Sunday, March 12, 2023

Stopping the Bleeding

The demise of Silicon Valley Bank has created a potential financial crisis … as many companies have huge deposits there which far exceed the FDIC’s insurance limit … and other regional banks might  also be on the brink of collapse.

Here are three things the Biden admin and/or the Fed could do to stop the financial industry’s bleeding;

- Have the U.S. Treasury bail out SVB … which should set Liz Warren’s hair on fire … and would be antithetical to Biden’s current politics.

- Have a national bank like JP Morgan absorb SVB and back up its uninsured corporate depositors.

- The Fed could announce it is stopping its balance sheet drawdown and slash interest rates by a full percentage point.

Who knows if anything like these measures will be done on Monday … but, if nothing is done, the hemorrhaging should get a whole lot worse.


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