Some Additional Hikes. Maybe.
"How confident" is the Fed that America's banking crisis is "contained," a reporter from the Financial Times wondered, during Wednesday's Q&A with Jerome Powell.
It was the first question he fielded. "Thanks," he said flatly, before getting to an answer.
The Fed's view is that the US banking system is sound. All deposits, Powell indicated, are safe, and deposit flows have stabilized. It was the second time in as many days that one of America's two top economic officials implicitly guarante
In the final part of Q&A, when talking about the “serious review” of SVB and the regulators’ work on SVB, Powell sounded, to me, borderline grim with a hint of anger.
Investors should put their bank stocks through a stress test including forced increase in capital ratios and liquidity, and increased focus on AOCI. I don’t have any significant small US bank exposure, after Monday, but when doing this exercise on the large bank stocks, some losers and winners emerge.
Some investor dismay over apparent disparity between Powell’s flat statements that “all” depositors will be safe and Yellen’s more equivocal statements today.
99% if Americans already have that federal guarantee.
It’s funny that he put the entire onus of SVB’s collapse on their management. I guess he doesn’t consider himself accountable for backing the legislation that de-toothed Dodd-Frank enabling their lack oversight and liquidity controls to exist in the first place?
There is nothing wrong with higher guarantees as long as the insurance is priced for risk correctly and regulation is tightened. Perhaps the fdic limit should be raised outright and private insurers price the rest by each bank’s risk with an fdic overlay/guaranty or perhaps a guarantee to take the last amount. to make sure it is covered. Fdic first 2mm at socialized rate. Private guarantee with fdic overlay for 2mm. Balance picked up by fdic at a separate rate. This would make riskier banks pay more. Just a thought.
Agreed, makes sense.