Chad Taylor, managing partner with MDT Financial Advisors here in Houston, Texas.

Today is Friday, May, the 19th, 2023, and I wanted to hop on a video and kind of go over a couple of questions I've been asked the last number of weeks, but this week specifically as well.

One is kind of talking about this debt ceiling fight that's going on and then two, the regional bank situation that's been happening now, seems like, for the last couple of months, and I know we've discussed that before in the past, but I just wanted to kind of give an update on it.

The debt ceiling fight that's going on right now, we hear a lot about it in the news. It's kind of in the forefront of everybody's thinking right now. Janet Yellen, a while back, came out and said that, the Treasury Secretary, said that it looks like June 1st is kind of the deadline for this debt ceiling fight, after earlier thinking it would be later in the summer, but it looks like June the 1st is when the issues could come to a head. Leadership, government leadership, has been meeting to try to come to a solution of raising the debt limit so that the government won't default on their obligations.

We've had a couple of things kind of going on so far this year. Tax revenues have declined because of the slowing economy that that's been going on, down, I don't know, roughly 3%, while spending is up year over year. And some of that is just the mere fact of interest rates have risen a bunch in the last 12 to 15 months and that kind of has pushed the spending up for the government.

So we believe that a resolution will take place on this debt ceiling. We think that they'll come to an agreement. It may be at the 11th hour. This has gone on a number of times through the last 30 or 40 years, but we believe that they will come to some kind of agreement on the debt ceiling and go ahead and raise it again.

Why? Couple of reasons. One, an election next year, 2024, and neither side, Republicans or Democrats, want to be accused of defaulting or being the reason for a default on the government debt. So we think they're will ... That's kind of first reason, just political. It's that time of the year.

And then the other, interest expenses right now are ... What the government has to pay to service their debt right now is reaching 14% of the total revenues that they get. When this has happened, and this has happened before, historically, when that happens, you start to see some spending cuts, even though you don't really hear about that, the rhetoric right now is none of that, but historically speaking, that's what's gone on and we think that that's probably going to go on here this time as well.

It's just kind of a function of historically speaking, what's happened, what we think. In general, at this point, we do think that it will get taken care of. We don't want to manage risk around this specific issue right now because we do think they will come to an agreement even if it's at the last minute.

Kind of transitioning a little bit, kind of going back to the regional bank issue that's been going on. People get nervous about that. You start hearing large banks that are taken over by FDIC and ultimately sold, but having to step in and correct the situation. We've had a couple of big ones here, Silicon Valley Bank, Signature Bank of New York, First Republic, will they be the last one? No one knows for sure. It kind of seems like that's calming down a bit. The government stepped in to make all depositors hold, which I think has helped. You are not really hearing a lot of whispers of other banks that are having problems, but it doesn't mean that they won't.

We don't think this is like 2008 when most of the banks had some kind of issues with all those CDOs and things from that time. This seems to be a little more contained. It seems to be calming down a little bit right now. Could we still see another bank go under or get taken over? Possibly. But we do think it is kind of getting under control right now.

As always, if you have questions, don't hesitate to reach out. We'd always love to talk about it. Or if it's time to do your strategy and review meeting, let's set that up and kind of go through some of these questions as well.

I hope you have a great weekend. I hope you have a great week and a good start to your summer here coming up soon. Thank you.