Crypto News: Swedbank Strategist Warns Regional Banking Crisis in the US is Spreading
A strategist from Swedbank, a Swedish bank based in Stockholm, has warned that the ongoing regional banking crisis in the United States is spreading.
Pär Magnusson, the bank’s fixed-income strategist, cautioned that several banks, including Pacwest Bank, Western Alliance Bank, and First Horizon Bank, have experienced financial meltdowns following the collapse of Silicon Valley Bank, Signature Bank, and First Republic Bank.
Magnusson’s remarks come after Federal Reserve Chairman Jerome Powell stated that the U.S. banking system is “sound and resilient” despite several bank failures.
Magnusson pointed out the irony that regional U.S. banks had successfully lobbied for less regulation during the Trump administration only to find themselves vulnerable to bank runs.
As a result, the strategist warned that the probability of more banks falling victim to similar fates grows, and a vicious spiral may be about to take hold. He recommended that investors position themselves for an increasing likelihood of a general risk-off reaction.
The Federal Reserve recently revealed that 722 banks reported unrealized losses exceeding 50% of capital in the third quarter of 2022. Despite this, the Federal Reserve remains confident in the strength and resilience of the U.S. banking system.
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