Value in 60 Seconds: Can we trust bank stocks? - 24 March 2023

The problem is it's not so much that we have real systemic issues. We have confidence issues. And confidence can mess up a bank no matter how good its underlying fundamentals are. Banks do not keep enough cash on hand to give all the depositors back their money. The banks don't have it. They lend it out. I mean, just think about your regular little community bank. You give them money, they stay in business because they take that money and they lend it for somebody to buy a car or a house. They can't collect them that loan right away. And how much is the growth of digital banking increasing the risk of bank runs? And it's a lot. I mean, back in the day, people had to go get in line. So you could do all kinds of things to slow that down, close down a few teller stations. I don't know, go for a long lunch, but click of a mouse, people can really do a run in a big way. That, that means that there could be some more turbulence. In the banking sector. Everyone's really sort of trying to figure out how to navigate this, and these issues are a result of bad businesses getting too much easy money and believing that there is no risk in the markets.