Soon
Chinese netizens and state media say low savings rates and rising credit card debt indicate the US is on the verge of a major financial crisis.
On January 20, Guyan Muchan（孤烟暮蝉), a fervent Chinese nationalist and influential internet personality with more than 6 million followers, quoted an American blogger on the popular social media platform Weibo, stating that “many banks in the US cannot withdraw cash and have not explained why.” jiemianan online business newspaper owned by the state-owned media company Shanghai United Media Group, published a report claiming that Capital One, a large American bank, had initiated mass layoffs. The report, later published by several other Chinese media outlets, quoted Zero Hedge, a far-right financial news blog as saying that the US economy is on the brink of collapse.
Asia Fact Check Lab’s (AFCL) review of the original Federal Reserve data and reports published by the US banks themselves show that the above statements are false.
Thoroughly
Did US banks steal their customers’ money?
On January 18, 2023, TikTok user Smashdatopic posted a short video taken at a Bank of America (BOA) where 10 customers were waiting in line. In the video, Smashdatopic claims that $1,400 of his account was missing and that BOA representatives were unable to explain why. He then asked if another customer had lost money, before finally saying, “And this is crazy, this is crazy. Yes, Bank of America decided to take people’s money without their consent.”
That same day, several posts by Twitter users Marisol Mendez and Weather,man also questioned how the money they transferred from Zelle, a digital payment system used by BOA, to their bank accounts had disappeared, posting screenshots of their accounts. mobile banking as evidence. US Senator Elizabeth Warren tweeted about the controversy soon after “@BankofAmerica and @Zelle are apparently failing customers again, with money somehow disappearing from accounts. This needs to be fixed immediately and customers compensated,” said Warren, a Massachusetts Democrat and committee member. Senate bank.
BOA apologized to its clients later that day. “Zelle transactions made between January 14 and 17 may be delayed to occur and post to accounts as requested,” the bank said in a statement. “Transfers will be completed and will appear in your account activity and balances as soon as possible. We apologize for any delays or inconvenience.”
The controversy quickly died down in the US, but in China the incident was rebranded by nationalist netizens as an example of the precarious state of the US economy.
On the afternoon of January 20, influential Weibo blogger Guyan Muchan reposted the Smashdatopic video, adding a comment that read: “many banks in the US cannot withdraw cash and have not explained why.Some Weibo users pointed out that Bank of America represents the majority of banks in the US, but most of the comments suggested that the US economy was about to collapse.
AFCL recently visited several BOA branches to interview customers and staff. No one reported ongoing issues with withdrawals.
Is the US economy on the brink of collapse?
Mainstream Chinese media have also focused on a possible downturn in the US economy.
jiemian, an online business newspaper owned by state-owned media company Shanghai United Media Group, published a report on January 20 with the headline: “US Customers Rates at Record Highs, Banks Expect Debt to Rise.” The report cited data from the far-right financial news site Zero Hedge on high credit card debt and low savings rates, likening the US economy to a tinderbox about to explode.
He jiemian The report cites the recent mass layoffs at Capital One as proof that banks are struggling. “The scheduled layoffs of more than 1,100 jobs could spill over into the company’s technology division,” the report states.
But that claim is false, AFCL found. Capital One itself is not laying off employees due to massive loan defaults. Rather, the company plans to transfer 1,100 employees from one department to another to adjust the company’s internal workflow, the bank said.
AFCL also found Zero Hedge’s data and comments to be misleading, particularly its comparison of post-2020 credit card debt to levels at the time of the Great Recession of 2007-2009.
Federal Reserve data shows that while US credit card users’ debt ratios in 2022 rose similarly to those around 2009, the key 30-day delinquency rate held falls by around 2%, well below pre-epidemic levels and the recent peak. of more than 6.5% during the Great Recession.
Lendingtree, a US online lending platform, recently published data showing a clear decline in credit delinquency rates. Although there has been a recent uptick, delinquency rates remain well below what they have been in the past two decades.
An August 2022 article published in Weiyang Wanga PhD research platform and subsidiary of Tsinghua University’s Institute for Fintech Research, delves deeper into the reasons behind the big changes in personal saving rates over the last fifty years of US history.
The article notes that after staying around 10% for several years, savings rates skyrocketed to a high of 33.7% following the COVID outbreak in April 2020. The researchers attributed the rise to a natural sense of increased caution during a crisis and the big bump in government. financial support through various economic stimulus packages, along with a general reduction in consumption as people spent more time in their homes. The post-COVID “decline” in savings rates was actually a return to pre-COVID levels.
Conclution
In the wake of COVID, both Chinese internet personalities and official media have distorted news about fluctuating US savings rates and credit card debt to spread false propaganda about an imminent collapse of the US banking system US economic officials have struggled to contain inflation, but employment and growth rates have remained strong.
Asia Fact Check Lab (AFCL) is a new branch of RFA, established to counter misinformation in today’s complex media environment. Our journalists publish daily and special reports that aim to sharpen and deepen our readers’ understanding of public issues.
