FED Guts Stress Tests as Big Banks Win (Uncut) 04-30-2025

FED Guts Stress Tests as Big Banks Win, Depositors Lose

Big banks are getting exactly what they want again, quietly pushing through the same kind of regulatory changes that led to the 2008 collapse. Only this time it’s not bad mortgages, it’s the U.S. Treasury market, consumer debt, and bank stress tests all being quietly rewritten to directly increase their profit and directly increase risk to you, the depositor. So what are these banking updates and how do they impact your deposits? Why is the Fed lowering guardrails right as pressure is mounting? And most importantly, how can you use this information to protect yourself before it’s too late? Let’s get into it.

Big banks have been fighting for years to loosen the already flimsy rules around leverage or how much risk and debt they can take on compared to their assets. The higher the leverage, the more fragile the system gets for depositors like you. Now, U.S. Treasury Secretary Scott Besson just proposed a change that would let banks exclude U.S. Treasuries from these limits altogether, essentially allowing these big banks to take on massive amounts of government debt with zero capital to back it.

But if those assets lose value, that risk rolls right back to the bank and therefore to you, the depositor. Now, the reason that this is being proposed is that it’s a way to support liquidity. I have been saying for weeks that we have a liquidity crisis.

This confirms that essentially banks would help fund government spending. Now, if you’re thinking about that and going, wait a second, so U.S. banks would be supporting the government’s debt binge? You’re not crazy. That’s exactly what this is.

But that’s not even the wildest part. The wildest part for me is the boldface lie we’re being told that these treasuries are risk-free. Buy as many as you want, U.S. banks.

Go ahead, because there is no risk. Therefore, you need no capital, no safety net. I’m sorry.

Does anyone remember what happened to Silicon Valley Bank when they bought massive amounts of U.S. Treasuries and then they lost the value on those, the unrealized losses that became very real when they were forced to sell at a loss, therefore creating a bank run? That’s exactly what could happen again. In fact, we know that banks today are sitting still on hundreds of billions of dollars of unrealized losses from U.S. Treasuries. So do not sit there and tell me that these are risk-free assets.

What it is is a ticking time bomb on banks’ balance sheets with nothing to counteract it if it goes off. And the most concerning part of all is why this is being proposed in the first place. I talked about liquidity, but the reason why there’s a liquidity crisis is because demand for U.S. Treasuries is declining.

This is part of a greater picture that’s been going on for a long time, but has accelerated in recent weeks. As foreign investors move away from U.S. Treasuries, the United States government is going to be forced to raise rates to attract buyers and or find other buyers like U.S. banks to step in and pick up the slack. There’s a reason these rules are in place today, and it’s because removing them creates huge systemic risk and risk to you, the depositor.

But not only that, there’s even one other reason I haven’t touched on. It’s going to redirect capital from private sector into public, meaning that there’s going to be less credit and equity available for private companies. How are we going to support economic growth if all of these banks are incentivized to essentially just park their capital in the U.S. Treasuries? They’re not going to want to go out and invest with anyone who’s trying to start a business.

Ultimately, it hurts long-term economic growth. But there is one silver lining. Jamie Dimon, J.P. Morgan’s CEO, one of the largest banks, he said that this needs to happen, not because a bank profit, although it will profit tremendously, but no, no, it’s not relief for the banks, you guys.

It’s relief for the markets. So I guess we’ll just have to take that at face value and we can all sleep a little bit easier at night. But while all that’s going on at the top, the foundation is crumbling.

And I’m not hearing anyone talk about this. Credit card charge-offs just hit a 13-year high. Charge-offs being the portion of credit card balances that a bank has to write off as uncollectible because people simply can’t pay it back.

But this isn’t just a little uptick. Consumers are getting squeezed by rising prices, high interest rate, and shrinking savings. We are talking about people completely walking away from their debt.

But that’s not all. When we look at the 30, 60, and 90-day delinquencies, those numbers continue to rise, meaning that we are standing at the edge of a wave that is about to crash and hit us all because consumer spending is the backbone of this economy. And you would think with all of the trends that we’re seeing that they would be waving the red flag, they’d be ringing the alarm bells.

But no, in fact, they’re doing the complete opposite. They are looking for new lines of credit for people and regulators are turning a blind eye when it comes to offering higher interest rate loans to people who simply should not be qualified because they cannot afford it. But if that’s not bad enough, the Fed is about to make things a whole lot worse because the Federal Reserve is planning to weaken the stress test, a tool that is used to understand how banks would respond in stressful market conditions like the one that we are in right now.

