The banking sector’s troubles might be out of mainstream headlines, but the crisis is far from over, with the risk of an implosion and consolidation of banks still extremely high, warned Lynette Zang, Founder & CEO of Zang Enterprises & LynetteZang.com.
A little more than a year since the March 2023 banking crisis, when the U.S. saw three of the four largest bank failures in its history, the banking sector is arguably even more vulnerable.
“I believe we will definitely see even more banks collapse,” Zang told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. “What they're trying to do is engineer a soft landing, but the problem is that we are transitioning into a new system. There's no such thing as a soft landing. They need a crisis. So we will see even more banks collapse this year.”
Zang pointed out that every single bank is insolvent because of what the Federal Reserve has been doing.
“They've been buying up all of this government debt with interest rates at zero or even negative. Now that the interest rates are pushed up to quote-unquote fight inflation, all the valuation of that debt is way underwater. It’s not just commercial real estate,” she said. "If the valuations of all the banks, including the central banks, are based on debt, which they are because the entire system is based on debt. Those interest rates have pushed down the market valuations of all of that debt.”