TFC - Banking Crisis Anniversary: It Is Difficult To Be Optimistic
2024-03-21 10:06:23 ET
Summary
- A little more than one year ago, two major banks collapsed and right now it seems like New York Community Bancorp also seems to be on the brink.
- The two major problems seem to be the higher interest rates and the real estate portfolio of banks (especially commercial real estate loans).
- In the fourth quarter, banks reported a much lower net income and still high unrealized losses.
- Past bank runs show how quickly sentiment can change and how it can bring banks to their knees which is reason enough to stay very cautious.
A little more than a year ago, the world was in shock as it seemed like the banking crisis suddenly returned. In total, 2023 saw 5 bank failures ( according to the FDIC ) and it was especially March 2023 that seemed dramatic due to two banks collapsing - Silicon Valley Bank collapsed on March 10, 2023 and Signature Bank collapsed on March 12, 2023. And while 5 banks collapsing in one year was the highest number of bank failures since 2017 the number is far away from 157 bank failures in 2010 (in the fall-out of the Great Financial Crisis). However, while only 5 banks failed in 2023 these banks had a combined $548.7 billion in assets – and this is the highest amount at least since 2001. And even when adjusting for inflation, the assets of the banks failed were higher than in any year during the Great Financial Crisis....
Banking Crisis Anniversary: It Is Difficult To Be Optimistic