Banking On A Fragile System: The Global Bank Failure Crisis – A Conversation with Craig Fine, Real Estate Attorney
Banks are failing- is this what is expected during these times? When money is not as free as it was the last few years, companies, including the banks tighten up. “There is never enough money on hand to pay everyone’s bank. It’s somewhat of a Ponzi-type scheme where unless new money is coming in, all of the old money cannot be paid back. Even the biggest can fail. REITs are restricted investors from withdrawing as their liquidity is not enough to pay everyone back in one shot. The banks that are currently failing were heavily invested in cryptocurrency which turned out to be fruitless and now that interest rates have gone through the roof, the banks are actually losing money” says Craig Fine, Real Estate Attorney. Couple that with depositors looking to take money out, and the result is a bank failure.
It is important to note that banks are not the only ones failing. Credit unions, all types of lending institutions, investment firms, and even the federal government is seeing red ink. It is a worldwide phenomenon, not just a regional or country phenomenon. The number of people affected by the banking failures is in the thousands, if not more.
The government is trying to do its part in trying to help the situation by providing bailouts, loan forgiveness programs, and other incentives to help keep the banks afloat. The Federal Reserve is also in the mix, providing loans to banks to help them stay in business. All of this, however, will not help if the underlying reasons for the bank failures are not addressed.
The underlying reason for the banks’ failure is simple – their business model has failed. They have been too aggressive in their investments and have not been taking into consideration the long-term health of their institution. They have overextended themselves with investments that have not paid off and have not taken into consideration the risks associated with their investments. This has led to a situation where the banks are unable to stay afloat, even with the help of the government and other financial institutions.
“The answer to this problem is not as simple as providing a bailout,” says Craig Fine, “the government and financial institutions must take a long-term view and develop strategies that will help the banks become more financially stable” Fine continues. Banks need to be more conservative in their investments, and they must take into account the long-term effects of their investments. They must also make an effort to engage in more consumer-friendly practices, such as offering more competitive rates and terms. This will ensure that the banks remain viable and can continue to provide services to their customers.
The banking industry has been around for centuries, but in the modern era, it has become more volatile and less reliable. The current banking crisis is a reminder of the need to have a more secure banking system that can withstand any type of financial crisis. Banks must make a serious effort to build relationships with their depositors and customers, and they must be more prudent in their investments. Only then can the banks continue to remain a stable source of financial security for individuals, businesses, and governments.