 |
| Experts Warn of More US Bank Failures Amid Interest Rate Hike and Unrecognized Banking Crisis |
Experts are predicting that more bank failures are looming in the United States following the recent interest rate hike and a growing banking crisis. Charles Gasparino, a well-known journalist and financial commentator, argues that the U.S. banking crisis is being ignored by Wall Street’s “low-rate” junkies. Gasparino claims that a “rot inside the banking system” is being exposed by higher rates and that the commercial bankers took “wild gambles” that could cause a steep recession. He also warns that as many as two dozen banks may fail, with balance sheets remarkably similar to those of the recent collapsed Silicon Valley Bank and Signature Bank.
Danielle DiMartino Booth, CEO of Quill Intelligence, echoes Gasparino’s prediction of more bank failures in the near future. Speaking with Kitco News lead anchor Michelle Makori, Booth stated that the banking industry is facing problems that “nobody wants to call a banking crisis.” Booth notes that “we have not seen the biggest banks step up,” and many of these troubled banks are “sitting in no man’s land.”
Booth also stresses that the Federal Reserve, Treasury, and Federal Deposit Insurance Corporation (FDIC) have set a precedent after bailing out SVB and Signature. Booth believes that the regulators have backed themselves into a corner by backing all the uninsured deposits of these two failed banks, and now they are in the middle of a banking crisis. However, the regulators’ job is not to pick winners and losers, but a precedent has been set, and it cannot be unset.
The recent bank collapses in the U.S. have led to numerous opinions and statements from financial experts and officials. On March 13, researchers at New York University published a paper that revealed U.S. banks had unrealized losses of $1.7 trillion in Dec. 2022. Gasparino’s opinion editorial in the New York Post insists that people should not “trust the addicts trading stocks,” and the recent stock market rally is comparable to the “stupefied giddiness of a junkie who just got his fix whenever he hears lower rates are in the offing.”
In conclusion, experts believe that more bank failures are likely in the United States, and the banking industry is facing a crisis that nobody wants to call a crisis. The banking system's rot is being exposed by higher rates, and commercial bankers took wild gambles that could cause a steep recession. The regulators’ job is not to pick winners and losers, but they have set a precedent by bailing out failed banks. The banking crisis in the U.S. is a serious issue that requires attention and immediate action from regulators and financial experts.
