 |
| US Economy Nearing Recession as Banking Crisis Raises Concerns, says Fed Bank President |
Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, has stated that the current banking crisis in the United States has brought the country closer to a recession. Speaking in an interview with CBS News, Kashkari warned that the situation was unclear and that it was uncertain how much of the banking stresses would result in a widespread credit crunch. He explained that such a crunch would slow down the economy and bring down inflation. Kashkari added that the Federal Reserve is monitoring the situation "very, very closely."
Kashkari was also asked about the need for more regulations to prevent bank failures and whether the FDIC deposit insurance should be raised above $250,000. He was also questioned about the rollbacks on the regulation of mid-sized banks that were implemented in 2018. Kashkari argued that the biggest banks in the world are still too big to fail, and that there are fundamental issues facing the banking system in the United States. He further stressed that the playing field for smaller banks is unfair and puts enormous pressure on regional and community banks.
The current banking crisis in the United States has prompted the Federal Reserve, Treasury Department, and Federal Deposit Insurance Corporation (FDIC) to step in and protect depositors. Several major banks, including Silicon Valley Bank and Signature Bank, have failed in recent weeks. Billionaire Bill Ackman has warned that permanent damage to smaller banks could occur if the government allows the current banking crisis to continue. Kashkari emphasized the need for a regulatory system that ensures the soundness of the banking system while also being fair and even so that regional and community banks can thrive.