Instead of getting a clear snapshot of what’s actually going on with banks, instead they are blurring the picture, taking an average of the last couple years. Now, you might be wondering why would they do that? You can tell me your theories in the comments below, but I certainly have my own. I believe that they know that the risk is huge.

They know that these stress tests are not going to be good and that the capital requirements would actually have to be much higher. But again, as I mentioned earlier, there is a liquidity crisis. And if you require more capital, then there’s even less liquidity than what they already have.

And the Fed essentially is trying to make sure that we don’t spook the markets or spook anyone by creating more problems, kicking the can down the road, because the problems are there. Do not get me wrong. And instead of facing them head on and saying, what can we do today? They are turning a blind eye and hoping for the best tomorrow.

It’s like putting sunglasses on a passenger in a car when we’re driving off the road. We all can feel that the car is swerving. You can’t fool us.

At this point, it tells me that the Fed is no longer trying to fix this problem. They are just trying to control the narrative and keep the peace. But this isn’t just a problem for the wealthy elite.

This is a problem for everyday Americans, anyone who has savings in a U.S. bank, because when these institutions are allowed to take on additional risk in the form of U.S. treasuries or consumer debt that they don’t have to pay attention to or stress tests that are blurred and not accurate. Who do you think is the one who’s really at risk? Do you think it’s the executives that have to take the fall when a bank fails, or is it you, the depositor? And yet most Americans still trust the FDIC, the Federal Deposit Insurance Corporation, that little gold sticker on your bank’s window that’s supposed to bring you comfort. The FDIC will proudly claim, well, we have always made sure to make everyone whole who’s ever had an insured deposit.

But let me ask you, have they really been put to the test? Have they really had to step in when a too-big-to-fail bank depositors had to be made whole again or when a swath of mid-sized banks went under? Because as I have said on this channel before, they currently have less than 2 percent of all total insured deposits. It’s not just the banks that operate on a fractional reserve system. The FDIC also operates on a fractional reserve system.

So you have a fractional reserve system where, let’s say, you have 10 cents on the dollar, 8 cents on the dollar being held. That’s probably being generous. And then you have the people who are supposed to make sure you’re whole, and they only have 1 cent on the dollar, 2 cents on the dollar, maybe.

Does that make you feel confident? Because I can tell you, for me, it does not. Think about this. The same institutions that are telling you that everything’s fine are the same ones who are making the rules in their favor, not in yours.

Now, I’m not saying that you need to panic. In fact, I don’t think anyone should panic. But I do believe we should be informed about what’s going on.

I know absolutely that my bank’s not going to tell me any of this. The media is not going to tell me any of this. I have to research.

I have to look into every single one of these items to really figure out what’s going on so that I can make an informed decision for myself. Again, you don’t need to panic, but you do need to be prepared because as pressure builds, when it releases, it’s not gradual. It is brutal.

And people who are not prepared, those are going to be the people who lose everything. Let me ask you this. If something happened tomorrow and your bank froze your ability to withdraw your accounts, how exposed would you be? Because that would just be the first step.

We’ve seen it in other countries where people don’t have access to their accounts, sometimes for years. And those are the lucky ones because most of the time, if they’re going to freeze access to your accounts, well, then what’s coming next would be a bank bail in. Or not only do you not have access to your funds, but actually portions of your funds would be taken to make the bank whole again.

Not a bailout using taxpayer money, but a bail in using depositor money. Now, I know someone out there is going to say, OK, she’s just spreading fear. My intention is not to spread fear, although it is a scary topic.

Don’t get me wrong. But personally, for me, it brings me great peace to know what’s going on, because then I can take action and I can prepare for what’s coming next. So if there’s anyone in your life who would benefit from hearing this, please feel free to share the video.

Give us a like, subscribe. It helps us so much spread the word. And I will continue to be covering this topic as it grows.

There is a lot that, again, the mainstream media is not telling us about what’s going on. And I do my best to break it down in a simple way so that we all can learn and grow together. And if you’re watching this and still wondering how you can prepare and get a strategy in place for what’s coming next, you can always call us at the number below.

You can click the link in the description and set up a time that works best for you. Find out how we can help you like we have helped so many other people. And as always, I so appreciate you being here.

I’m Taylor Kenney with ITM Trading, your trusted source for all things gold, silver and lifelong wealth protection. Until next time.