Author: Oke Kay Snyder
Strap on your seat belts, folks. The ride through the fiscal circus, brought to you by the Fed and the current administration, is just about to get bumpier. If the script didn’t seem ludicrous enough already, they’ve added a plot twist: an impending banking crisis. That’s right, ladies and gentlemen, the slapstick continues.
Regional bank stocks took a comedic tumble on Friday, slipping down a slippery slope of nearly 3%. This was spurred on by hushed whispers of Treasury Secretary Janet Yellen suggesting further bank consolidations. Just picture it, a grand game of financial dominos, with the toppling of one bank leading to the absorption of another.
Cue to Yellen, our very own puppeteer, pulling the strings of the banking world. Meeting with a parade of suited CEOs, she alluded to the possibility of regional banks being gobbled up by their larger counterparts. It’s akin to feeding the little fish to the sharks. But don’t worry, according to the official Treasury Department narrative, she was merely discussing the “strength and soundness” of the U.S. banking system. Because, of course, nothing screams “strength and soundness” like a good ol’ banking crisis.
Adding to this financial farce, Jamie Dimon of JPMorgan Chase casually brushed off the idea of additional acquisitions, just days after his bank played white knight to the ailing First Republic Bank. Dimon, ever the comedian, noted that “most of these risks were hiding in plain sight.” Hiding? Or perhaps neatly swept under the rug while our trusted financial institutions and watchdogs played peek-a-boo with the economy?
The recent collapses of Silicon Valley Bank, Signature Bank, and First Republic Bank have added a new act to this circus. The fact that these failures echo the calamitous period of 2008 would be comedy gold if it wasn’t so tragic. The market’s confidence seems to have been juggling flaming torches, with shares tumbling as the audience—oops, I mean investors—watched with horror.
Meanwhile, regional banks PacWest and Western Alliance have been riding their own rollercoasters. PacWest’s deposit base plummeted 9.5%, yet it somehow found the courage to cancel plans to raise capital in the wake of Silicon Valley Bank’s collapse. Apparently, they took a leaf out of the government’s book and decided that burying their head in the sand was the best course of action.
Western Alliance, on the other hand, has been the comeback kid. Its shares rebounded, presumably buoyed by investors’ faith in the Fed’s emergency lending capabilities, which were so nobly displayed when they bailed out the First Republic.
Yes, folks, the Fed and the current administration continue to perform their high-wire act, assuring us that everything is just fine while the financial sector burns beneath them. But hey, as long as we can trust in their “decisive federal action” and enjoy the comedic spectacle, what’s a little economic catastrophe among friends?
