The 25 largest US banks are now seeing a record plunge in deposits according to the latest study conducted by the Federal Reserve Economic Data (FRED).
According to the FRED data, between July 5 and the most current reading on July 26, the 25 largest U.S. banks saw a plunge of $174 billion in deposits.
Deposits at the 25-largest domestically-chartered U.S. commercial banks peaked at $11.680 trillion on April 13, 2022, according to the updated H.8 data maintained at the Federal Reserve Economic Database.
As of the most current H.8 data for the week ending on Wednesday, July 26, 2023, deposits stood at $10.709 trillion at those 25 commercial banks, a dollar decline of $970 billion and a percentage decline of 8.3 percent.
In fact, small banks have performed better than big banks in terms of inflow.
Despite all of the misleading news reports about depositors seeking out the perceived safety of the largest banks since the banking crisis in the spring, it’s actually been the smaller banks that have staged a comeback on growing deposits since the week of April 26,” says Wall Street on Parade.
“This breakdown does not give the American people a quick pulse beat on the dangers lurking in the U.S. banking system – a system that imploded in 2008 and was on its way to imploding again this spring until the Fed stepped in with another bailout program. In the span of seven weeks this spring, running from March 10 to May 1, the second, third, and fourth largest bank failures in U.S. history occurred.
In order of size, those were: First Republic Bank (May 1), Silicon Valley Bank (March 10) and Signature Bank (March 12). The largest bank failure in U.S. history, Washington Mutual, occurred in 2008 during the financial crisis.
Because there are only four domestically-chartered commercial banks in the U.S. with more than $1 trillion in deposits – JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup’s Citibank – it behooves Americans to closely monitor what is happening at these four banks, which hold such a highly concentrated share of the banking system’s deposits and assets.
That is especially true given that one of those four banks, Citigroup, blew itself up in 2008 and received the largest Fed and Treasury bailout in U.S. banking history.”
Also Read: Money Expert Warns Government May Freeze New Bank Withdrawals
US Banks Are Freezing Accounts and Withdrawals in New Scandal
One of the reasons big banks might see a plunge in deposits could be due to a loss of trust in the banking system.
For example, customers who experience frozen accounts or limitations may be more compelled to move to smaller banks or unions.
CBS Los Angeles reports that a growing number of people say they are abruptly losing access to their entire bank accounts.
The report cites the sudden account closure of Elad Nehorai, who received an ominous alert while logging into his Bank of America account.
He then drove to a branch in West LA, where he was told his account had been shut down and access to his life savings was denied, says DH.
“Bank of America told me it was shut down. They refused to give me an explanation. They told me I would get my money after it was resolved.
All of a sudden I find out I’m broke. I can’t feed my family and I can’t pay any expenses,” reported Elad.
Banks typically shut down accounts over concerns of suspicious behavior, says DH.
But according to the Banking Policy Institute, only 4% of Suspicious Activity Reports (SARs) submitted by banks to law enforcement result in a follow-up, and a small fraction of the follow-ups result in arrests and convictions.
Nehorai says Bank of America, which has $1.4 trillion in assets under management, said it would take up to 20 days to review his account.
“It’s another one of those situations where you just – how do you deal with this massive bank, this massive power that you have no control over? I was shocked to find out that this is actually relatively common.”
Wells Fargo Customers Go Through Painful Experience
Wells Fargo froze new deposits in what seems to be one of its most painful scandals, affecting customers nationwide.
For the second time this year, Wells Fargo acknowledged that deposits were not showing up in customers’ accounts.
In an emailed statement Friday morning, a Wells Fargo representative said the issue was affecting a “limited number of customers,” and that “the vast majority” of instances had been resolved before noon, while the “few remaining” would be resolved soon.
Jeani Cortez, a single, disabled, self-employed accountant and Alaska resident, says she was supposed to have paid her rent, gas, electric and internet payments for the month by now with funds she deposited Wednesday.
She said she was told Friday by a Wells Fargo representative that she would not be able to access her deposit for another three to five business days. She’d earlier been told that Wells Fargo could send her a letter to give to her creditors; that too has not arrived.
“There is simply not enough funds (without that deposit) to cover them all,” she wrote in an email, adding: “I simply cannot live without my funds now.”
For Brent Morrison, a Texas resident and father of two, the Thursday outage was doubly painful: He was laid off less than two weeks ago.
“That money was a little bit important to me yesterday,” Morrison said in a phone interview Friday.
While the funds — approximately $2,000 — ultimately did appear in his account, Morrison said he’d also been affected by the March outage, so he is now looking to move his money to a local bank, he said.
“They lost a customer. I just have no choice,” Morrison said. “It just doesn’t make sense to continue with them. The words ‘banking’ and ‘confidence’ shouldn’t end in a question mark.”
Also Read: JPMorgan is Abruptly Closing Business Accounts in New Scandal
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