And..... another shadow bank aka "non-depositary financial institution" (NDFI) goes to the wall in the US. PrimaLend Capital Partners, which financed car dealers serving low-income buyers, have gone bankrupt after missing interest payments. Their borrowers’ collateral (used cars) fell sharply in value as car prices dropped. The root cause is a weak economy and rising financial stress: Low-income consumers are struggling with shrinking paychecks and job insecurity. Car-loan delinquencies (missed payments) have been rising for over a year in the US. Businesses are taking longer to pay their bills, causing cash flow issues for others — this creates a chain reaction of financial stress. In short: borrowers can’t pay → collateral values drop → lenders get squeezed → the whole credit system tightens up.....because the global economy is failing. The dominoes are starting to fall, so get buckled up. The cockroaches are emerging!
Is a new wave of US regional bank collapses beginning? Similar to what happened in March 2023 when several banks collapsed, like Silicon Valley Bank and First Republic, it appears other regional banks are now going to the wall on the back of the First Brands collapse. 1. Why Are Regional US Banks Crashing? Bad loans and bankruptcies: Some companies that borrowed money—especially in the auto industry—have gone bankrupt. Banks like Zions and Western Alliance admitted they’re losing money (“taking a charge”) because some borrowers can’t pay back their loans or committed fraud and their shares have dropped dramatically. 2. “Isolated incidents”? Bank executives claim these losses are just a few isolated cases, but this is part of a bigger systemic issue. Jamie Dimon (CEO of JPMorgan Chase) recently stated “when you see one cockroach, there are probably more,” meaning one visible problem often hides many unseen ones. 3. Loose lending during good times: When the economy seems strong, banks lower their lending standards and take more risk, lend more freely, and sometimes ignore warning signs. But when the economy slows these risky loans are exposed. This cycle of boom (easy money) and bust (painful correction) happens repeatedly in financial history. 4. Bigger Picture: Systemic Risk The financial system is interconnected—if one borrower defaults, it can hurt banks, which then affects other lenders. The recent AI stock boom and other “bubbles” (overpriced markets) make people take extra risk, believing the good times will continue. When confidence drops, problems can spread quickly (“contagion”). The Key Takeaway The regional bank crashes are a symptom of deeper financial weakness—too much risk-taking when money was cheap, now exposed as interest rates stay elevated. Warning signs like the inverted yield curve and bank write-offs suggest the economy is under stress. The Federal Reserve may step in again, but doing so could stretch its legal limits. Do you have your wealth protected as the economy continues to weaken? If not, you really should consider what you can do to protect yourself. As ever, none of this is financial advice
