A collaboration with BPR: May

by Neil Alappatt ‘26

Disclaimer: The views expressed in this article are not necessarily parallel to the views of Bellarmine College Preparatory.

A conversation with Andrés Ryan ’26

Second week of May:

Neil: Hey Andres! All right, so this is politics this week, the week of the 15th. So I want to talk about our country’s finances today, specifically the slew of bank failures that have started over the course of 2023. Now, for anyone who doesn’t know this all started with Silicon Valley Bank, which unfortunately fell due to startup ventures and wealthy investors pulling out their money due to a lack of liquidity within the bank. Now SVB triggered other banks to do the same with interest rates increasing and businesses taking out their money from these banks. What most people allude to is the 2008 recession, in your opinion, are there any connections between these bank failures and 2008?

Andrés: I don’t think systemic confusion played a role in the recent bank failures as much as it did in 2008 because it suggests that we really had this like a ripple effect, a chain reaction of sorts, where you just had these banks that eventually collapsed, that had holdings on other banks, and these loans failed. This is because banks held money for other banks and when they collapse, the cycle just continues. But what you’re seeing here this year, is not so much as a systemic confusion, but rather these depositors just point out money being lost and start freaking out leading to the series of unfortunate events we saw.

Neil: And how did this specifically differ from what happened in 2008?

Andrés: It was 2008. The conception was highly related to the real estate sector, but in actuality, the more systemic problem was in the banking sector, because these banks were trying to find ways to massively leverage their portfolios and make a lot of money, and these are potential for securitizing mortgage backed security mortgages. They did this through more mortgage securities, which essentially pulled mortgages, but over time, these began getting riskier and riskier as banks began pushing low income borrowers to take on riskier loans with higher interest rates.

Neil: Okay, so just to kind of concise everything you just said. This year, we’ve seen a slew of bank failures, mostly because of a distrust in banks. Whereas in 2008, where loans and real estate were on the high, banks were encouraging their clients to take on riskier loans for any real estate or land. And that just ended up when interest rates started increasing that the bank’s clients not being able to pay back on their loans and full on bank failures started.

Andrés: Exactly!

Neil: And finally, we’ve looked at both 2008 and the slew of bank failures this year. How do you think this will impact financial portfolios in the future, and especially banks, in terms of how much the FDIC can insure them for lost assets and how much banks will have on them in cash, in other words their liquidity?

Andrés: For individuals, there will be a negligible effect because of the FDIC which is $250,000 insurance policy, they’ll most likely be entirely covered, or at least mostly covered. As far as businesses are concerned, there’s a growing fear that businesses are actually committing insurance fraud, like creating multiple accounts under different banks to ensure more than two, this could prompt regulatory crackdown, which you may see in future years. But for now, I don’t really think that the bank failures will spread in the contagious way like we saw in 2008, just in part because there isn’t a system of high risk securities connecting each and every bank.

The first week of May:

Q: I first want to talk about the candidates for the presidency as it seems. Every single day we’re getting new Republican candidates for the Republican nominees. Do you have any predictions for who’s getting the Republican Nomination?

A: Obviously the front runners are Ron DeSantis and Donald Trump for Donald Trump having a more insignificant version. Donald Trump has the advantage of being a previous incumbent so what DeSantis has going against him is Trump’s sheer policy legacy. He went on a platform of delivering somehow economic freedom to ordinary rural Americans. Yet he’s somewhat failed to capitalize on this promise, as he ultimately failed in his objective of actually stimulating these rural areas. And not to mention, these people were only worse off by the COVID recession, along with the inflation fueled by the stimulus package that Donald Trump himself passed, yet the other candidates aren’t that much better. One DeSantis, for instance, has been the second in comparison to polls to Donald Trump. The thing that he has going against him is his culture war policies. Although at first he was emblematic of what the Republican party wanted to achieve. In reference to his signature Don’t Say Gay legislation. We’re having the education of LGBTQ material in public schools for kids ages 12 through 15, now recently extended to 18. It signifies that he isn’t privatized with the bread and butter issues affecting Republicans like inflation, the economy, immigration and alike.

Q: How does campaign deteriorate day by day through selling loses credibility with the mainstream Republican Party?
And what do you think about the other candidates specifically Nikki Haley, who have had her prospective legislations, like the Mental Competency Tests for politicians, that have nearly 75% approval rates?

A: I can’t think Nikki Haley or the other slew of candidates being any significant factor in social primary.

Q: All right, I understand that just a couple of months ago, the debt ceiling crisis was a major roadblock in America’s finances. How do you think it will affect the game of “Who Will be the President?”

A: So at the end of the day is just who can outlast in the game of chicken, the Republicans or the Democrats? The Republicans recently passed a bill to the House that would allow a new budget reconciliation and raise the debt ceiling in turn for President Biden cutting some of his spending, in particular reference to the COVID seamless programs and his student debt cancellation plan. Yet, this has seen Republican not only democratic walk ins are also Republican backlash within their own party, particularly by the most right wing individual citizen that gets more and Boober and his whole contingent. This at least has seen the backtracking of their party unity actually needs to put up a credible defense against Democrats.

Q: Okay, then just to end it. Where do you think our country is heading to in the next couple of years concerning anything, whether it’s politics, whether it’s our finances, whether it’s the Republican and Democratic Parties?

A: Congress will likely see continued waves of economic stimulus for our chip sector. Democrats has been a fan of shifting to soft power to counter Russia in reference to the economy. But Republicans by contrast, favor a hard foreign policy hearing the Roosevelt big stick if you will. So what you will really see is increased economic development industrial policy, if you like Democrats, by contrast to the political rhetoric, if you like Republicans.