A Wall Street expert who predicted the 2008 Lehman Brothers’ collapse has revealed which bank he believes is set to go under next.
In the wake of Silicon Valley Bank’s disastrous plummet, Robert Kiyosaki predicted the next bank to fold is Credit Suisse as the volatile bond market crashes.
He made the prediction just hours before the bank itself admitted it has a ‘material weakness’ in creating risk assessments for its financial statements.
Kiyosaki told Cavuto: Coast to Coast: ‘The problem is the bond market, and my prediction, I called Lehman Brothers years ago, and I think the next bank to go is Credit Suisse, because the bond market is crashing.’
He explained, while holding up a dollar bill: ‘The U.S. dollar is losing its homogeny in the world right now. So they’re going to print more and more and more of this…trying to keep this thing from sinking.’
The expert said that the bond market – which is bigger than the stock market – is now the problem, and the fact that it is crashing is unnerving to many onlookers.
Wall Street expert Robert Kiyosaki warned that Credit Suisse is next to go along with the crashing bond market
Credit Suisse may be the next bank to fold, according to financial experts
He continued that he is ‘concerned about Credit Suisse,’ despite it being a big bank with high exposure and conservative treasuries in its portfolio.
Kiyosaki – the best-selling author of Rich Dad Poor Dad – infamously called the 2008 Lehman Brothers’ collapse, which deepened the financial crisis of the time.
He added that this is the ‘perfect storm’ as his generation of boomers are set to retire: ‘Like I said, again, I think the Fed and the FDIC signaled they’re going to print again, which makes stocks good. But this little silver coin here is still the best, it’s 35 bucks, so I reckon anybody can afford $35, and I’m concerned about Credit Suisse.’
But he is not the only one who has seen similarities with the fall of SVB and the Lehman Brothers. Wall Street expert Larry McDonald also said: ‘I saw inside of Lehman and what we just learned over the weekend as to the way this bank was managing itself.
‘It’s just bloodcurdling irresponsibility and the Fed enabled it. And then when they juiced rates up higher, they’re essentially just blowing up these bad actors.’
In the early hours of Tuesday morning, it was announced that Credit Suisse Group AG had found ‘material weakness’ in its reporting procedures for the fiscal 2021 and 2022 years.
Their ‘weakness’ was in the bank’s capability to design and maintain effective risk assessments in its financial statements.
In their annual report, the bank admitted that ‘the group’s internal control over financial reporting was not effective’ and are now adopting a remedy plan.
Credit Suisse’s annual report was delayed after US regulators raised queries – however the content of these issues have not been disclosed.
This comes as Swiss financial regulator FINMA on Monday said it was seeking to identify any potential contagion risks for the country’s banks and insurers following the collapses of Silicon Valley Bank and Signature Bank .
Shares in Swiss banks slumped along with others in the sector globally after moves by U.S. authorities to guarantee deposits of the two lenders failed to reassure investors.
Credit Suisse shares hit a new low, while the cost of insuring its debt against a default rose to an all-time high. Shares of Swiss rival UBS dropped more than 7 percent.
‘FINMA takes note of the media reports on Silicon Valley Bank and Signature Bank in the USA and is closely monitoring the situation,’ FINMA said in a statement.
Kiyosaki (right) pictured with Donald Trump in 2006
Kiyosaki – the best-selling author of Rich Dad Poor Dad, infamously called the 2008 Lehman Brothers’ collapse, which deepened the financial crisis of the time
‘FINMA is evaluating the direct and indirect exposure of the banks and insurance companies it supervises to the institutions concerned,’ it said. ‘The aim is to identify any cluster risks and potential for contagion at an early stage.’
The regulator said it was in contact with various institutions which could be affected, but declined to name them or the measures it might take.
President Joe Biden pledged on Monday to do whatever was needed to address the banking crisis precipitated by the collapse of the two lenders which forced regulators to step in with emergency measures to stem contagion.
FINMA said it was also monitoring for any spill-over effects from the failure of another tech-focused U.S. bank, Silvergate Capital Corp, which said on Wednesday it was planning to wind down its operations and liquidated voluntarily.
The regulator said its supervisory activities were focused on the risk management of supervised institutions and on dealing with various scenarios.
The expert said that the bond market – which is bigger than the stock market – is now the problem, and the fact that it is crashing is unnerving to many onlookers
Switzerland’s Federal Department of Finance said it ‘takes note of the reports on US banks and the development of the stock markets’ but would not be further commenting on them.
The government department also pointed to FINMA’s role and said ‘FINMA is closely monitoring Credit Suisse as part of its supervisory activities.’
The Swiss National Bank declined to comment on the effect SVB’s collapse could have on Switzerland’s financial sector.
In a further reflection of investor concern about Credit Suisse’s outlook, the price of some of its bonds fell sharply, with some at record lows.
Struggling to recover from a string of scandals, Switzerland’s second-biggest bank has begun a major overhaul of its business, cutting costs and jobs and creating a separate business for its investment bank under the CS First Boston brand.
Last week it announced it was delaying the publication of its annual report following a call from the U.S. Securities and Exchange Commission.