A new Fed report shows $79bn was withdrawn from banks in one week alone for the month of June.
The Federal Reserve Economic Data (FRED) system states that $79.16 billion exited American bank accounts from the beginning of the month through June 7th.
“The deposit flight is a big reversal after two weeks of inflows into the system, and in the last year $803.73 billion has been drained out of customer accounts,” says DH.
Another report shows that Americans pulled $472bn from big banks, more than the $100 billion priorly reported for the first quarter of 2023.
“First-quarter 2023 deposits dropped a record amount across U.S. banks — the steepest fall since the Federal Deposit Insurance Corp. starting collecting the data in 1984.
The $472 billion outflow in deposits outpaced the drop that banks saw following 2008 financial crash,” says Boston Business Journal.
This shatters a 39-year record.
Online-only banking models have become a big competitor to traditional banks.
So much in fact that big banks have begun to close several branches across the country.
In Philadelphia, Wells Fargo has closed 17% of its local bank branches since 2020.
PNC is not far behind, shuttering 15% of its branches in the Philadelphia area, per the Philadelphia Business Journal.
As depositors leave the banking system, money market funds have witnessed massive weekly cash inflows.
Also Read: New Study Shows Nearly 190 Banks on Verge of Collapsing
Money Expert Warns Government May Freeze New Bank Withdrawals
Hedge fund manager and macro economic expert Hugh Hendry says the government may freeze new bank withdrawals as currency panic sets in.
In a new interview on Bloomberg Markets, Hendry says mass panic and capital flight away from the US banking sector is entirely justified.
Hendry says a further decline in the M2 money supply, which in part tracks money in liquid checking accounts, could convince the US government to step in and prevent citizens from taking their capital out of the banking system.
“Sometimes it’s kind of relevant to panic. I would recommend you panic… You’ve seen the biggest waterfall decline in M2 right now. M2 is deposits, not loans. That’s the deposits fleeing the system and going into money market funds.
That could reach a crescendo where the Treasury and the Fed may have to come in and actually restrict your right as a US citizen to pull money out of the US banking sector.”
“There is capital flight, deposit flight from the banking sector seeking yield. I fear that, I don’t say this lightly, but in 1934 the Federal Reserve Act confiscated gold from US citizens.
We’re at the point where the Fed and Treasury officials I’m sure are having to consider a gate a lock on US bank deposits.”
Hendry says that Bitcoin may actually be an asset class that has the potential to fight this banking crisis today.
“I’ve not got the bug, but Bitcoin is something I could conceive as an asset class that could trade three or four times higher in the next five years. There is no other asset class that I could make that determination.”
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