Last Time Bank Offered Depositors Sign Up Bonuses Silver Soared

Banks are at it again offering bonuses to depositors in a dash for more cash approach not seen since the last financial crisis. Skip to the silver analysis at the end if you are in a hurry.

The Financial crisis ended by 2011 but this may come to many as a surprise, that there have been 212 bank failures since 2011 as the financial crisis didn’t end in 2009 for banks. It wasn’t until the end of 2014 that bank failures slowed down. There were no bank failures from end of 2020 to end of 2022 and we saw 5 failures in 2023 and only one so far in 2024. So everything is great with banks again, right?

First off one needs to know that the stock market is not indicative of the economy. It has rebounded nicely since 2009 and is is deserving of its own article and of course the book I have coming out soon, Profit In Up and Down Markets will address what is happening there. But if banks are handing out free money to depositors to get them to deposit more into their bank, then you know something is up.

The last time I saw bonuses like these was preceding the last crisis when Washington Mutual was offering bonuses. But not only were banks offering bonuses, they were offering rates on deposits that were much higher than normal. It didn’t make sense to me how they could do that and of course the next thing that occurred was the financial crisis and eventually Washington Mutual was acquired by Chase bank.

While you don’t see the high rates or bonus rates offered yet by banks, it is something to watch out for. If it were to occur, you can bank on what’s next.

Digging deeper, the Federal Reserve did a stress test for all 31 banks and claimed all was well and could withstand a sever hypothetical downturn. But Jamie Dimon, CEO of Chase bank begged to differ. He said, the Federal Reserve overestimated a key measure of income in the giant bank’s recent stress test, and that its losses under the exam should actually be higher than what the regulator found.

Is Your Bank Safe? 

Avi Gilburt has done some great work in analyzing banks and you can subscribe to his work by going to safebankingresearch.com

At a minimum, you will find a better bank possibly. But just like the FDIC offers you insurance on your money in the bank, silver offers you insurance against what problems banks always seem to get into. More on that in a moment.

I have written about what these banks do in my 2016 book Illusions of Wealth, but in a nutshell, banks go about their business of whatever they want to do and pay millions if fines afterwards. They don’t get in trouble for anything they do wrong. The ones who run banks aren’t held personally liable for their actions. Here is an excerpt from that book complete with footnotes.

The three largest U.S. banks by assets are JPMorgan Chase, Bank of
America, and Citigroup.179 These companies have been pegged by
many as “too big to fail.” And from the looks of their actions in paying
settlement after settlement, they know it—and don’t care. This by
definition is known as “moral hazard.” The sad part for capitalism as
we know it is that they’re right. The Fed always has their backs.
Congress always works with them, not against them. But let’s take a
look at just how much these “too big to fail” banks do get away with.
It might surprise some of you.

The following is a list of lawsuit settlements made by these three
banks since 2009.

JP Morgan: $35.24 billion since 2011180
● November 2014 $1.34 Billion – Currency manipulation
● January 2014 $1.7 billion – Bernie Madoff retribution

179 https://en.wikipedia.org/wiki/List_of_largest_banks_in_the_
United_States
180 http://www.dividend.com/dividend-education/a-brief-history-of-jpmorgans-
massive-fines-jpm/

● December 2013 $108 million – Libor rigging scandal
● November 2013 $13 billion – The Big One: Misleading “toxic
mortgages”
● November 2013 $4.5 billion – Institutional mortgage securities
● September 2013 $5.1 billion – The Fannie and Freddie fines
● September 2013 $920 million – The London Whale
● September 2013 $389 million – Illegal credit card practices
● July 2013 $410 million – Electricity trading scandal
● January 2013 $1.8 billion – Improper foreclosures Pt. 2
● November 2012 $269.9 million – More mortgage
misrepresentation
● February 2012 $5.29 billion – Foreclosure abuses and “robosigning”
● July 2011 228 million – Anticompetitive conduct in municipal
bonds
● June 2011 153.6 million – Misleading CDO investments
(Does not include the $6.2 billion trading loss from the London
Whale.)181

Bank of America: $29 Billion Since 2009182
● September 2012 $2.43 billion to shareholders for the
acquisition of Merrill Lynch
● February 2012 – $11.8 billion under 50 attorneys general
settlement, which included $7.6 billion in payments for
borrowers, $1 billion for refinancing, $2.25 billion paid to state
and federal governments, and $1 billion to the Federal Housing
Authority
● December 2011 – $335 million to settle allegations that
Countrywide discriminated against minority borrowers

181 http://fortune.com/2013/01/15/jpmorgans-board-is-unchangedafter-
6-billion-trading-loss/
182 http://blogs.wsj.com/deals/2012/09/28/bank-of-americassettlements-
29-billion-since-2009/

● June 2011 – $8.5 billion for mortgage repurchase demands
from bond holders
● May 2011 – $20 million to Department of Justice over
allegations Countrywide wrongly foreclosed on active-duty
members of the military
● April 2011 – $1.6 billion for Assured Guaranty to settle
breaches of representations and warranties on mortgage bonds
● February 2011 – $410 million to checking-account customers
who were charged overdraft fees
● January 2011 – $3 billion to Freddie Mac and Fannie Mae to
settle demands for mortgage repurchases
● October 2010 – Part of a $67.5 million settlement for former
Countrywide CEO Angelo Mozilo was covered by the bank for
civil fraud charges
● June 2010 – $108 million to the FTC for claims that
Countrywide, before BofA owned it, inflated costs of
foreclosure services for customers by up to 400%
● May 2010 – $600 million to pensions that lost money on Countrywide mortgage securities
● February 2010 – $150 million to SEC over the Merrill
acquisition, reluctantly approved by judge

