More bank failures are coming.
Big banks have a long enough memory to not step in and buy these flailing banks. These banks are sitting in no man’s land, because nobody wants to say that they’ve failed. I think we are going to see more bank failures, because we have not seen the biggest banks step up.
Following the failure of SVB and Signature, the Fed, U.S. Treasury Department, and Federal Deposit Insurance Corporation (FDIC) bailed out the banks’ depositors, including those with uninsured deposits above $250,000. Unfortunately, now a bad precedent has been set, with regulators signaling that clients in other banks could have full coverage of their deposits.
The precedent has been set, and it cannot be unset. As regulators, it’s not your job to pick winners and losers, but that’s the corner they [The government and Fed] backed themselves into when they backed all of the uninsured deposits of Signature and SVB.
We’re in the middle of a banking crisis that nobody wants to call a banking crisis.