Ram Ahluwalia, CEO of Lumida Wealth Management, joins us for his second time on Bankless to discuss the latest bank failure and what it means for the rest of the traditional finance system.

Are there more failures to come? Can crypto save the banks? Why are politicians being quiet this time around? What will Powell do next? Answers to these questions and much more in the episode. 

——
🚀 Stake with Swell

——
BANKLESS SPONSOR TOOLS: 

⚖️ ARBITRUM | SCALING ETHEREUM

🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE

🧠 AMBIRE | SMART CONTRACT WALLET

👻 PHANTOM | FRIENDLY MULTICHAIN WALLET

🦊METAMASK LEARN | HELPFUL WEB3 RESOURCE

——
Timestamps:

0:00 Intro
8:30 Season Two of the Banking Crisis
10:38 First Republic Bank
13:00 Politicians Being Quiet? 
15:13 Ram’s Slide Agenda
16:10 Co-Morbidities of Bank Failures 
23:40 Negative Equitites 
24:40 Publicly Traded Banks 
30:27 The Walls Preventing a Collapse 
35:40 The Banks’ Mycelium Network
39:26 What’s the Problem?
45:50 Commercial Real Estate 
47:10 The Next 2008?
50:10 CRE Risk
53:07 Arthur Hayes Take 
56:40 Balaji Take
1:01:13 Will Powell Blink?
1:03:20 How to Fix the Banks
1:09:35 How Crypto Saves the Banks?
1:12:55 Closing & Disclaimers

——
Resources:

Ram Ahluwalia

—–
Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here:
…(read more)

LEARN MORE ABOUT: Bank Failures

REVEALED: Best Investment During Inflation

HOW TO INVEST IN GOLD: Gold IRA Investing

HOW TO INVEST IN SILVER: Silver IRA Investing

The world has been through quite a tumultuous ride with the 2008 global financial crisis, which made many people question their faith in the banking system. It’s been 12 tumultuous years since then, and the financial system is once again under stress, with banks facing a crisis that could have profound implications on the global economy.

Ram Ahluwalia, the CEO of PeerIQ, a fintech firm that tracks the lending industry, believes that the new crisis is not just driven by the COVID-19 pandemic, but also by the structural issues that have plagued the banking sector for years.

One of the biggest issues, according to Ahluwalia, is the massive pile-up of debt that has occurred since the 2008 crisis. As global interest rates have remained stubbornly low for over a decade, investors have been chasing high-yield debt, such as corporate bonds, private debt, and leveraged loans, to generate returns. This flood of cheap capital has enabled companies to take on unprecedented levels of debt, which, if left unchecked, could lead to a wave of bankruptcies and defaults.

Another problem is the regulatory environment in which banks operate. Since the 2008 crisis, regulators around the world have implemented a series of measures to make banks safer, such as forcing them to increase their capital reserves and reduce their leverage. While these regulations have undoubtedly made banks stronger, they have also made it harder for them to make profits. As a result, we’ve seen a wave of consolidation in the banking sector, with larger banks getting bigger and smaller banks struggling to survive.

The COVID-19 pandemic has only exacerbated these underlying issues. As businesses shut down and unemployment skyrocketed, borrowers started defaulting on their loans, putting pressure on banks’ balance sheets. Falling oil prices also hit banks hard, especially those with large exposures to the energy sector. Moreover, many banks were forced to move their operations online, which exposed the limitations of their digital infrastructure and highlighted the need for modernization.

Despite these challenges, there are reasons to be optimistic about the future of the banking sector. Technology, as Ahluwalia notes, has the potential to revolutionize the industry and make it more efficient, customer-friendly, and resilient. Fintech firms like PeerIQ are already working with banks to help them digitize their operations and embrace new business models. Furthermore, a new generation of digital banks and fintech startups is disrupting the traditional banking industry, offering innovative products and services that cater to changing consumer preferences.

In conclusion, the banking sector is facing a crisis that is driven by a complex mix of factors, including debt overload, regulatory pressures, and the COVID-19 pandemic. However, this crisis also presents an opportunity for banks to reinvent themselves, adapt to the new reality, and leverage technology and innovation to create a brighter future. As the old saying goes, “never let a good crisis go to waste.”