Citigroup: $10.6 Billion Since 2014
● August 2015 – $180 million for hedge fund fraud183
● August 2015 – $15 million to settle civil charges alleging it
failed to enforce policies. designed to prevent and detect
insider trading184
● July 2015 – $140 million over deficiencies in its anti-money
laundering program185
183 http://www.marketwatch.com/story/sec-fines-citigroup-affiliates-
180-million-for-hedge-fund-fraud-2015-08-17-11911452
184 http://www.reuters.com/article/us-citigroup-prosiebensat-1-
settlement-idUSKCN0QF2A920150810#AeJZAGzhw7yTYP1b.97
● July 2015 – $770 million over credit card practices186
● June 2015 – $2.5 billion for rigging foreign exchange
markets187
● July 2014 – $7 billion for packaging bad mortgages

All in all the nation’s top 3 banks have had over $113 billion in fines
since 2010, but the top 16 global banks incurred fines collectively of
over $300 billion, and there are presently 264 investigations involving
46 banks ongoing around the world. What other businesses are you
aware of that are investigated and sued, yet still continue to act
unscrupulously with no regard for anyone but themselves?188 They
make Al Capone (the early years) and his gang look like angels.189
One thing lost, though, when most people analyze banks is the fact that
these banks are major owners of government debt. According to truthout.
org, this:

…gives them even greater leverage over the policies and priorities of
governments. Exercising this power, they typically demand the same
thing: austerity measures and “structural reforms” designed to
advance a neoliberal market economy that ultimately benefits those
same banks and corporations. The banks in turn create the very crises
that require governments to bail them out, racking up large debts that
banks turn into further crises, pressuring economic reforms in return
for further loans. The cycle of crisis and control continues, and all thewhile, the big banks and financial institutions engage in criminal
conspiracies, fraud, manipulation and money laundering on a massive
scale, including acting as the financial services arm of the world’s
largest drug cartels and terrorist organizations. 190

185 http://www.bloomberg.com/news/articles/2015-07-22/citigroup-toclose-
banamex-usa-unit-pay-140-million-civil-fine
186 http://www.reuters.com/article/us-usa-banks-creditcardidUSKCN0PV1PJ20150721#
2QgHzu0PRlgMydwY.97
187 http://www.ibtimes.co.uk/fx-fixing-scandal-citigroup-paid-2-5bnfines-
rigging-currency-rates-bank-made-just-1m-1505515
188 http://www.theguardian.com/commentisfree/2015/feb/15/hsbc-hasform-
mexico-laundered-drug-money
189 http://www.rollingstone.com/politics/news/gangster-bankers-toobig-
to-jail-20130214?page=4

This isn’t a conspiracy theory, but a well-documented argument that
shows banks get away with fraud and manipulation of markets such as
the Libor rigging in 2013 by Chase and gold rigging in 2016 by
Deutsche Bank.191 They continually get fined for their actions—more
than any other type of business in the world. At least the early days of
Capone fulfilled a need with the bootlegging operations of the 1920s
Prohibition era (for those who enjoyed a drink now and then). These
banks today don’t fulfill the needs of even their shareholders, who
constantly sue them, or those trapped in their credit card web of
usury—like your average American citizen, who carries some credit
card debt. It’s no wonder those who want to safeguard their money
with a sound financial institution are looking for alternatives.
Not only do banks have carte blanche in running their own affairs, but
they charge you very high interest rates if you don’t pay off your credit
card balance each month. The next table shows the average rates
charged for credit card balances.192 Fees can be as high as 24.99% for
some cards.193

190 http://www.truth-out.org/news/item/33942-bank-crimes-pay-underthe-
thumb-of-the-global-financial-mafiocracy
191 http://www.zerohedge.com/news/2016-04-14/first-silver-now-golddeutsche-
bank-admits-it-also-rigged-gold-prices-legal-settleme
192 http://www.bankrate.com/calculators/credit-cards/credit-cardminimum-
payment.aspx
193 http://www.bankrate.com/credit-cards/bad-creditcards.
aspx?ic_id=calc_credit%20cards_CreditCardRatesAverages_Cre
ditCards_CardsForBadCredit

Why Silver Is An Important Asset In Your Portfolio

Silver was trading between $15 and $16 an ounce in November of 2008 in the midst of the last financial crisis and soared over 200% to over $50 by March of 2011.

Chart

Today we have silver trading at 30.91 after a move up to 32.50 and is in a small pullback to pick up some more of the metal. You can see from the chart it has broken out of a multiyear channel dating back to 2020 where we are just starting the next leg up.

If banks are indeed going to start having issues again, the run up in silver will see 40 as it’s first stop. That’s a 29.40% move. While 40 is a given to me in the next year, your CD at most is earning 5% or so and you pay taxes on that growth. Diversify some of your banking dollars into silver as insurance and keep pace with the purchasing power of your portfolio.

At one time silver was money in the United States. It still can be money if you exchange if for fiat dollars that are backed by nothing except a promise of future value worth whatever a dollar can buy you at the time. It’s the same value a 1965 quarter can buy you today versus a 90% 1964 quarter that if exchanged for dollars is worth $5.59. What will change that dynamic moving forward? Will we all of a sudden pay of the national debt? Will Congress stop kicking the can down the road by spending within their means?

Let that sink in.

About Doug Eberhardt

Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534