday Look how fast things change.

You have this big bank that was one of the biggest Killers just a couple years ago now being managed by The Regulators Now I'm sure this was a coinkydink. a little coincidence, but a couple weeks ago on February 27th, the CEO and CFO sold a combined 4 million bucks worth of shares. They sold at around 287 dollars a share before the SEC hold. Today, the stock was trading at about 33 bucks, probably at the end of the day.

This is going to be worth like nothing because in a bankruptcy, shareholders are paid out last. but hey, great timing that they just happened to get out a couple weeks. But for the collapse and looks like they had some pretty good timing towards the end of last year as well. But why did Svb fail? Well, largely because of policies enacted by the Pow Pow on a financial system that is very, very unprepared for those policies.

The NBC reported the roots of Svb's collapse stem from dislocation spurred by higher rates. As startup clients withdrew deposits to keep their companies afloat in a chilly environment for IPOs and private fundraising, Svb found itself short on Capital. it had been forced to sell all of its available for sale bonds at 1.8 billion dollars of a loss and a sudden need for fresh. Capital Coming on the heels of the collapse of Crypto Focus Silvergate Bank sparked another wave of deposit withdrawals.

Thursday as VCS instructed their portfolio companies to move funds according to people with knowledge of the matter. The concern, well, a bank run at Svb could pose an existential threat to startups who couldn't cap into their deposits. Now telling some people to pull their funds is like yelling fire in a crowded theater. everyone is going to run for the exit.

So when you had some big names going and yelling hey, you need to move your money, well all of a sudden everybody else is like, okay, it's time to move our money too And everyone's running for the exit and then all of a sudden you get a collapse. Really, really nasty. Now let's go ahead and talk about what's at risk here: Bloomberg Reported the bank had about 209 billion in total assets and about 175.4 billion in total deposits at the end of last year. At the time of closing, the amount of deposits in excess of insurance limits was undetermined.

Now, like this says, it's unclear the exact amount that is going to end up being insured, but it's probably going to be a relatively small amount. FDIC Limits are at about 250 000, but Svb has the 99th least deposits under 250k in the country. In fact, in Q4 only 2.7 percent of their total deposits are under 250k. Which means potentially the vast majority.

The vast majority of the remaining 97.3 percent are left uninsured. So this FDIC shutting down of this bank is really just to protect a very, very, very small total of the deposits. Now there may be some joint depositors, which does increase the FDIC Summit by considering that a lot of this bank is just catering to small companies and startups and so on and so forth. Well, you have a lot of investors that probably gave money to startups and all of a sudden all of that money is just locked up and pretty much going to end up being gone.

You also have a lot of small to mid-sized companies who depend on this bank and use this money that's in that bank to actually go and pay their payrolls. And you have all these companies that have all this debt they owe to other banks that now have no cash to actually service those debts. So over the coming weeks you're going to see a lot of those companies declare bankruptcy. You're going to see a lot of those companies go and say hey, you know what? We got to lay off all of our employees.

We no longer have the capital that we need to run our business. Things were bad enough, but now we don't have our cash anymore that we stored up. So folks expect a ton a ton more. Tech layoffs in the coming weeks.

A lot of capital is going to be tied up with this and likely lost forever. Now will this be a contagion that spreads to other? Banks Well, you'd be naive to think not, as Bloomberg reports the FDIC receivership will end the end. Certainly about this particular Bank said Solah Al Morava, a law professor at Cornell but I Don't think that necessarily itself stopped people from feeling less safe if they have some kind of exposure to assets or they hold their own money in banks with similar risk profiles. So what does that mean? Well, it means people watching this Bank collapse are going to start thinking Hmm Maybe it's time to pull my money out of other similar small Banks and put it into the top three or four big Banks.

Of course those three or four big Banks aren't foolproof either, but I'd rather be on a tanker ship in a storm than a small sailboat and so people will rush to pull money out of smaller similar Banks which have popped up like crazy because the regulatory standard is so much lower and that's going to put a ton of stress on those Banks and actually make them much more likely to collapse as well. And I'm not the only one coming to this conclusion. A lot of the same people that are telling you this isn't going to spread are then going and dumping shares of every bank they possibly can. Some of the biggest examples are with some of the counterparts some of the peers of Silicon Valley Bank like pack West Bancorp which was down 31 plus at points today First Republic Bank which also took a massive dip Western Alliance took a massive dip even Charles Schwab Mr Charlie Charlie Schwab is diving and these are just the tips of the iceberg.

And the funny thing is a lot of the people again that are saying that the large banks are safe I Thought myself that the large Banks were safer. Well, even even those stocks are going down huge. So it's like sure again, the big tanker ship is going to be much, much, much better than a small sailboat. But the big tanker ship.

if the storm's big enough, the big tanker ship can still capsize. The bank's troubles have dragged down the entire industry. the four largest U.S Banks lost some 52 billion in market value Thursday and a broader index of Bank Stocks had its worst day in nearly three years in three years. What were they referring to what happened three years ago? You can connect the dots there: Bank Stocks continue to plunge Friday morning with a number halted for volatility.

Now I know what you're thinking Charlie This can't B stop with the fun. When you say bankster collapsing and failing even though they are collapsing and failing, that is just fear-mongering And after all, I mean Treasury Secretary. And ever Optimist Yellen says the bank system is resilient, resilient. Despite the Svb collapse, she's saying hey, we're doing a great job.

