FT.com |March 15, 2023
BlackRock chief executive Larry Fink has raised the spectre of a “slow rolling crisis” in the US financial system following the failure of Silicon Valley Bank, “with more seizures and shutdowns coming”. In his closely watched letter to investors and chief executives, the founder of the $8.6tn money manager said SVB’s collapse was an example of the “price we’re paying for decades of easy money”. Rapidly rising interest rates were “the first domino to drop” while SVB was an instance of the second, Fink wrote as he warned that other regional banks and investors who rely on leverage could also follow suit. Fink said that swift regulatory action had helped stabilise markets after the biggest bank failure since 2008. But he nonetheless compared recent events to the 1980s savings and loan crisis, when more than 1,000 lenders collapsed.
“We don’t know yet whether the consequences of easy money and regulatory changes will cascade throughout the US regional banking sector (akin to the S&L Crisis) with more seizures and shutdowns coming,” he wrote.
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