Swedbank Strategist Says US Banking Crisis Spreading – Warns of More Banks Failing in ‘Vicious Spiral’ – Finance Bitcoin News

A strategist at Swedbank, a Swedish bank, has warned that the regional banking crisis in the US is spreading. After several bank failures, he stressed that Pacwest Bank, Western Alliance Bank and First Horizon Bank have all been “subject to financial consolidation”.

Swedbank on the spread of the American banking crisis

Pär Magnusson, an interest rate strategist at Swedbank, a Swedish bank based in Stockholm, has warned of the spread of the American banking crisis. He is said to have said:

After Silicon Valley Bank, Signature Bank, First Republic Bank and now potentially Pacwest Bank, Western Alliance Bank and First Horizon Bank all suffered financial collapses, the proverbial cat will be very difficult to put back in the bag.

First Republic Bank was seized by regulators last week and most of its assets were sold to JPMorgan Chase. It was the largest US bank failure since 2008. Silicon Valley Bank and Signature Bank collapsed in March. After the seizure of First Republic Bank, the shares of several banks fell, including Pacwest and Western Alliance Bank.

“It’s hard not to see the irony that regional US banks have successfully lobbied for less regulation under the Trump administration, only to find that less regulation now leaves them vulnerable to bank runs,” Magnusson said.

The Swedbank strategist further warns:

The US regional banking crisis is spreading. With each bank that succumbs to shrinking deposits and/or market distrust, the likelihood of more banks falling victim to similar fates increases. A vicious spiral may be about to take hold.

“A general risk-off reaction is becoming increasingly likely and you should position yourself for this risk,” the strategist concluded.

Despite several bank failures, Federal Reserve Chairman Jerome Powell said the US banking system is “healthy and resilient” as Fed officials raised interest rates by 25 basis points this week. The Federal Reserve recently revealed that 722 banks reported unrealized losses exceeding 50% of capital in the third quarter of 2022.

Do you agree with the Swedbank strategist that the US banking crisis is spreading? Let us know in the comments section below.

Kevin Helms

A student of Austrian economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the intersection of economics and cryptography.