Silicon Valley Bank and Signature Bank collapsed virtually overnight and a rescue of First Republic failed to stem unease. The Federal Reserve could risk further weakening banks, a resurgence of inflation or even a recession, says this finance professor.
Commentary: Credit Suisse, Silicon Valley Bank, FTX are reminders that risk and compliance shouldn’t be seen as a chore
High inflation quickly cuts into how much stuff your money can buy. It also makes saving money more difficult because it eats at the value of your savings. When high inflation sticks around for a long time, it gets entrenched in expectations, making it very hard to control. Moreover, stepping back from its one-year-old inflation campaign may send the wrong signal to investors. If central bankers show they are really concerned about a possible banking crisis, the market may think the Fed knows the financial system is in serious trouble and things are more dire than previously thought.At the very least, the complex global financial system is showing some cracks.
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