Xinhua News Agency, New York, May 2 (International Observation) The “lesion” has not been cured. The US banking crisis is far from over
Xinhua News Agency reporter Liu Yanan
On the 1st, JPMorgan Chase acquired all deposits and most of the assets of First Republic Bank. Since March this year, JPMorgan Chase and other banks have provided liquidity support to First Republic Bank, but the fate of the latter being taken over has not been changed.
Analysts said that the “lesion” of the US banking crisis has not been removed, especially that the legislative and regulatory levels have not really started to change the status quo, and the crisis may continue.
The U.S. Federal Reserve’s previous investigation report on the closure of Silicon Valley Bank pointed out that after the international financial crisis in 2008, the U.S. passed the “Dodd-Frank Act” in 2010 to strengthen supervision of the banking industry, but it was affected by partisan interests and lobbying by small and medium-sized banks. In 2018, the United States introduced new legislation to relax the regulatory requirements for small and medium-sized banks, burying hidden dangers for the current banking crisis.
Many industry insiders said that in view of the current situation, the US banking crisis may continue to ferment. Gary Cohn, the former president of Goldman Sachs Group, believes that the crisis will not end easily, and there will be problems in the banking business, including the commercial real estate sector.
Dai Zhongkai, co-founder and CEO of Samara Alpha Management, an American alternative asset management company, told Xinhua on the 2nd that the loss caused by interest rate risk and the possible delinquency or default of commercial real estate loans are serious problems faced by regional banks in the United States. question. Whether regional bank reserves can meet demand is still a blind spot in the market.
From the perspective of the macro environment, since inflation is still high, the Fed expects that it is unlikely to cut interest rates before 2024, so the book losses of banks will not be significantly improved. At the same time, the crisis has caused the U.S. banking industry to shrink credit and increase the downward pressure on the U.S. economy. It will also bring counterproductive effects such as increased non-performing assets and credit losses of banks, and may cause some banks to fall into a “crisis cycle.”
Jamie Dimon, chief executive of JPMorgan Chase & Co., also acknowledged that other “cracks” could appear in the banking system if the U.S. recession and high interest rates persist.
In addition, there has been a long-term problem within the US banking industry that there are too many rewards for senior executives and less accountability, which has become an important reason for the frequent occurrence of current banking crises. Many analysts pointed out that bank executives have often “reaped benefits” when there is a crisis, and they will not be held accountable for the crisis. This situation has already appeared during the financial crisis in the 1980s and 2008, and now Nothing changed.
Although the Biden administration has called on Congress to pass legislation to give regulators relevant policy tools to hold bank executives truly accountable, the prospect of relevant legislation is more uncertain when the Republicans and Democrats control the House of Representatives and the Senate, respectively. The Federal Reserve needs to perform open procedures to strengthen supervision within its purview, which is expected to take several years. Therefore, the risks accumulated in the US banking industry cannot be effectively resolved in the short term and may be further exposed.
From the perspective of the market, investors’ concerns about the banking crisis have not been significantly alleviated, and the stock prices of regional banks, including Pacific Western Bank, have dropped significantly. Many analysts said that the Fed’s interest rate hike and other factors have brought enormous pressure to the financial system, and the banking industry is in turmoil. In the future, there will be more short-selling behaviors targeting regional banks in the market.
(Editor in charge: Miao Su)