U.S. banks reported an alarming increase in unrealized losses and a growing list of institutions at risk of failure in the first quarter of 2024, according to the latest U.S. Federal Deposit Insurance Corporation (FDIC) data. The FDIC report highlights 7 billion in unrealized losses and identifies 63 banks as vulnerable, marking a concerning uptick […]
Bitcoin News
Charlie Munger Raises Concerns Over Troubled Commercial Property Loans at US Banks
Charlie Munger, the vice chairman of Berkshire Hathaway, stated in a recent interview that American banks are burdened with poor-quality commercial real estate loans. His comments arrive amid the collapse of three major U.S. banks and the expected seizure of First Republic Bank by the federal government. Despite the potential challenges, Munger emphasized that the current situation is not as severe as the 2008 financial crisis, stating that “it’s not nearly as bad as it was in 2008.”
U.S. Banks Saddled With Poor-Quality Commercial Real Estate Loans, According to Charlie Munger’s Latest Interview
The renowned investor and vice chairman of Berkshire Hathaway, Charlie Munger, spoke to the Financial Times (FT) in an interview published on April 30, 2023, where he discussed potential issues facing the U.S. banking system.
During the previous financial crisis, Berkshire Hathaway provided capital injections to Bank of America and Goldman Sachs. However, the FT interview noted that the conglomerate holding company has not made any comparable moves amid recent events, including the failures of Silicon Valley and Signature Bank last month.
“Berkshire has made some bank investments that worked out very well for us,” Munger stated. “We’ve had some disappointment in banks, too. It’s not that damned easy to run a bank intelligently, there are a lot of temptations to do the wrong thing,” the investor added.
The 99-year-old American businessman discussed some of the challenges facing financial institutions today. Munger specifically highlighted the amount of commercial property currently held by U.S. banks.
According to sources, American banks hold nearly .5 trillion in debt, which is due by the end of 2025. The decreasing value of this property has raised concerns, compounded by the ten consecutive federal funds rate increases since last year. “A lot of real estate isn’t so good any more,” Munger remarked.
The Berkshire vice chair added:
We have a lot of troubled office buildings, a lot of troubled shopping centres, a lot of troubled other properties. There’s a lot of agony out there.
Following the publication of Munger’s interview, Jim Bianco, the president of Bianco Research, tweeted about the investor’s remarks. Bianco stated that “Buffett is the GOAT largely because he has invested in banks for over 50 years. No one understands them better. So, I have noted his absence in all the happenings in the regional banks in the last two months. He is not investing, and, to me, this speaks volumes.”
Bianco added:
Munger may have said the reason why.
Loan quality is a critical factor for American banks, alongside undercapitalization and the inability to meet obligations. If a bank makes too many bad loans, it can end up losing a significant amount of money, similar to what happened during the 2008 financial crisis.
Nevertheless, during his interview with FT, Munger expressed optimism that the economy’s current troubles will not be as severe as they were back then. “It’s not nearly as bad as it was in 2008,” Munger said. “But trouble happens to banking just like trouble happens everywhere else. In the good times, you get into bad habits . . . When bad times come they lose too much.”
What do you make of Charlie Munger’s remarks about the state of U.S. banks and their exposure to poor-quality commercial real estate loans? Share your thoughts about this subject in the comments section below.
Binance Returns to Korean Crypto Market — Invests in Troubled Exchange Gopax
Binance has returned to the South Korean cryptocurrency market after two years with a “meaningful” investment in a local, licensed crypto exchange. Gopax fell into trouble following the collapse of crypto exchange FTX and the bankruptcy filing of crypto lender Genesis Global.
Binance Invests in Troubled Korean Crypto Exchange
Cryptocurrency exchange Binance announced Friday that it has invested in Gopax, a licensed crypto exchange in South Korea. The investment marks Binance’s return to the Korean crypto market, which the company exited two years ago, citing low usage and trading volume.
Gopax halted withdrawals of both principal and interest payments from its decentralized finance (defi) service “Gofi” in November last year “as a consequence of the upstream challenges experienced by Genesis Global Capital LLC,” Binance detailed. “Since then, Gopax has been working closely with local regulators and industry partners in an effort to raise funds to make affected users whole.” The global crypto exchange explained:
As part of this transaction, Binance will inject capital into Gopax with the objective of securing in full any potential Gofi users’ withdrawal requests against all staked deposits, including interest.
