2023-06-10 22:34:19
The chief executive of a $5.61 billion private investment firm warns that the crisis in the banking sector is not over yet.
In a new interview with Bloomberg Invest, Dawn Fitzpatrick, CEO of Soros Fund Management, says more bank failures are on the way as she believes the troubled sector continues to raise red flags under the hood .
“I think there will be more bank failures, probably in smaller banks. So it’s not going to be regarding the headlines and the magnitude of the bankruptcies we’ve seen so far. But I think there will be [are] more problems below the surface.
Sales will therefore continue.
According to Ms. Fitzpatrick, banks must be prepared for the regulatory measures to come, which she describes as “rather punitive”. Ms Fitzpatrick says the Federal Reserve will likely introduce regulations that will require banks to report their unrealized losses on assets such as government bonds they hold.
“The Federal Reserve has said it is conducting a comprehensive review of banking regulations. I think this will result in improved stress tests, AOCI (accumulated other comprehensive income) exemptions which I think will disappear. I think the AOCI (accumulated other comprehensive income) exemptions will go away. [when] people didn’t need to value things at the market.
I think cash management will come under much greater scrutiny.
One of the interesting things regarding the financial crisis (2008) is that there was a lot of focus on asset quality…and not so much on liability management. But we now know that the filing assumptions were just plain wrong.”
At the height of the banking crisis, CNN reported that US banks faced $620 billion in unrealized losses due to the Fed’s tight monetary policies.
Banks that had accumulated heavily in US bonds and Treasuries during the days when interest rates were near zero saw their portfolios hurt by the Fed’s aggressive interest rate hikes. Soaring interest rates devalued these bonds significantly as the government issued new debt offering higher yields.
Writer for the news site Essonneinfo. Hélène specializes in writing and journalism, she likes to share interesting information and news with readers. Apart from her journalistic activities, Hélène is passionate regarding arts and culture, she likes allis au museh, godcorvrir of norvelles expositions et assister To of the concerts.
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