Community banks more important than ever

We have a government induced banking crisis, and it is not contained—but rather is in its early stages. Our mission today is to seek the truth about how to best protect your money, and we will start by connecting the dots on what is happening and why so that you will be able to recognize misinformation. When we finish you will see how important your local community bank is to your financial freedom—and how important your deposits are to your local banker.
Let’s start with the government bailout to survive the 2008 crisis made to the 4 “too-big-to-fail” banks of JPMorgan Chase, Citibank, Bank of America, and Wells Fargo. Today these big banks are working with the government on their Central Bank Digital Currency (CBDC) program that, if implemented, would do away with Cash and result in government control of its citizens' finances. The government appears to be assisting these big banks in getting bigger. Why?
The regional banks are having difficulty keeping their depositors because of the Fed’s rapid increase of interest rates in one year from 0.50% to 5.25% combined with the onslaught of increased regulations resulting in regional banks reducing their commercial lending, and instead deploying these assets towards old 2%Treasurys guaranteed by the government. These banks are now forced to compete with the government for their “on demand depositors” who can now buy a short-term Treasury earning 5.0% instead of a bank savings account paying 1.0%. These depositors are fleeing to the big banks who apparently now have unlimited FDIC deposit insurance.
The smaller community banks, who provide about half of all small-business loans, “remain healthy and strong,” according to the Independent Community Bankers of America (ICBA). “Our guys tell us that there have not been deposit outflows from their banks”. That isn’t to say that their depositors will not be seeking higher interest rates soon on their savings accounts. Small banks should develop “Win-Win” strategies on their interest rates paid on deposits and proactively communicate that to their customers along with ways to maximize FDIC insurance.
We are entering some perilous times, and the community bank and their customers need each other more than ever. The U.S. banking industry is consolidating into an ever-smaller number of banks, and smaller communities could lose their access to credit and banking services. As interest rates continue to increase trust and confidence between lender and borrower will become critical—and communication between the two parties will be vital. Community bankers could take the first step by explaining their financial health and why they can’t pay 5% interest yet on their savings accounts, while small-business borrowers can update their financial statements/business plan and schedule a mid-year meeting with their banker. Remember, we need each other.

Steve Gardes is a Certified Public Accountant (CPA) and Certified Valuation Analyst (CVA) with over 40 years of public accounting experience.