When it rains, it pours. On the exact same day that we witnessed the second largest bank failure in U.S. history, Wells Fargo experienced an unprecedented nationwide computer glitch that caused countless numbers of account holders to have “incorrect balances” and “missing transactions”.
This is yet another example that demonstrates why it is never wise to put all of your eggs into one basket. If you have all of your money in just one bank, you may wake up one day and find that you are suddenly not able to access any of it. For years I have been telling my readers to spread their assets around, because our banking system is far more vulnerable than most people realize.
In particular, I have never been a fan of Wells Fargo.
It has been embroiled in controversy for years, and now this massive “computer glitch” has happened…
A nationwide computer glitch at Wells Fargo left irate customers with incorrect balances and missing transactions Friday morning, sometimes dipping accounts into negative balances.
Funds remain available, even though some customers’ direct deposit transactions were not showing on their accounts, bank spokesman Josh Dunn said.
Dunn did not say how many customers were impacted by the problem and did not provide a time when customers can expect the issue to be resolved. But he said Wells Fargo was “working quickly on a resolution.” As of 4:30 p.m. Friday, Dunn could not say when the problem would be resolved.
The number one thing that you should want from any bank is security.
And right now Wells Fargo seems to be severely lacking in this area.
When users tried to log into their online banking apps, they received a very alarming message…
It’s not clear what might be causing the direct deposit issue or when it might be resolved, but Wells Fargo posted a message at the top of its online banking app saying: “If you see incorrect balances or missing transactions, this may be due to a technical issue and we apologize.”
Needless to say, a lot of account holders were not pleased.
Wells Fargo is further proof to keep cash on hand for use. In the blink of an eye, a computer glitch or whatever, your funds are inaccessible.
— SD (@SDWilliby) March 10, 2023
i do not like to feel massive panic immediately upon waking but wells fargo decided to give me that gift this morning
— Katy Barber (@katy__kakes) March 10, 2023
I woke up to overdraft protection emails. @WellsFargo better have a good explanation because I had a paycheck yesterday
— aegyo tired leader @ htx (@_hasesuns) March 10, 2023
Wells Fargo has me like this at 9am on payday. I will definitely be closing my accounts. #WellsFargo pic.twitter.com/qFGVpaWyFY
— trav 💞 (@kingtravvv) March 10, 2023
Of course those that have their money in Silicon Valley Bank are in much worse shape.
Rumors had caused a huge run on the bank in recent days, and regulators moved very quickly on Friday to permanently shut it down…
The Federal Deposit Insurance Corporation (FDIC) says it has seized control of Silicon Valley Bank (SVB), confirming the lender was shut down by California regulators amid a run on the bank.
The FDIC said in a press release that SVB was closed on Friday by the California Department of Financial Protection and Innovation, which in turn appointed FDIC as the receiver of all insured deposits of the bank.
Those that have less than $250,000 deposited with SVB will be covered by FDIC insurance.
But as I detailed in an article that I posted earlier today, the vast majority of the funds deposited with SVB are not covered by FDIC insurance.
Some depositors are literally in danger of losing millions of dollars, and that should deeply alarm all of us.
Meanwhile, there are now rumors that another major bank on the west coast may be in jeopardy…
Concerns have quickly shifted to other banks that might be in trouble. First Republic, another West Coast-based bank whose shares are down more than 30% since Wednesday, tried to reassure investors. In an unusual statement midday Friday, it said tech companies only account for 4% of its deposits and that less than 15% of its total assets are invested in securities like bonds.
Is this the start of a new financial crisis?
Some experts that were interviewed by CNN claim that this is not the case…
Mike Mayo, senior bank analyst at Wells Fargo, said the crisis at SVB might be “an idiosyncratic situation.”
“This is night and day versus the global financial crisis from 15 years ago,” he told CNN’s Julia Chatterley Friday. Back then, he said, “banks were taking excessive risks, and people thought everything was fine. Now everyone’s concerned, but underneath the surface the banks are more resilient than they’ve been in a generation.”
Similarly, former US Treasury Secretary Larry Summers told Bloomberg News Friday that he saw “no systemic risk” if the situation “is handled reasonably,” adding he had “every reason to think that it will be.”
You can believe them if you want.
But as I explained earlier today, SVB got into trouble because they were sitting on mountains of Treasury bills that rapidly lost value once the Fed started aggressively hiking interest rates.
Unfortunately, there are lots of other banks that are in the exact same position.
The financial day of reckoning that I have been warning about for a very long time appears to be rapidly approaching, and most Americans are not prepared for it at all.
If you have all of your money in a single institution, or if you have more than $250,000 in a single bank, I would encourage you to consider taking action while you still can.
Things are starting to get really crazy out there, and you don’t want to find yourself exposed when the music stops playing.
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Article cross-posted from End of the American Dream.
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