Economists warn that more bank failures could be on the horizon

https://www.msn.com ^ | 4/30/24 | Story by Maite Knorr-Evan

[RomanSoldier19]

epublic First Bank, a Pennsylvania-based financial institution, has collapsed, with the FDIC covering customers’ deposits by transferring them to Fulton Bank after an agreement was reached with the federal agency.

This is the first major bank collapse this year, following five that occurred in 2023, as the high-interest rate environment destabilized the balance sheets of major financial players.

When Silicon Valley Bank (SVB)collapsed in spring 2023, many economists warned that more could follow—and they did. Signature Bank, First Republic Bank, Heartland Tri-State Bank, and Citizens Bank collapsed in the succeeding months, a sign of instability as the Federal Reserve’s monetary policy stressed these institutions.

[RomanSoldier19]

[packagingguy]

Is this because banks held long term treasuries to back up loans they gave?

I don’t know I’m asking.

[RomanSoldier19]

https://www.risk.net/risk-quantum/7959239/smaller-us-banks-hold-over-half-of-cre-loans

[citizen]

I think that’s it. The “free” money was never going to end...then it did, and rising interest rates cut the value of those treasuries in half.

The word is the FED assured these small-to-mid banks they would be protected if they bought US long-term debt. They were lied to.

[delta7]

BAIL- INS coming, per the Dodd Frank Act. If you don’t know what a bail in is, you had better get up to speed and act accordingly.