The three US banks that collapsed this year - First Republic, Silicon Valley Bank and Signature Bank of New York - had more combined assets under management than all 25 federally insured lenders that failed in 2008 at the onset of the Great Recession.
If 2023-2024 follows a pattern similar to that of 2007-2008, the banking system is in a lot of trouble.
Perhaps in an attempt to calm the banking sector, Powell was sure to declare at the FOMC press conference that the banking system is "Sound and resilient." Yet, within hours of the press conference, two more banks were showing signs of extreme stress.
In other words, Powell professed confidence in the banking system required only a few hours to look very misplaced, indeed.
Powell responded to Liesman's question with no details except to insist the Fed has the situation under control and to say that things are fine because banks are actively seeking more liquidity.
Given Powell's response to Liesman's question, it is also apparent the Fed has no strategy here except to pump more liquidity-i.e., easy money-into the banking system.
If the Fed is serious about brining down price inflation it's difficult to see how the Fed can do that while also guaranteeing more liquidity to an obviously fragile banking system.
https://mises.org/wire/jay-powell-said-banking-system-sound-and-resilient-now-more-banks-are-trouble
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