The economy is better than ever. Biden says the same thing. Don't look at any of the problems with the economy, only focus on the good parts, right? Because you want to be an optimist. Well, I Hate to say it, but Yellen may just be wrong here.

but what is she doing? That's the important thing. Here's what she's doing: Treasury Secretary: Janet Yellen on Friday reacted to the largest failure by a U.S lender in more than a decade by declaring the U.S Banking system remains resilient and Regulators have effective tools to address Fallout from the collapse of Silicon Valley Bank What are these tools? Well look at who she is meeting with and then you can connect the dots yourself to what the tools are yelling. Called a Meeting Friday with leaders from the Federal, Reserve, the Federal, Deposit Insurance Corp, and the office of the Comptroller of the Currency to discuss the developments around Svb. So obviously the FDIC is a big deal here for ensuring the deposits under 250k.

but the other player that's very, very important here is the Fed Today, Jerome Powell and the main people over at the Fed and Treasury Secretary Yellen were all sitting around a table most likely and talking about hey, well, right now at the pace of tightening that we're doing, you're already starting to see widespread failures. Sure, you're not seeing the big Banks fail, but the trend is pretty clear. If we keep doing what we're doing, we're going to get more of what we're getting. But the Fed's got to be sitting there thinking right now.

Okay, well, maybe the lowered standards on small Banks from 2018 Maybe that wasn't such a great idea since now there's oodles and oodles of small Banks everywhere and they make up a combined massive massive threat. Here are the big Banks may be fine and dandy for now. I mean the standards on them? They're much higher than they were in 2008, but the many, many small to mid-sized banks are set up to be the first to fall. and when you add up all of those, well, the aggregate total is kind of like having Mega Banks.

So this is the first time where the FED has to think. Okay, well, if we push this over the edge, we could be in trenching ourselves into a massive massive Financial shite storm. The Fed's got to be thinking right now. Okay, maybe we should have been a bit slower with rate hikes and waited to see them factor into the data before we decided to keep freaking markets out before we decided to keep yelling that we're going to go higher and higher and higher.

Maybe we should have waited a little bit because the effects are super super duper lagging. Maybe we should have waited. But no, the FED just keeps signaling Higher and Higher and Higher and Higher and all of a sudden, guess what? You play stupid games. You get stupid prizes Boom Boom Pow Everything drops and honestly I mean inflation's pretty damn bad I Can't blame the FED for wanting to raise rates.

You know, not to contradict myself here, but I can't really blame them for wanting to raise rates. The problem is that the system that they built post 08 can't take the rates that they are trying to give it. You can't raise rates this fast and expect the system to not have any any massive failures. We're having massive failures in the FED house to make the decision of whether or not we risk more and more and more and more failures or whether they start cutting back a little bit on those raid hikes and I would be shocked if we go what? that 50 basis point hike in the meeting in a couple weeks? I think at maximum 25 basis points but I think they're going to start pausing real real soon.

This is a big big big red flag and the FED is not going to ignore this. That's just my opinion. Inflation is the top priority until the financial system looks like it's about to collapse and then all of a sudden it's no longer the top priority. Right now, you're on that edge where things are starting to fall off the edge.

The big things haven't fallen off the edge yet, but they're not too far behind. Remember the FED is still turning up the dial on the financial system and the higher they turn it up, the bigger and bigger the banks are that are going to fail. A lot of people look at this I'm like who cares, Who cares if a couple doesn't even small to mid-sized Banks fail? as long as the big guys are okay. Well again, that's a terrible way to look at it because there's a lot of people in small businesses that work with those small Banks But also, who do you think is going to end up buying all of these small Banks and their toxic debt? Who do you think at the end of the day is the final straw? The final boss that's going to fall? If This just keeps snowballing and snowballing.

Well, the Big Banks And that's going to lead to the taxpayer bailing everybody out and that's going to lead to another crisis down the road as we have even worse debt. So anyways, that is the latest on this banking crisis. But I also want to end with something a little funny on how history may not exactly repeat itself, but it often. Rhymes back before the collapse of Bear Stearns in 2008 Jim Cramer Said Bear Stearns is fine.

Do not take your money out. And likewise, a month ago Kramer said Silicon Valley Bank was one of the biggest buys right now and that fear is overrated and it could boom a lot more so you should buy it. Well now, not too long later, their stock is in free fall and only stopped by the SEC Halt and they are reopening in the hands of a regulator on Monday History may not exactly repeat itself, but it often. Rhymes I Think the fears were not justified.

It's a very compelling situation. Hey, by the way, long-term private Equity Venture Capitalism going away. Being the banker to these invest immense pools of capital has always been very good business. Stock's still cheap.

Now you have to remember that a stock that falls 66 percent like Svb Financial did last year. Oh, it takes it a lot more to recover after losing two-thirds of your value. you need a 200 gain to get back to even. This is arithmetic.

Some people call it geometry, so you could argue Svb's nearly 40. Value this year is barely a drop in the bucket and that's how I want you to think it. I Think it's also a good example of why these bounce back moves might be far from over. These stocks could have more room to run, especially if you think they were driven down to artificially low levels.