Amid the failure of three regional banks since March and another one on the brink, there are concerns about a potential cascade of bank failures in the US. Bloomberg reported on Wednesday that San Francisco-based PacWest Bancorp is considering a sale. Last week, First Republic Bank became the third bank to collapse, the second-largest bank failure in US history after Washington Mutual, which collapsed in 2008 during the financial crisis. Following the demise of Silicon Valley Bank and Signature Bank in March, a study on the fragility of the US banking system found that 186 more banks are at risk of failure, even if only half of their depositors decide to withdraw their funds.
Why are regional banks failing?
The Federal Reserve’s aggressive interest rate hikes to curb inflation have eroded the value of bank assets such as government bonds and mortgage-backed securities. Most bonds pay a fixed interest rate that becomes attractive when interest rates fall, driving up demand and the price…
2023-05-04 09:37:58
Post from finance.yahoo.com