Gofi’s products are provided by its partner, Genesis Global Capital, a subsidiary of Digital Currency Group (DCG), Gopax previously explained. Genesis halted redemptions and new loan originations at its lending arm General Global Trading in November following the collapse of crypto exchange FTX.
The crypto lender then filed for bankruptcy in January following a lawsuit by the U.S. Securities and Exchange Commission (SEC) alleging that the company offered and sold unregistered securities to retail investors. Gopax’s parent company Streami Inc. is listed as one of Genesis Global’s 10 largest known creditors in the bankruptcy filing.
According to Binance’s chief business officer, Yibo Ling, the company has taken a “meaningful” equity stake in Gopax but the terms of the deal have not been disclosed.
Binance Aims to Help Rebuild the Korean Crypto and Blockchain Industry
Binance’s stake in Gopax is part of its Industry Recovery Initiative (IRI), launched in November last year following the collapse of crypto exchange FTX and the bankruptcy filings of several crypto firms.
Noting that the initiative was created “to support promising companies that were negatively impacted by the events of last year,” Binance CEO Changpeng Zhao (CZ) emphasized:
We hope that taking this step with Gopax will further rebuild the Korean crypto and blockchain industry.
The two crypto exchanges will also work closely “to improve user education and blockchain awareness through Binance Academy,” Friday’s announcement adds, concluding that Binance is committed to collaborating with local regulators and stakeholders to explore how it can “leverage its technology and liquidity to support the local ecosystem.”
The South Korean government announced this week that it will adopt a cryptocurrency tracking system within the first half of this year. In addition, the country’s Financial Supervisory Service (FSS) has revealed its plan to develop monitoring tools to regularly inspect the risks associated with crypto assets.
What do you think about Binance reentering the Korean crypto market? Let us know in the comments section below.
VGX, Native Crypto Of Troubled Voyager Platform, Gains 44% Over Last 24 Hours
Voyager (VGX), the crypto exchange platform that declared bankruptcy in July, used to be a force to reckon with in the crypto space.
- VGX pumps up in price by 44% in the past 24 hours
- Voyager Digital files notice for public auction of the remainder of its assets
- VGX registers a spike in trading volume and social metrics
In fact, VGX, its native token, has soared 10x in a few months following its launch.
VGX token exhibited some generous spike in 2021 but was terribly decapitated by the crypto downturn in 2022 that led to its bankruptcy.
Albeit, VGX seems to be recovering on coming back stronger as it has registered a remarkable gain stepping it up amid the top 200 cryptocurrencies.
According to CoinMarketCap, VGX price has nosedived by 19.56% or trading at .8528 as of this writing.
Voyager Digital Files Notice For Auction
Voyager Digital has recently filed a notice informing the United Stated Bankruptcy Court for the Southern District of New York that the company will be having an auction to dispose the remainder of its assets.
The auction is set to be held at the Manhattan office of Moelis & Company on September 13. More so, hearing on approval on the results is scheduled on September 29.
Apart from Voyager hinting there’s trouble in paradise, this also indicates that the crypto platform has received more than enough bids for its remaining assets which Voyager has recently confirmed in a tweet.
Apparently, Voyager has been getting multiple bids on the auction of its assets which can further consolidate and strengthen the platform’s redesign process. Evidently, this development came following a crypto lender’s rejection of an offer coming from FTX exchange.
VGX Trading Volume Remains Bullish
VGX has seen remarkable gains since then. With a revved up trading activity, VGX token’s trading volume has also soared by 2,000% overnight. Reportedly, in August, trading volume of Voyager token is at .64 which is considerably the highest daily volume registered for VGX in the past month.
Chart: CoinMarketCap
Following a massive bullish momentum, VGX’s social dominance has also appeared bullish which isn’t a surprise. However, despite the positive outlook of VGX token, the future of both Voyager Digital and VGX token looks bleak which means investing or trading should be made with extreme caution.
Voyager token is a US-based crypto exchange platform established in 2017 by founders Stephen Ehrlich, the CEO, together with Gaspard de Dreuzy and Philip Eytan, finance and tech industry titans. Voyager happens to be a registered traded company listed on the Toronto State Exchange.
The crypto exchange platform has over 100 coins that you can buy using its secure and fast mobile application that allows users to earn 7% to as much as 12% in rewards on a yearly basis plus an opportunity to beef up earning though the Voyager Loyalty Program.
Voyager has so many exciting and innovative plans and perks in store for users such as debit card plus other DeFi projects.
Crypto total market cap at trillion on the daily chart | Source: TradingView.com
Featured image from CoinJournal, chart from TradingView.com
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