Turmoil in the banking industry will dominate the economic discussion this week, not only in the US. The immediate question/concern is whether the Federal Reserve will change its stance on proceeding with further interest rate increases in order to reduce inflationary pressures. This question, in turn, is now formulated against a backdrop of potential negative economic effects from the disruption of and scrutiny into the operation of large and small banks around the country, as well as banks outside the United States. Beginning last week, we believe fears about the health of bank securities’ portfolios surged, aggravated by banking models with poor asset liability management as measured by high loan to deposit ratios, inferior emphasis on large uninsured commercial deposits, and long duration interest sensitive assets. While it’s too early to conclude, our view is the large unrealized losses in bond holdings do not threaten a liquidity choke hold on the entire U.S. banking system because few banks will be forced sellers with the new government announced initiatives. On the wealth planning front, we revisit how and when FDIC insurance works and the difference between bank and brokerage accounts.
Click Here to Read the March 13, 2023, Economic Commentary
Click Here to Read the March 13, 2023, Investment Commentary
Click Here to Read the March 13, 2023, Wealth Planning Commentary
