2023-05-09T11:25:24-04:00May 9th, 2023|5- Client Report|

Fed Frets About Banks, Nonbanks, Hedge Funds

Perhaps because its last financial-stability report (see Client Report SYSTEMIC94) was contradicted  just five months later by a systemic-risk designation, the Federal Reserve’s latest report eschews a conclusion about prospective risk in favor of a review of current concerns.  As noted upon the report’s release, these include a somewhat less effusive view of bank resilience than has characterized prior reports but the Board nonetheless views the banking system as sound and recent failures as essentially idiosyncratic.  The report is, however, concerned with midsized-bank CRE concentrations and the near-term impact of macroeconomic factors and deposit outflows on credit availability, noting as Chairman Powell did last week that this could adversely affect economic growth.