The collapse of a couple of regional banks in the US has raised some questions. Is this the start of a repeat of 2008? Are the banks in the US in trouble? What about our banks, are they OK? How is this going to affect us?
Here are some of the key takeaways and links from various sources for you to review.
The Key Takeaways
These are regional banks which were not held to the same stress testing as the major and national US banks. Canadian Banks are even more rigorously regulated.
To prevent a wave of future failures, the US government stepped in over the weekend with new policies to stem any further contagion. The US Fed and Treasury have stepped in quickly to secure the bank’s deposits.
Silicon Valley Bank was unusually poorly positioned to survive recent headwinds.
The markets have dropped primarily due to the fear and “panic” selling that occurs on such negative news. The fundamentals that were in place before haven’t changed.
This may have an impact on future interest rate decisions. Speculation is growing that the US Fed will stop raising rates and possibly start cutting. SVB’s failure was in part caused by interest rates rising too much and too fast.
Canada Banks are taking advantage of the bank failures to secure assets and clients from the failed banks. They will come out of this stronger.
For more detailed viewpoints please feel free to read the attached articles.
If you have more questions, reach out to your advisor!
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