A Financial Crisis Is Here: U.S. Banks Are Closing Down Hundreds of Branches and Laying Off Thousands of Workers

Article by Michael Snyder from The Economic Collapse Blog cross-posted with permission.

(The Economic Collapse Blog)—I know that there is a lot going on in the world right now, but I just had to write about what is happening to our banks.  High interest rates and chaos in the real estate industry are combining to put an enormous amount of pressure on our largest financial institutions.  As a result, banks are getting very tight with their money, they are closing down hundreds of branches, and they are laying off thousands of workers.

We are in the early stages of the worst financial crisis since 2008 and 2009, and I fully expect conditions to get even worse in the months ahead.

During the first week of October alone, U.S. banks closed a whopping 54 local branches…

Major US banks are continuing to close branches across the US, leaving an increasing number of Americans without access to basic financial services.

Bank of America axed 21 branches in the first week of October, according to a bulletin published by the Office of the Comptroller of the Currency (OCC) on Friday.

Wells Fargo shuttered 15, while US Bank and Chase reported closing nine and three respectively.

In total, some 54 locations had either closed or were scheduled to close between October 1 and October 7.

That is just one week! Of course bank branches have been closing at a frightening pace for quite some time now.

Last year, U.S. banks shut down about 2,000 more branches than they opened…

Banks are closing branches faster than they’re opening new ones. U.S. banks closed over 3,000 branches last year while opening just 1,000. JPMorgan Chase led in branch closures last year, shuttering 144 branches, while opening 133. The trend will likely continue as banks face staunch competition for deposits and younger customers from online banks, fintech firms and Big Tech.

Unless you live under a rock, I am sure that you have noticed this happening in your own local area.

For many Americans, a “trip to the bank” is no longer just a few minutes away.

And our banks are also laying off staggering numbers of workers here in 2023…

The largest American banks have been quietly laying off workers all year — and some of the deepest cuts are yet to come.

Even as the economy has surprised forecasters with its resilience, lenders have cut headcount or announced plans to do so, with the key exception being JPMorgan Chase, the biggest and most profitable U.S. bank.

Pressured by the impact of higher interest rates on the mortgage business, Wall Street deal-making and funding costs, the next five largest U.S. banks have cut a combined 20,000 positions so far this year, according to company filings.

The banking industry is in trouble.

Big trouble.

And this is happening at a time when economic conditions are steadily deteriorating.

In fact, we just learned that the Conference Board’s index of leading economic indicators has now fallen for 18 months in a row…

The Conference Board Leading Economic Index® (LEI) for the U.S. declined by 0.7 percent in September 2023 to 104.6 (2016=100), following a decline of 0.5 percent in August. The LEI is down 3.4 percent over the six-month period between March and September 2023, an improvement from its 4.6 percent contraction over the previous six months (September 2022 to March 2023).

“The LEI for the US fell again in September, marking a year and a half of consecutive monthly declines since April 2022,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “In September, negative or flat contributions from nine of the index’s ten components more than offset fewer initial claims for unemployment insurance. Although the six-month growth rate in the LEI is somewhat less negative, and the recession signal did not sound, it still signals risk of economic weakness ahead. So far, the US economy has shown considerable resilience despite pressures from rising interest rates and high inflation. Nonetheless, The Conference Board forecasts that this trend will not be sustained for much longer, and a shallow recession is likely in the first half of 2024.”

If things are this bad now, what is going to happen if the hot phase of World War III suddenly erupts in the Middle East?

At this point, nobody can claim that the economy is headed in the right direction.

During the first nine months of this year, the number of commercial Chapter 11 bankruptcies was 61 percent higher than it was during the same period a year ago…

A wide array of U.S. businesses have struggled this year. In the first nine months of 2023, commercial Chapter 11 bankruptcies have soared 61% year over year to 4,553, according to Epiq Bankruptcy, which provides U.S. bankruptcy filing data.

61 percent! Let that number sink in for a moment.  And we have just learned that sales of previously owned homes have dropped to a level not seen since 2010 when the U.S. “was in the midst of a foreclosure crisis”…

Sales of previously owned homes dropped 2% in September from August to a seasonally adjusted, annualized rate of 3.96 million units, according to the National Association of Realtors. Sales were 15.4% lower compared with September 2022.

This is the slowest sales pace since October 2010, during the Great Recession, when the market was in the midst of a foreclosure crisis. As a comparison, just two years ago, when mortgage rates hovered around 3%, home sales were running at a 6.6 million pace. The average rate on the 30-year fixed today is right around 8%, according to Mortgage News Daily.

Speaking of home foreclosures, they are up 34 percent compared to the same time in 2022…

Home foreclosures are on the rise as Americans continue to grapple with the ongoing cost-of-living crisis.

That is according to a new report published by real estate data provider ATTOM, which found that foreclosure filings – which includes default notices, scheduled auctions and bank repossessions – surged 28% in the third quarter to 124,539.

Foreclosures are up 34% from the same time one year ago.

A new economic crisis is here.

And the truth is that it is going to get a whole lot worse.

So even though things are not great now, enjoy these last few days of relative stability while you still can, because war in the Middle East will soon plunge the entire global economy into a state of great turmoil.

Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.