037: Waking Up to Bank Failures and What It All Means

Retirement Equals Freedom

It’s been a bumpy ride for banks lately – but context is everything! That’s why Josh Bretl, our fearless host and founder of FSR Wealth Strategies, is here to decode the collapse in recent weeks of Silicon Valley Bank, Signature Bank and First Republic.

When we talk about these bank failures and the role of the FDIC (Federal Deposit Insurance Corp.) in bailing them out, it’s important to understand the customer base of the institutions involved.

You’ll learn on this episode of Retirement Equals Freedom about the three key factors that have driven topsy-turvy ledger sheets and exposure for banks in general – but most especially among those serving primarily high-tech players holding lots of cash.

Interest rates at an all-time low converged with pandemic stimulus checks that produced a massive influx of cash deposits.

What happened next (you’ll have to tune in!) had everything to do with how those deposits and other cash holdings were invested and what occurred when interest rates started to rise.

Some banks – like those that specialize in serving the tech industry – have proved especially vulnerable. Risk mitigation is critical for just such situations, explains Josh, but you can rest assured that the banking system overall is fundamentally sound.

And remember: any account with a balance of up to $250,000 will always be covered by the FDIC.

It’s been a wake-up call for many of us who have been in an economic “dream state” the past 15 years, but there are fortunately lots of great financial planning strategies to help you navigate our new economic realities.

Josh and his Co-Host, Dave Schmidt, also leave you with some bonus advice to help manage the stress: Be kind. Go out there and live your life. We can make the world a better place!

Want to understand why it’s actually a bad thing for yields on investment vehicles like U.S. Treasury Bonds when interest rates go up? Listen to Episode 19 of Retirement Equals Freedom: "Do Bonds Have a Place in My Portfolio?"

If you’re feeling queasy about the recent banking roller-coaster, now may be the time to chat with Josh directly. He and the team at FSR Wealth Strategies are dedicated to ensuring your personal finances are safe – and growing! Click here to schedule your free 15-minute call.

Finally, here are a few fun links to explore if you’d like to dive into our podcast community:

• Sign up for FSR’s page-turner of a newsletter here.
• Join the R=F private Facebook group at this link.
• Visit this pod link resource to get one-click access to your favorite platform for listening to past episodes!
• You haven’t read "Harry Potter and the Sorcerer's Stone"? Book 1 is the very best!
• Click here for more about the behind-the-scenes FDIC negotiations that brokered the deal for Chase Bank to take over First Republic.