The recent closure of Silicon Valley Bank and Signature Bank due to "systemic risk" has caused turmoil and unrest in the financial markets.


  In response, former FDIC Chairman Sheila Bayer warned in an interview with the US media that the US banking system is currently in a "Bear Stearns moment" and that if the government does not continue to help, US banks fear a domino collapse.


  In March 2008, against the backdrop of the sub-prime mortgage crisis, the Federal Reserve approved JP Morgan Chase's acquisition of Bear Stearns and provided special financing assistance for the acquisition in order to alleviate the liquidity shortage of Bear Stearns, the fifth largest investment bank in the US. However, the Fed underestimated the impact of the Bear Stearns debacle, believing that the worst of the sub-prime crisis may have passed, leading to the situation spiralling further out of control. In September of the same year, the US government refused to bail out another investment bank, Lehman Brothers, triggering a collapse in market confidence and turning the sub-prime crisis into a financial "tsunami". These two events were referred to as the "Bear Stearns moment" and the "Lehman moment" respectively.


  For the U.S. Silicon Valley Bank and Signature Bank closed one after another, the United States Federal Deposit Insurance Corporation former chairman Sheila Bayer warned that the U.S. banking system is now in the "Bear Stearns moment", the market panic about the banking system is spreading, uncertainty is increasing, the U.S. government needs to provide temporary relief to more banks, to prevent a wave of bank closures. The US government needs to temporarily bail out more banks to prevent a wave of bank closures.

641.jpg

  Sheila Bayer, former chairman of the FDIC: I think it's more like another Bear Stearns moment, where panic is spreading and it's panic rather than reason. I think the problem is that the government has bailed out these two mid-sized banks in the name of "systemic risk", even though they are a small part of the overall banking system, but it has created a lot of uncertainty. More bailouts (by the government) may be needed, rather than fewer. If it is systemic (risk), then full guarantees will have to be provided for the time being.


  New study shows nearly 200 US banks at risk of 'meltdown'


  As the impact of the Silicon Valley bank closures spreads, the US financial markets continue to shake, and despite the measures taken by the US government to intervene, the dire situation remains unabated.


  According to the Wall Street Journal on the 17th, the latest research shows that there are now as many as 186 banks in the United States that may have similar risks to Silicon Valley Bank.


  The new study, jointly released by economists from several universities in the United States, shows that the Fed's interest rate hikes have "significantly" increased the vulnerability of the U.S. banking system. Influenced by the Fed's aggressive rate hike, many US banks hold bonds and other financial assets that have shrunk significantly in value, with the value of some banks' assets even reduced by more than 20%. And 10 per cent of US banks have more floating losses on their books than Silicon Valley banks due to their large holdings of financial assets such as bonds. The study says that if market confidence continues to be low and some depositors withdraw their deposits, as many as 186 banks may become insolvent and face a "meltdown". And even if there is only a small run, more banks will be at risk.


  The US Treasury Secretary Yellen has also recently said that the current US banking system "remains sound as a whole", but if the crisis spreads further, it could lead to many banks closing and triggering a run.


  U.S. Treasury Secretary Yellen: I think we need to carefully analyze the causes of bank closures. There is a serious risk of contagion (Silicon Valley bank closures), which could lead to many bank failures and runs.


  Experts: US economy may be heading for a "hard landing"


  Before the closure of several US banks, the US economy was already full of uncertainty due to high inflation and several rounds of interest rate hikes by the Federal Reserve.


  Some economics experts point out that the US economy may shift from the previously unpredictable "no landing" state to a "hard landing".

503098962_副本.jpg

  The United States Apollo global management company chief economist Torsten Slocke local time 15 issued a report pointed out that in the United States economy of the total loan, small banks occupy a 30% share, in the past week the United States banking system turbulence, small banks bear the brunt. Slocke expects that under such pressure, in the coming quarters, even if the Fed stops raising interest rates or even starts cutting them, more small banks will choose to tighten credit conditions for commercial and housing loans in order to ensure the health of their balance sheets. This "emergency brake" will also push the US economy from a "no landing" to a "hard landing".


  Raghuram Rajan, a professor at the University of Chicago Booth School of Business, also argued in an interview with the US media that a "hard landing" would occur in the US economy.


  Professor Raghuram Rajan of the University of Chicago Booth School of Business: I think from this point in time (the U.S. economy) "soft landing" is particularly unlikely, the U.S. economy will have a moderate or high intensity "hard landing". There are two possible ways of landing, one is that inflation remains high and the Fed continues its interest rate hiking cycle; the other way is that there are growing concerns within the economy and more surprises, growing public concern and reduced consumption, but either of these is harder than the "soft landing" that many people think.