The Banking Crisis That Was

Three of the largest five bank failures in US history happened between March and May of 2023: Silicon Valley, Signature and First Republic.

Most investors are barely aware. The collapse in regional banking was quickly papered over by a Federal Reserve program to buy the bad bonds at face value.

A full-blown crisis was narrowly averted, but it didn’t go away.

Yesterday, Zions Bancorporation and Western Alliance Bank dropped 13% and 10% respectively, dragging the S&P 500 down with them.

In pre-market trade this morning, the broader banking sector also got whacked. JP Morgan was down 1.5%, while Citi fell 1.9% and Bank of America was down 2.9%. In Europe, meanwhile, the regional Stoxx Banking Index fell almost 3%.

The Federal Reserve stopped tracking “unrealized losses” at regional banks in 2022. But occasionally, a snippet of data will come to light, like this piece from the FDIC earlier this year:

Turn Your Images On

America’s regional banks are sitting on substantial losses (Source: FDIC)

For individual investors, yesterday’s headline selloffs are worth paying attention to. In a credit crisis, banks go first.

~ Addison

P.S. “The private credit market is showing signs of cracking too,” notes Andrew Packer. The popular alternative asset class has notoriously opaque reporting requirements. Andrew digs into private credit in the October Grey Swan Bulletin – which will hit members’ inboxes (as soon as Addison gets his lead on Anduril and Palmer Luckey written!)

Much like Treasury Secretary Scott Bessent alludes to financing the national debt, stress in banks and in the credit market is the leading edge of a broader crisis in debt financing. That’s another reason to like the precious metals here.

Gold at $4,300 isn’t a mania. Silver above $50 isn’t a panic. They’re the visible signs of trust sliding down the pyramid to safer assets.

Check out the Dollar 2.0: The Final Countdown replay, right here.

If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

Three of the largest five bank failures in US history happened between March and May of 2023: Silicon Valley, Signature and First Republic.

Most investors are barely aware. The collapse in regional banking was quickly papered over by a Federal Reserve program to buy the bad bonds at face value.

A full-blown crisis was narrowly averted, but it didn’t go away.

Yesterday, Zions Bancorporation and Western Alliance Bank dropped 13% and 10% respectively, dragging the S&P 500 down with them.

The Federal Reserve stopped tracking “unrealized losses” at regional banks in 2022. But occasionally, a snippet of data will come to light, like this piece from the FDIC earlier this year:

Turn Your Images On

America’s regional banks are sitting on substantial losses (Source: FDIC)

For individual investors, yesterday’s headline selloffs are worth paying attention to. In a credit crisis, banks go first.

~ Addison

Gold at $4,300 isn’t a mania. Silver above $50 isn’t a panic. They’re the visible signs of trust sliding down the pyramid to safer assets.

Check out the Dollar 2.0: The Final Countdown replay, right here.

If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

Sunday night, Powell addressed the probe head-on in a video post — a rarity. He accused the White House of using cost overruns in the Fed’s HQ renovation as a pretext for political interference.

The White House denied involvement. But few in Washington believed it.

What followed was bipartisan condemnation of the investigation. Greenspan, Bernanke, and Yellen co-signed a blistering rebuke, warning the U.S. was starting to resemble “emerging markets with weak institutions.”

Estimates now indicate that the average consumer will default on a minimum payment at about a 15% rate – the highest level since a spike during the pandemic lockdown of the economy.

President Trump’s proposal over the weekend to cap credit card interest at 10% for a year won’t arrive in time to help consumers who are already missing minimum payments.

Not to fret, the other 85% of borrowers continue to spend on borrowed time. Total U.S. household debt, including mortgages, auto loans, student loans, and credit cards, reached record highs in late 2025, exceeding $18.5 trillion. This surge was driven partly by rising credit card balances, which neared their own all-time peaks due to inflation and higher interest rates.

There’s an old Wall Street maxim: “Don’t fight the Fed.”

This year, you could add a Trump corollary.

A wise capital allocator doesn’t fight that storm. He doesn’t argue with it. He respects it the way sailors respect the sea: with preparation, with humility, and with a sharp eye for what breaks first.

In 2026, the things that break first are the stories. The narratives. The comfortable assumptions.

Total municipal, state and federal debt service costs soared to nearly $1.5 trillion in the third quarter of 2025. Debt’s easy to accumulate when rates are low. Trouble is, you are obligated to refinance them even after rates go up.

It’s also a key reason why the Trump administration is demanding lower interest rates – even if it means reigniting inflation.