Larry Fink says more bank foreclosures could be coming, it’s too early to know
BlackRock CEO Larry Fink issued a dire warning on the state of financial markets, saying the banking crisis sparked by the collapse of Silicon Valley Bank could spread, but it was too early to tell. “We don’t yet know if the fallout from easy money and regulatory changes across the US regional banking sector (similar to the S&L crisis) will cascade with more seizures and closures,” Fink said in his annual chairman’s letter to investors. The CEO of the world’s largest wealth manager said the collapse of Silicon Valley Bank — the second-biggest bank collapse in US history — was a classic asset-liability mismatch, meaning a bank does not have enough readily available assets to sell , to reach the value of his deposits. The collapse of SVB and Signature Bank prompted extraordinary bailouts from regulators, who stopped all deposits with the failed lenders and provided an additional funding facility for troubled banks. Fink said it now seems “inevitable” that some banks will have to scale back lending to shore up their balance sheets and there may be tighter capital standards for banks in the future. “It’s too early to know how extensive the damage is. The regulatory response has been swift so far, and decisive action has helped stave off risks of contagion. But the markets remain tense. Will asset-liability mismatches be the second domino to fall?” Fink wrote. The financial sector remained under pressure on Wednesday and concerns have spread beyond regional banks. Shares in Credit Suisse, a Swiss bank with large US and global operations, fell more than 20% to another all-time low. The Saudi National Bank, Credit Suisse’s largest investor, reportedly said it could not provide any more funds. The first domino to fall on years of easy money is rising inflation, which prompted the Federal Reserve to hike interest rates by nearly 500 basis points in a year, Fink said. “These dramatic changes in financial markets are happening at the same time as equally dramatic changes in the global economic landscape — all of which will keep inflation higher for longer,” Fink said.
https://www.cnbc.com/2023/03/15/larry-fink-says-more-bank-seizures-could-come-but-its-too-early-to-know-how-widespread-crisis-is.html Larry Fink says more bank foreclosures could be coming, it’s too early to know
