(Daily Caller)—Small community banks are feeling the brunt of the Federal Reserve’s interest rate hikes that were put in place to counter sky-high inflation under President Joe Biden, according to The Wall Street Journal.
Following slow loan growth during the COVID-19 pandemic, community banks increasingly parked their assets in Treasury bonds, mortgage-backed securities and municipal bonds, which then lost value due to higher interest rates, leaving those banks with billions in unrealized losses, according to the WSJ. Interest rates rose due to the Federal Reserve hiking the federal funds rate to a range of 5.25% and 5.50%, the highest level in 22 years, in an effort to tame inflation that peaked under Biden at 9.1% in June 2022.
In the third quarter, more than 300 banks had 50% of their assets in securities, and 100 of those had more than 75%, according to the WSJ. In contrast, only 19% of all assets invested by American banks were held in securities in the middle of the year, indicating that the top banks that hold the majority of assets have less in securities.
Depositors have become increasingly cautious about where they place their money following a string of regional bank failures earlier this year, starting with Silicon Valley Bank (SVB), resulting in federal regulators seizing the bank’s assets. As a consequence, depositors have increasingly brought their money to bigger banks that they see as a safer bet, believing they are presumably immune from the same kind of bank runs that SVB and others saw.
Banks' unrealized losses grew in the third quarter, per Axios: pic.twitter.com/9H6owxoQrx
— unusual_whales (@unusual_whales) December 27, 2023
The dwindling depositors and the effect of unrealized losses have led to net income at community banks falling 20% in the third quarter, according to the WSJ. Community banks are often the key lenders in local economies, and without them, a crucial line of credit would disappear.
The Federal Reserve released their expectations for the new year at the most recent Federal Reserve Open Market Committee meeting, showing that the median consensus was a lowering of the Fed funds rate to 4.6% by the end of 2024. While that would still leave the rate relatively high, it could provide relief for some of the unrealized security losses that are weighing down many banks.
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact [email protected].
Why the National Debt Is the Looming Threat to Your Retirement Plans
The Hidden Crisis No One Is Talking About
Every day, headlines warn about inflation, market volatility, and global instability—but the greatest looming threat to your retirement might be something far more fundamental: America’s skyrocketing national debt.
You can learn more about how the national debt affects you by reading this 3-minute report titled, “Debt Will Hit $40T in 2026: Prepare Your Retirement Now“.
With debt growing faster than most Americans can possibly fathom, the government’s borrowing habits have reached historic—and dangerous—levels. To cover spending, Washington is making moves with their budget packages, tariffs, and taxes. Is it enough? No. It’s not even close to what would be necessary to stop out-of-control debt, let alone reverse it.
How Debt Erodes Your Nest Egg
There are only so many levers government and the Federal Reserve can pull to try to protect Americans, assuming that’s even a top priority for them. Unfortunately, pulling one level to relive one pressure invariably adds pressure from another direction. This is why prices keep going up even as inflation reportedly slows.
For retirees and pre-retirees, that’s a perfect storm. The dollars you’ve worked hard to save lose value, and your cost of living increases while your investments lag behind.
If you’re relying solely on paper-based assets—stocks, bonds, or mutual funds—you’re essentially tied to the same system that’s creating the problem. It’s a system that was designed to work well in the 20th century, not in today’s world with people living longer and the dollar rapidly losing value.
This is why the 3-minute report, “Debt Will Hit $40T in 2026: Prepare Your Retirement Now,” is so important.
The Precious Metals Hedge
Thousands of Americans are looking for a tangible, time-tested hedge: physical gold and silver.
Unlike paper assets, precious metals aren’t dependent on government policy or the stock market’s mood swings. They’re real, finite resources that have maintained value for thousands of years through wars, recessions, and inflationary periods.
In fact, during times of high inflation and fiscal instability, gold often performs its best—because it’s seen as a store of value when faith in the dollar weakens. This is why prices have skyrocketed this year and are expected by many economists to continue going up in the future.
Take Control with a Gold IRA
One of the most effective ways to protect your retirement from national debt fallout is through a self-directed Gold IRA. This IRS-approved account lets you hold physical gold and silver within your retirement portfolio, giving you:
- Direct ownership of your assets
- A hedge against inflation and dollar decline
- The control to diversify beyond Wall Street
Augusta Precious Metals specializes in helping Americans just like you take this step with confidence. The company has earned a strong reputation for transparency, education, and personalized service—making it one of the most trusted names in the industry.
The Next Step: Secure Your Financial Future
Augusta Precious Metals has helped thousands of Americans with at least $50,000 to invest from their IRAs, 401(K)s, TSPs, and other retirement accounts safeguard their savings through precious metals.
If you’re concerned about what the rising national debt could mean for your future, now is the time to act.
Read this 3-minute report titled, “Debt Will Hit $40T in 2026: Prepare Your Retirement Now“ and learn the simple steps you can take to protect your retirement.
