$100 Billion Exits US Banking System in Three Months As Kevin O’Leary Warns People Are ‘Very Nervous About Putting Their Money in the Bank’
The US banking system is facing a period of major consolidation, according to Shark Tank’s Kevin O’Leary. In a recent interview with Fox News, O’Leary predicts that the number of regional banks in the country will likely be cut in half over the next few years.
Currently, there are approximately 4,100 regional banks in the US. However, O’Leary believes this number will drop to around 2,000 as consolidation takes place. This consolidation is driven by a loss of confidence in the financial sector, as people become increasingly nervous about putting their money in the bank.
One of the main factors contributing to this loss of confidence is the lack of sufficient guarantees for depositors. Currently, the Federal Deposit Insurance Corporation (FDIC) provides insurance for deposits up to $250,000. However, this guarantee is limited and does not cover larger deposits. As a result, people are hesitant to keep their cash in the bank, fearing that if another bank fails, they may lose a significant amount of their savings.
This prediction by O’Leary comes at a time when new data shows a continuous outflow of funds from the US banking system. According to the FDIC, total deposits decreased from $18.7 trillion at the end of Q1 to $18.6 trillion at the end of Q2, representing a $100 billion drop on a quarter-over-quarter basis. Although the pace of deposit flight has slowed, Americans are still actively withdrawing funds from banks in search of higher-yield opportunities.
During the second quarter, lower-earning accounts such as transaction, money market deposit, and other savings accounts declined by $412.8 billion, while time deposits increased by $306.7 billion. This indicates a trend in which customers are actively seeking higher yields beyond traditional banking options.
In light of these trends, it is crucial for individuals to thoroughly evaluate their investment options and consider diversifying their portfolios beyond traditional banking. Exploring alternative investment opportunities can potentially yield higher returns and provide additional security for individuals’ hard-earned money.
While the US banking system continues to face challenges, it is important for individuals to stay informed and make informed decisions about their finances. As the landscape continues to evolve, it will be crucial for regulators and financial institutions to address these concerns and provide reassurance to restore confidence in the banking sector.
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