2023-05-02 10:43:39
US First Republic Bank (Archyde.com)
banking crisis
A third US bank bailout could lead to banks complying with stricter rules that could hamper their ability to lend.
With the curtain falling on the collapse of the First Republic, with most of its assets acquired by JPMorgan, is the worst in the US banking sector crisis over?
We review the most prominent opinions of the participants in the Milken Institute meeting, which was held amidst these rapid developments.
The collapse of the First Republic overshadowed the Milken Institute conference being held in Beverly Hills amid concern that the third bailout of a US bank could lead to banks complying with stricter rules that could hinder their ability to lend, at a time when the US economy began to feel the effects of a rising economic crisis. interest rates by the Federal Reserve, which could exacerbate the economic slowdown.
According to the Financial Times, David Hunt, CEO of PGIM, which manages assets exceeding a trillion dollars, said: “There is a tendency to breathe a sigh of relief on a morning like this, but the American economy is just beginning to feel the repercussions of what is happening in the banking sector, which will lead to Real changes to the system will be restricted.”
This was also pointed out by Rishi Kapoor, CEO of Investcorp, who said there is no doubt that the long-term impact of recent events on the banking sector will cause tightening financial conditions.
For her part, warned Karen Karniol-Tambour, chief investment officer at the giant hedge fund, “Bridgewater Associates”, that whoever expects the Federal Reserve to cut interest rates prepares himself for disappointment in light of high inflation.
And the Director of the International Monetary Fund, Kristalina Georgieva, blamed the failure of US banks on “lax” application of regulations, which will require new regulations in light of the ability of depositors to withdraw their money very quickly electronically.
Jane Fraser, CEO of Citigroup, noted that the turmoil showed the overall resilience of US banks, saying, “When you take a step back and look at the structure of the US financial system, it is incredibly sound,” referring to the ability of major banks to intervene to support troubled banks. The Fed’s meeting, which starts today and ends tomorrow, will be the focus of observers’ attention, especially with expectations of a quarter-point rate hike.
But the most important thing is to wait for the press conference of its president, Jerome Powell, who is expected to address the collapse of the First Republic Bank, so what will his opinion be? Especially since he said in his last comment on the collapse of the “Silicon Valley” bank that the American banking sector is solid.
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