Barron's: A Banking Crisis Could Be Closer Than You Think
Article by Mark Hulbert in Barron's
It’s premature to feel relief as we approach the first anniversary of Silicon Valley Bank’s collapse.
The Pollyannas on Wall Street disagree, pointing out that the banking system has avoided the systemic crisis that seemed all too possible this time a year ago.
Silicon Valley Bank’s bankruptcy in early March was the largest bank failure in the U.S. since the Great Depression, and was closely followed by the collapse of Silvergate Bank and Signature Bank. Switzerland’s Credit Suisse bank also failed in March 2023, igniting fears of the crisis spreading to other countries’ banking systems as well. Notwithstanding all these worries, the banking system has survived.
There are several reasons it would be premature to celebrate, however. Some are more obvious, even if an exuberant Wall Street is largely ignoring their potentially systemic consequences. One is that New York Community Bancorp, which took over Signature Bank, is now in trouble itself. Its stock is now worth less than half of where it stood at the beginning of the year.
Another is that there are many banks suffering from ......