Experts Foresee Further Bank Failures in the US After Interest Rate Hike and Unstable Banking Crisis – Economics Bitcoin News

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Since the recent US bank collapses, many feel that more failures are coming following the Federal Reserve’s decision to boost the benchmark interest rate by 25 basis points (bps). Financial commentator Charles Gasparino claims Wall Street is ignoring the US banking crisis and Quill Intelligence CEO Danielle DiMartino Booth says the banking industry is facing a situation that “nobody wants to call a banking crisis.”

Disregarding the US Bank Crisis

There have been numerous opinions and statements from financial experts and officials after the failures of three leading US banks. All four main benchmark stock indexes rose on Friday after the Fed raised the federal funds rate by 25 basis points two days earlier. Charles Gasparino, a financial journalist, radio host, and commentator, wrote a piece over the weekend claiming 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 banks 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.” Coincidentally, a paper published on March 13 by researchers at New York University shows that US banks had unrealized losses of $1.7 trillion in Dec. 2022.

The writer’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 think 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.” Fed chair Jerome Powell recently stressed that “rate cuts are not in our base case,” and he declared that “inflation remains too high.”

Quill Intelligence CEO Danielle DiMartino Booth also sees more bank failures on the way as well. Booth discussed the topic with Kitco News lead anchor Michelle Makori, and she touched on the problems surrounding the commercial bank First Republic. Booth asserted that “we have not seen the biggest banks step up,” and many of these troubled banks are “sitting in no man’s land.” Moreover, 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 [US 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 US? Let us know what you think about this issue 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.

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