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The banking crisis is far from over. Bill Ackman, Jeffrey Gundlach and Mohamed El-Erian have issued new warnings about unresolved risks.


Bill Ackman

Bill Ackmann.Reuters

  • Bill Ackman, Jeffrey Gundlach, Mohamed El-Erian and others are warning the banking turmoil is far from over.

  • Chaos has ripped through the sector over the past two months, causing four lenders to collapse so far.

  • Here are some of the most recent warnings from prominent investors, analysts and other experts.

Over the past week, First Republic Bank became the fourth U.S. lender to go bankrupt this year, prompting a sell-off in regional bank stocks. That prompted leading economists and investors to once again warn that the banking turmoil is far from over.

Big names from Bill Ackman to Jeffrey Gundlach and Mohamed El-Erian have expressed fresh concerns about the stability of mid-sized US banks, as PacWest Bancorp became the latest institution to face scrutiny after it said it was weighing strategic options after abandoning a previous fundraising effort.

The US banking industry has faced increasing uncertainty since the collapse of Silicon Valley Bank and Signature Bank in March, with the recent collapse of First Republic Bank and the JPMorgan’s subsequent takeover added to concerns about industry stability.

Below is a selection of the most recent warnings about US banking risks from other prominent investors, analysts and experts.

Bill Ackman, billionaire investor

“The FDIC’s failure to update and expand its insurance coverage has driven more nails into the coffin,” Ackman said. Twitter. “The First Republic will not fail if the FDIC temporarily guarantees deposits while a new guarantee regime is created. Instead, we see dominoes collapse at economic expense,” he said. large economy and system”.

“We’re running out of time to fix this. How many more unnecessary bank failures do we need to watch before the FDIC, the US Treasury, and our government wake up?” he added. “We need a system-wide deposit guarantee right now.”

Jeffrey Gundlach, CEO of DoubleLine

“Deposits will continue to flow out, I don’t think this is the last chapter in the banking problem in this region… I really don’t know what will stop it unless the Fed cuts rates,” Gundlach said. speak CNBC’s “The End Bell”.

Mohamed El-Erian, Allianz Chief Economic Adviser

“I fear this could end up being added to the list of regrettable Federal Reserve communications over the past few years that have eroded the credibility of the Fed, undermined its direction,” said El-Erian. its policy effectiveness and jeopardize its political autonomy”. in one Thursday tweet. He was raise suspicions about Federal Reserve Chairman Jerome Powell’s suggestion during Wednesday’s press conference that the worst of the banking crisis is over.

Paul McCulley, former chief economist at PIMCO

“The economy is slowing down. Inflation is on the right track. We have a chronic banking problem,” McCulley said. CNBC on Wednesday.

McCulley said the “acute phase” of the banking crisis, in which lenders collapsed and caused panic among Wall Street investors, was beginning to subside. However, the economy is now about to face a “chronic phase” of banking problems, when banks that have suffered heavy losses in the past few months are expected to stop lending, prompting banks to stop lending. Credit conditions tightened and slowed the economy further. according to him.

“We have this chronic situation that I think is a tight control over MainStreet lending,” he warned.

Read more: PacWest and First Horizon plummet 40% as tensions in the banking industry fuel speculation of further consolidation

Read the original post on Business Insider

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