Experts Predict More Bank Failures in the US Following Interest Rate Hike and Unsettled Banking Crisis
After the recent bank collapses in the U.S., a number of people believe that more failures are coming following the Federal Reserve’s increase of the benchmark interest rate by 25 basis points (bps). American journalist Charles Gasparino insists that Wall Street’s “low-rate” junkies are ignoring the U.S. banking crisis. Quill Intelligence CEO Danielle DiMartino Booth asserts that the banking industry is facing problems that “nobody wants to call a banking crisis.” Ignoring the U.S. Bank Crisis
There have been numerous opinionsand statementsfrom financial experts and officials following the failures of three major U.S. banks. All four major benchmark stock indexes ended the day in the green on Friday after the Federal Reserve raisedthe federal funds rate by 25 basis points two days earlier. Journalist, radio host, and financial commentator Charles Gasparino wrote an opinion editorial over the weekend that claims the “modern-day stock market is an addict.” Gasparino believes that higher rates are “painfully exposing” a “rot inside the banking system.”
He adds that commercial bankers took “wild gambles,” and the failures of Silicon Valley Bank and Signature Bank highlight the issue. “There will be others, as many as two dozen, I am told,” Gasparino explains. “All have balance sheets remarkably similar to SVB and Signature. If things continue to go south, they are ready to fold, too, guaranteeing a steep recession.” Coincidently, a paperpublished on March 13 by researchers at New York University shows that U.S. banks had unrealized losses of $1.7 trillion in Dec. 2022.
The reporter’s opinion editorial, published by the New York Post, also mentions First Republic Bank, and he insists that First Republic “made some of the same horrible portfolio choices as SVB.” Gasparino doesn’t believe people should “trust the addicts trading stocks.” Gasparino compares the recent stock market rally on Thursday and Friday to the “stupefied giddiness of a junkie who just got his fix whenever he hears lower rates are in the offing.” While traders may be wishing for lower rates, Fed chair Jerome Powell recently stressedthat “rate cuts are not in our base case,” and he insisted that “inflation remains too high.”
Author and CEO of Quill Intelligence, Danielle DiMartino Booth, envisions more bank failures to come as well. Booth discussed the subjectwith Kitco News lead anchor Michelle Makori, and she mentioned the issues surrounding the commercial bank First Republic. Booth noted that “we have not seen the biggest banks step up,” and many of these troubled banks are “sitting in no man’s land.” Further, Booth claims a precedent has been set after the Federal Reserve, Treasury, and Federal Deposit Insurance Corporation (FDIC) bailed out SVB and Signature.
“The precedent has been set, and it cannot be unset,” Booth told Makori. “As regulators, it’s not your job to pick winners and losers, but that’s the corner the [U.S. government] backed themselves into when they backed all of the uninsured deposits of Signature and SVB. We’re in the middle of a banking crisis that nobody wants to call a banking crisis,” Booth concluded. Tags in this story Assets, Bailouts, balance sheets, bank collapses, Bank crisis, bank failures, bank issues, Banking, banks, Charles Gasparino, commercial banks, credit, Danielle DiMartino Booth, debt, deposits, economics, Economy, failures, Federal Reserve, Finance, Financial Crisis, inflation, interest rates, Investments, Investors, lending, liabilities, Losses, Michelle Makori, Portfolio, profits, Quill Intelligence, Recession, Regulation, Regulations, risk, Stability, Stock Market, trading, Wall Street
What do you think needs to be done to prevent further banking crises in the U.S.? Let us know what you think about this subject in the comments section below. Jamie Redman
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today. Analyst Predicts Gold Prices Might Exceed $8,000 in the Next Decade as Central Banks Lose Confidence in Foreign Currency ECONOMICS | 14 hours ago A Look at the Fed"s Recent Custodia Bank Denial and the Central Bank’s Push Back Against Narrow Banking ECONOMICS | 19 hours ago
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