Category: Finance News (Page 1 of 68)

Goldman Sachs (NYSE:GS) is making it difficult for Apple (NASDAQ:AAPL) customers to withdraw money from their savings account.

Apple’s savings account partnership with Goldman Sachs launched in April and now customers are reporting being unable to take their money out of the bank.

Nathan Thacker, who lives outside Atlanta, had been trying to transfer $1,700 from his Apple account to JPMorgan Chase since May 15.

Each time he called Goldman’s customer service department, he said, he was told to give it a few more days, per WSJ.

But JPMorgan is also under scrutiny for freezing customer bank accounts in May.

Others said they also had trouble transferring money from their new Apple accounts.

Customer service representatives at Goldman, which holds the deposits, sometimes gave differing responses about what to do, they said.

Sometimes, their money appeared to have simply vanished, not showing up in their Apple account or in the account they were trying to move it to.

“The customer response to the new savings account for Apple Card users has been excellent and beyond our expectations,” the bank said in a statement.

“While the vast majority of customers see no delays in transferring their funds, in a limited number of cases, a user may experience a delayed transfer due to processes in place designed to help protect their accounts.”

Read: Goldman Sachs Gets Ready to Fire Hundreds of People

Goldman Sachs Apple Savings Account Case Study

Min-Jae Lee, a lawyer, was curious to try out the Apple account and intrigued by its high interest rate.

She deposited $100,000 in April, but soon decided she would rather have her money elsewhere.

On May 1, she tried to transfer it out; it took more than three weeks for her to get it.

Lee said Goldman told her to contact JPMorgan Chase, where she was trying to move the money.

Then, on Goldman’s advice, she tried sending the money to her Vanguard account.

The $100,000 moved there before going back to Apple the same day, she said.

Goldman then called her, she said, and told her that the money could be transferred only to the account from where she had sent it.

She initiated a transfer to Ally on May 16.

A few days later, Goldman told her that her account was under a security review.

Her Apple account showed a zero balance, but the money wasn’t in her Ally account either before finally showing up there on May 25.

It is reasonable that a bank would delay a transfer to do enhanced due diligence, but the length of the delay in these cases is surprising, said Dennis Lormel, who worked on financial crimes for the U.S. government for three decades and now is a bank consultant.

The Apple savings account has attracted people searching for a high yield savings account.

It pays a 4.15% interest rate, but weary investors say banks are scouring for liquidity.

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A new study shows that nearly 190 banks are on the verge of collapsing.

Several reports throughout the year have highlighted a crisis amongst the banking system.

After the collapse of Silicon Valley Bank and Signature Bank in March and First Republic Bank in April, a study on the fragility of the U.S. banking system found that 183 more banks are at risk of failure even if only half their uninsured depositors—those with deposits greater than $250,000—decide to withdraw their funds, USA Today reported. 

“The recent declines in bank asset values very significantly increased the fragility of the U.S. banking system to uninsured depositor runs,” economists wrote in a recent paper published on the Social Science Research Network.

“So, our calculations suggest these banks are certainly at a potential risk of a run, absent other government intervention or recapitalization.” 

Regional banks are failing because the Federal Reserve’s aggressive interest rate hikes to clamp down on inflation have eroded the value of bank assets such as government bonds and mortgage-backed securities, reported USA Today.

“If a ‘confidence crisis’ can happen to First Republic, it can happen to any bank in this country,” says Jake Dollarhide, Chief Executive Officer of Longbow Asset Management.

A run on these banks could pose a risk to even insured depositors—those with $250,000 or less in the bank—as the FDIC’s deposit insurance fund starts incurring losses, the economists wrote. 

Liquidity in Banks is Running Dry

The report circling the banking sector suggests that liquidity in banks is running dry.

Below will be a few statements from the official report.

“The U.S. banking system’s market value of assets is $2.2 trillion lower than suggested by their book value of assets accounting for loan portfolios held to maturity.

Marked-to-market bank assets have declined by an average of 10% across all the banks, with the bottom 5th percentile experiencing a decline of 20%.

We show that a bank’s survival depends on the market beliefs about the share of uninsured depositors who will withdraw money following a decline in the market value of bank assets.

A case study of the recently failed Silicon Valley Bank (SVB) is illustrative. 10 percent of banks have larger unrecognized losses than those at SVB.

Nor was SVB the worst capitalized bank, with 10 percent of banks having lower capitalization than SVB.

On the other hand, SVB had a disproportional share of uninsured funding: only 1 percent of banks had higher uninsured leverage.

Combined, losses and uninsured leverage provide incentives for an SVB uninsured depositor run.

We compute similar incentives for the sample of all U.S. banks.

Even if only half of uninsured depositors decide to withdraw, almost 190 banks with assets of $300 billion are at a potential risk of impairment, meaning that the mark-to-market value of their remaining assets after these withdrawals will be insufficient to repay all insured deposits.”

Which Banks Are at Most Risk Right Now?

Banks that have the most risk right now are:

• First Republic Bank
• Huntington Bancshares
• KeyCorp
• Comerica
• Truist Financial
• Cullen/Frost Bankers
• Zions Bancorporation

The “Top 5” also have a big risk factor, though many have deemed these banks as “too big to fail”.

• Bank of America
• Citigroup
• JPMorgan Chase
• Morgan Stanely
• Wells Fargo

Is your money safe in banks?

“It’s not a problem unless your depositors decide it’s a problem and ask you for their money back, which is sort of what happened with Silicon Valley Bank,” said David Sacco, a finance professor at the University of New Haven. 

This is why banks at the moment are offering higher CD rates as well as higher yield savings accounts.

As long as majority of the population continues to keep their money in banks and aren’t resorting to withdraw large amounts of cash, there’s a possibility that the current banking crisis begins to die down.

Other Banking News

The nation’s largest bank JPMorgan (NYSE:JPM) is facing a painful $1.5 billion fee that may also be felt by various other banks later this year.

The Federal Deposit Insurance Corporation’s board of directors approved a proposal to raise the fees banks pay to have depositors’ money insured.

This comes after the government insured depositors’ money that exceeded the $250,000 insurance cap at Silicon Valley Bank and Signature Bank to stem the panic that ensued from their failures.

In total, that depleted $15.8 billion from the FDIC’s Depositor Insurance Fund (DIF).

Banks that are FDIC-insured pay fees to the fund in exchange for coverage in the event that they fail.

To recover the $15.8 billion, the FDIC is proposing levying higher fees on banks that have more than $5 billion in uninsured deposits.

The FDIC is focusing on these banks since they benefited the most from the FDIC’s unprecedented actions in the wake of the collapse of SVB and Signature Bank, according to CNN.

The proposed rule would charge banks 0.125% annually for two years on all their uninsured deposits as of the end of last year after deducting $5 billion.

JPMorgan Chase would pay around $1.5 billion in additional fees given the bank had around $1.2 trillion in uninsured deposits at the end of 2022, according to FDIC records.

Dr. Stephen Leeb, one of the world’s top money managers, says that JPMorgan’s gold derivate short positions are so numerous and large that they likely exceed the entirety of the bank’s assets on hand – “which is a very dangerous position in which to be.”

“Should the price of gold ever shoot up from its current price by, say, another $1,000 in the coming weeks or months due to an unexpected “black swan” event, banking giant JPMorgan Chase would more than likely find itself underwater due to the massive gold derivative short positions it currently holds,” says Planet Today.

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