Banking Crisis 2023

Former Treasury Secretary Lawrence Summers said the Federal Reserve shouldn't be spooked into easing its campaign to contain inflation out of excessive concern about a credit crunch in the wake of the recent banking turmoil.

The collapse of Silicon Valley Bank and Signature Bank clouds the economic landscape and complicates monetary policy decisions but it's a long way off from the troubles banks and broker-dealers faced in the 2008 financial crisis.

Is the banking sector in crisis? What happened, and what can bankers learn from this turmoil? Two of American Banker's reporters discuss the fallout and what comes next with the magazine's editor-in-chief.

Outflows continued as Refinitiv Lipper reported $461.123 million was pulled from municipal bond mutual funds in the week that ended Wednesday after $307.815 million of outflows the week prior.

"What is happening at Silicon Valley Bank is on everyone's mind," UCLA Anderson Forecast Director Jerry Nickelsburg said at its quarterly economic update.

The collapse of Silicon Valley Bank and Signature Bank won't impact the Fed or the market enough to cause rates to drop and refunding volume to significantly increase, according to muni experts.

Navigating challenges and what's ahead in banking regulation.

"The main question for investors recently has been: will we see bank selling of municipals that exerts pressure on the market, and what kind of market effects could occur," Barclays strategists said.

The fall of Silicon Valley Bank is forcing regulators to take a closer look at asset structure and the integrity of depository institutions, which will likely include the issuers of securities.

"The muni market is no different than others, where fear and greed drive the trends," said Peter Delahunt, StoneX's managing director.

Gov. Phil Murphy announced funding for programs to address short-term liquidity issues and keep investments flowing in the wake of the bank's collapse.

The recent bank failures have changed market thinking about the Federal Reserve's next move.

The Federal Reserve's top regulator will examine what steps the central bank took to mitigate risks at the bank before its failure last week.

Even more uncertainty has been introduced into the municipal bond market as the Federal Reserve may have to tweak its monetary policy plans as the situation unfolds.

Triple-A benchmarks have fallen five to 10 basis points, depending on the scale.

President Joe Biden said that deposits at U.S. banks are safe following swift action from his administration's bank regulators.

The Treasury Department issued a "systemic risk exception" allowing it to cover uninsured deposits at SVB and Signature Bank, which New York State closed on Sunday.

Shares in Silicon Valley Bank's parent company plunged 60% after executives announced they would sell a large bond portfolio at a big loss. The market "seems to be pricing in greater liquidity needs" than the bank currently anticipates, one analyst said.