The Higher Standard Jerome Powell vs Ben Bernanke and Paul Volcker, Bank Conspiracy Theory and Don't Do This
As a series of U.S. lenders were besieged by customers yanking out their money this month, banking giants such as JPMorgan Chase & Co, Citigroup Inc. and Bank of America Corp. warned employees: Do not make it worse. JPMorgan, the nation's largest bank, told all employees they "should never give the appearance of exploiting a situation of stress or uncertainty," in a March 13 memo. "We do not make disparaging comments regarding competitors."
In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.
They discuss data showing that customers have recently pulled nearly $100 billion in deposits, while Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and more than a dozen other officials convened a special closed meeting of the Financial Stability Oversight Council.
Chris and Saied look at news that Deutsche Bank’s stock plunged Friday as the market hones in on the German firm as the next major bank at risk in the wake of long-time rival Credit Suisse’s collapse and similar events stateside. Frankfurt-listed shares of Deutsche Bank dropped 7.5%, now down more than 25% since March 8, when confidence in the international banking system began to crumble.
They also offer some thoughts on data from Trepp, an analytics provider for the Structured Finance, CRE, and Banking markets, indicating that this year, roughly $270 billion in commercial mortgages held by banks are set to expire. This means that big owners of property face the prospect that beleaguered banks, especially smaller ones, could get more aggressive with lending arrangements, giving landlords even less room to breathe as they try to refinance a mountain of loans coming due.
Join Chris and Saied for this fascinating and informative conversation.
Enjoy!
What You’ll Learn in this Show:
- Paul Volcker’s monetary policy career and Ben Bernanke’s role in AIG bailout.
- Jerome Powell's role in the current banking crisis.
- The two different types of lender in the commercial real estate space.
- Why JP Morgan and Bank of America have been telling staff not to poach clients from stressed competitors.
- And so much more...
Resources:
"Volcker Slayed Inflation. Bernanke Saved the Banks. Can Powell Do Both?" (article from Bloomberg)
"Exclusive: JPMorgan, Citi, BofA tell staff not to poach clients from stressed banks" (article from Reuters)
"Nearly $100 billion in deposits pulled from banks; officials call system ‘sound and resilient’" (article from CNBC)
"Veteran of FDIC Takeover Tells What It’s Like to Run a Failed Bank" (article from The Wall Street Journal)
"What’s Going On at Deutsche Bank?" (article from The Wall Street Journal)
"Commercial real estate is in trouble. A banking crisis will make it worse." (article from Yahoo! Finance)
"Elon Musk says Jerome Powell is so bad at his job that GPT-4 would be a better Fed chair: ‘This foolish rate hike will worsen depositor flight’" (article from Yahoo! Finance)