the in the borrowing the banks are doing of at the federal reserve the discount window, borrowing the borrowing against their new credit facility, the bank turned funding facility. you can see it in the borrowing from the federal home loan bank system. you can see it in the borrowing that central banks with the fed, so the system is obviously under a lot of stress. and uh, i think investors are just really nervous about you know what s the next shoe to fall here? if any so if we see these, you know big global banks at risk smaller regional banks in the us, they still aren t in the clear what? what isn t at risk and how worried should people be? i don t think it should be worried. i look, i think the system is in good shape. you know, if you look at the amount of capitalist system has its the cash cushion, banks have to digest any losses on their securities or on their loans. if you look at their liquidity, and of course you ve got the government backstop. you know, the fed the f d i c
existing regulations and the power and authorities are actually quite fine. people just did not exercise them when they should have well, i think it is wise to wait until we get kind of a root cause analysis here to really truly understand what what went off the rails was silicon valley bank. but my sense of it is that the rollback of those regulations on banks of less than 250 billion had an impact. you know it goes to capitol the amount of capital that they hold, which is the cash cushion that banks have to digest the losses on their loans , and on their on their security goes to liquidity. and that s what this has all been all all about banks. i haven t had the cash necessary to pay off. depositors goes to stress tests . you know, those are simulations of a world where things are going off the rails like higher interest rates or bad recession in banks have to figure out what that means for them and prepare for that. so there s a long list of things that these banks would have done.
unfortunate because as you noted this is a bank that has struggled with its business model for years now. but it comes at a time when there are a lot of people nervous and questioning the state and health of the global financial system. like some of these regional banks, there is concern that some of the european banks though they may be well capitalized and stronger also hold a lot of long term treasury that has been devalued as we have seen interest rate hikes go up around the world. how much should americans be focused on the health of larger financial institutions in europe and the united states right now? well, not in the united states. i think u.s. large u.s. banks, financial institutions, are on very solid ground. in the world after the financial crisis over a decade ago lots of reforms were put into place and these large institutions have been required to build a lot of capital. that is the cash cushion that they hold to digest any losses
folks who are trying to figure out how do i protect myself, how can i be proactive on certain things with my family, finances in the meantime. what would those things be? so great question. i am so glad you asked. for starters, get rid of debt. if you can, if you have any wiggle room in your budget, pay down debt. this is a good time, even if we didn t have the debt ceiling standoff, frankly, because rates are higher than in the past, it s a good time to get rid of debt. i would also, and i have done this myself, build up a cash cushion, build up, you know, certainly, you know, the gold standard is one year of living expenses in cash. now, very few people can swing that. get whatever you can as a safety net in case you do have credit card bills that go up or you have a mortgage payment that starts to go up. other than that, think about your retirement savings and when you need that money. if like me you are not going to
and growing calls and forecasts for recession. if you don t believe we are already in one, by the way, we have had a couple quarters of negative gdp growth, but some major bank heads, including goldman sachs, bank of america, but the white house says it s a hot economy. when the president says we are not much of recession or inflation is moving up an inch, that means voters can t prepare for the down turn. if they believe him, we don t need to build up the cash cushion. it s misleading and bad for the american people to have rhetoric like that. but when we have guys at silicon valley, a ceo of alphabet, the parent of google, he s telling his workforce the worst macro economic conditions in a decade, we have to, you know, and then amazon jeff bezos something, happening now, thanks for that, and jeff is saying baton down