January 15, 2019 20:35 ET
For the first time in thirteen years, the Federal Deposit Insurance Corporation record any bank seizures. This marks the first time since 2006 that the United States did not have a bank failure, but in the bigger economic scheme of things, what does this mean?
First and foremost, the lack of action by the FDIC and statements published regarding the health of our banking system indicates that a real economic recovery was underway in 2018. This does not mean all is well throughout the nation, but in Middle America it means the neighborhood bank is relatively healthy and the predictions of constant doom and gloom under President Trump’s administration were entirely unwarranted.
Secondly, the new accounting laws have allowed the perpetual shell game to continue. Unless mark to market accounting returns, a highly unlikely prospect at this time, deferred losses or off the book entries shall be permitted, allowing any rot near the core of financial institutions to be masked by the perfume of the regulators.
Lastly, despite the economic indicator of failing banks being seized by the FDIC becoming a red flag as to the health of a region or market, the underlying rot of the dark banking system is hiding in the shadows. By the time the FDIC is in action, it will be too late for Joe and Jane Mainstreet.
Enjoy the good times my friends but stay vigilant and start preparing for a wild ride as this current economic cycle begins to wind down. It’s not the bank failures the FDIC reports that my readers will have to worry about this time; it is about the unbanks and their hidden disasters which will be the clarion call that the economy is rolling over.