🏦 Navigating Bank Failures, Fed Rate Hikes, and Risks to the Financial System
The recent failure of three U.S. banks has raised concerns over the economy and financial system. The situation is still evolving, and there is plenty of speculation about what might come next. One recent development is that government officials from the Treasury, Federal Reserve, and FDIC have announced that depositors will be made whole in an effort to backstop the system and restore confidence. This crisis has already created hardship for many companies and individuals as payrolls are disrupted and access to cash is halted. However, when it comes to investing, it's more important than ever to stay levelheaded and focus on the big picture. What should long-term investors know about these bank failures, and what do they reveal about the financial system?
We discuss in this episode of The Wealth Effect Podcast:
📉 Financial Sector Performance
📊 Bank Unrealized Investment Losses
📈 FDIC Bank Failures
Matt Faubion, CFP®
Founder - Wealth Manager
Show notes and charts:
Bank stocks have struggled due to recent failures
Banks accumulated unrealized losses on investment securities as rates spiked
These bank failures are the largest since 2008
*Note that this FDIC data does not yet include Signature Bank
The bottom line: While recent bank failures are problematic, parallels to 2008 are premature from a market perspective and inaccurate from a policy perspective. There will likely be more developments to come in the next several days, which highlights the importance of focusing on the big picture rather than minute-by-minute speculation.
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