A Run on the Banks

Banking Collapse Arrives

Earlier this week, Jerome Powell at the Fed tweaked interest rates upward by another 25 basis points in response to somewhat stubborn inflation. This of course, comes in the aftermath of 2 large banks collapsing and a 3rd (1st Republic) that needed to be rescued. Although the rate hike was not as high as what many thought (1/2 percent), it still adds fuel to the fire that is facing many banks across the country. You see, banks also are large investors of fixed income (usually bonds). When interest rates go up, banks experience large losses from those holdings, and thus we…