Welcome to the banking crisis that never needed to happen.

After the two banks dealing with the cryptocurrency industry and Silicon Valley Bank collapsed due to two horrible decisions made by bank executives, this should have been over.

Instead, all the Class of 2020 virologists and epidemiologists who had retired and became Artificial Intelligence experts took the arduous 60-minute podcast on banking and passed the final exam.

Said exam consisted of staring in the morro and repeating ten times, “You are one Super Smart (Expletive deleted). The world needs to hear what you think about the level of insured deposits and two bank securities accounting works.”

Off to Twitter they flew to tell us all which bank they had never heard of would fail imminently because of banking practices with which they were not in any way familiar.

Add some Congressmen, Senators, and a Treasury Secretary who should never be allowed to speak in public, and we created a nice banking crisis out of thin air.

This is not a crisis – it’s an opportunity…

Banks had securities losses a month ago. The same 40% of industry deposits were not insured then as well.

No one cared.

Banking was boring.

There were no clicks to generate talking about bank stocks.

Now we have a few bank failures and some coming out of Europe, and it is clicks galore.

Contagion is coming!

The only problem with this scenario is that there is little evidence that contagion is coming.

The borrowings from the new emergency Fed window all originated at the New York or San Francisco Fed.

Over the $300 billion pledged at the regular window a few weeks ago, $142 came from the three failed banks the regulators seized.

Everyone is panicking except the bankers and investors who specialize in bank stocks.

Early into this mess, I got an email from one of the hedge funds that invests in banks I follow. These guys are very good at what they do.

The fund managers pointed out that banks were trading at the lowest valuation in years. They added that the bankers they talked with were seeing business as usual. The banks were also being proactive with big depositors. The bankers were talking with customers to discuss the safety of deposits.

No one was seeing anything close to panic on the part of depositors.

The wildly successful hedge fund managers concluded that the current volatility should be treated as an opportunity to invest cash that should lead to outsized returns.

A former bank executive and investor in numerous community banks talked to over 60 bank CEOs.

None reported any problems.

Many bankers expressed their lack of concern with the industry in general and the banks they managed specifically in the most convincing manner possible.

They whipped out their checkbooks and bought shares of the bank they manage in the open market.

These are not uninformed purchases made by some punter who read an internet article and is trying to make a few points.

These are experienced bank executives who understand bank accounting and regulations that are very well aware of their bank’s current position.

The bank executives are paying bargain prices for the shares because they expect to make several times the current stock price.

They are aware they may be early.

The markets could keep going down as the talking heads spout more stupidity out into the social media void.

None of the bank executives making open-market purchases right now care about that.

If the stock drops far enough, they will buy more.

They care about the price of the bank five, ten, or even 15 years from now when they are ready to retire and live on their inflated nest egg.

The bankers know that buying at these deflated prices will give them a lot more cash when they are ready to call it a day and kick back poolside or on the golf course.

The banks with the largest buying over the past few weeks have been:

• Valley National Bancorp (VLY)
• Byline Bancorp (BY)
• Cullen/Frost Bankers (CFR)
• Lakeland Financial (LKFN)
• Bankwell Financial (BWFG)

Over the next week, we will explore some of the opportunities created by this manufactured, social media-fueled banking crisis that offer potentially life-changing profits.

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