[BrianC]

Jamie Dimon Says Banking Crisis Not Over and Will Cause 'Repercussions For Years' (cnbc.com) 26
Posted by msmash on Tuesday April 04, 2023 @12:47PM from the closer-look dept.
The stress on the financial sector caused by two bank failures in the United States last month is still a threat and should be addressed by a reimagining of the regulatory process, according to JPMorgan Chase CEO Jamie Dimon. From a report:
"As I write this letter, the current crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come," the longtime CEO said in his annual letter to shareholders Tuesday. "But importantly, recent events are nothing like what occurred during the 2008 global financial crisis," he added. The recent banking issues in the U.S. began with the collapse of Silicon Valley Bank, which was closed by regulators on March 10 as depositors pulled tens of billions of dollars from the bank. The smaller Signature Bank was closed two days later. And in Europe, Swiss regulators brokered a purchase of Credit Suisse by UBS.

JPMorgan and other large banks stepped in to make $30 billion of deposits at First Republic, another regional lender that investors feared could become the next SVB. The stress on the regional banks has led investors and analysts to suggest that the too big to fail institutions would be a beneficiary of the crisis, but Dimon said JPMorgan wants to strengthen the smaller banks for the benefit of the whole financial system. "Any crisis that damages Americans' trust in their banks damages all banks -- a fact that was known even before this crisis. While it is true that this bank crisis 'benefited' larger banks due to the inflow of deposits they received from smaller institutions, the notion that this meltdown was good for them in any way is absurd," Dimon wrote. Dimon also cautioned against knee-jerk changes to the regulatory system. He wrote that most of the risks, including the potential losses from held-to-maturity bonds, were "hiding in plain sight." The interconnected network of SVB's deposit base was the unknown variable, he said. "The recent failures of Silicon Valley Bank (SVB) in the United States and Credit Suisse in Europe, and the related stress in the banking system, underscore that simply satisfying regulatory requirements is not sufficient. Risks are abundant, and managing those risks requires constant and vigilant scrutiny as the world evolves," Dimon wrote.
https://news.slashdot.org/story/23/04/0 ... -for-years

[Plantagenet]

Jamie Dimon Says Banking Crisis Not Over and Will Cause 'Repercussions For Years'

Why should the banking crisis be over?

The USA is still seeing inflation and interest rates are still going up. And just yesterday Saudi and Russia and several other countries announced new cuts in oil production designed to cause the price of oil to inflate again. This may well produce even more interest rate hikes.

Its estimated that about 900 US banks are at risk of banks runs because they are heavily invested in long term bonds that have lost much of their values as interest rates rocketed up over the last year in response to Joe Biden's inflation. More inflation will just make this problem worse.

The Biden administration rushed to bail out SVB in California and Signature bank in New York when they failed, but both these banks were in D states and have many wealthy D donors and foreigners as depositors.

Since then Treasure secretary Yellen has made it clear the US government will NOT bail out smaller banks that only have regular old Americans as depositors.


The Biden administration says it will not bail out local banks that only have regular Americans as depositors.

People out there with money in their local bank should be careful here....the Biden administration has already made it clear they won't help you if your local bank goes under.

Cheers!

[theluckycountry]

The GFC isn't over either and this is just a manifestation of the actions taken to paper over that. It's repercussions have been expanding for years, and back of that and all the other financial crises is the global decision in the 1970's to go off the gold backed currency standard, and generate inflation, endless debt with no thought to squaring the books. How any thinking person could imagine you could borrow your way to prosperity for ever is amazing, but what I think people have done is simply ignore the repercussions and focused on the short term. But time is catching up

Great Britain abandoned the gold standard in 1931, because of it's high debts. It once policed the world and took the major share of profits, just like the US did up until recently.

[Plantagenet]

How any thinking person could imagine you could borrow your way to prosperity for ever is amazing, but what I think people have done is simply ignore the repercussions and focused on the short term.

Yes.

That's a good description of what Biden and the Ds have done since they took power in Jan. 2021.

And the results of this short-term thinking are clear to see.....first lying about inflation, then doing too little about inflation, then rapidly pushing to higher interest rates to try to make up for lost time, which creates a bank crisis, and all the while the economy is moving toward an economic slowdown and now a looming recession.

And when you get inflation combined with economic stagnation it's called STAGFLATION. And, thanks to Joe Biden's idiotic economic policies, that will be next.


stagflation... prices go up while the economy contracts and average working people get #$%$#ed over by the Biden administration.

CHEERS!

[evilgenius]

You can view inflation from various points of view. One of them, is that of the venturi when there is pressure. If there is a lot of pressure, and only one small hole, then there is a lot of movement if you measure it at the venturi. But you do have to consider what makes the venturi possible. What is it that constrains the rest of space, so that, in this case, there are no alternatives and everybody keeps having to pay high prices? Because these high prices are a result of misaligned markets, right? Is it like an ore vein running through solid rock, where there is flow at a weakness? Because if everything is equally weak, as if it were less than solid rock making the constraints, you will get movement that is more amorphous than directional, and slower.

It is possible that the Fed has already raised enough? It is possible that the reasons why people are so in love with the idea of inflation are more political than economic? It's as if this is the natural result of using the method of truth discovery, experience, that we chose to use to deal with the pandemic. We had to do that because we refused to listen to experience already. We had to relearn the value of experience because we chose to throw everything about vaccines away so that we could stick with the orthodoxy that compelled us, which coincided with Trump's presidency. It's the same sort of political decision that has shipwrecked the Christian Church, upon the ground of the subject of abortion. In this case, it's probably upon the ground of the value of conservatism in society.

It's probably just another example of how technology has come along and democratized life. Now, the power to influence things economically lies with the people. It does so because of the advertising model of economic extraction that social media has chosen. That has made these sorts of things an economic choice. That is, the sorts of things that conspiracy theorists are also always on about. For they get to us right here, where we collectively haven't thought things through very much, and there are enough undiscovered truths, especially the ones the influencers get on about, making such huge piles of money, that the conspiracy theorists might be right about one or two of them.