Analysts Warn of More Bank Failures, Possible Recession and Global Repercussions Caused by First Republic Bank Collapse 
The recent takeover of First Republic Bank, the fourth U.S. bank to fail this year, has awakened concerns about the possible repercussions this new failure might have on U.S. and international economies. While United States President Joe Biden has assured the public that the banking system remains safe, analysts are warning that this might not be the last bank failure in this period of turmoil.
First Republic Bank Collapse Shows the Weaknesses of the US Banking System, Say Analysts
The recent collapse of First Republic Bank, the second-biggest bank failure in the history of the U.S., has set off the alarm bells of analysts regarding the possible repercussions that this might have on the economy of the country. While President Joe Biden has assured that the banking system is safe, some believe the fourth bank failure in a year might show that the U.S. banking system has systemic weaknesses.
An anonymous investment manager at a Beijing bank told Global Times that this new collapse will likely lead to more banks failing in a future liquidity crunch. He stated:
The takeover indicates the problem is more severe than we first predicted, as we believed the crisis had been eased after the previous bailout.
Jamie Dimon, CEO of JPMorgan, the bank that took over First Republic, declared he believes this “part of the crisis is over.” However, some American analysts think otherwise.
Tomasz Piskorski, a professor at Columbia Business School, believes that other banks could be at risk. He declared:
By our calculations close to 200 other banks can fail, many of which are smaller [than First Republic]. The issues aren’t over.
Federal Reserve Blamed
Several analysts believe that these bank failures have to do with the hawkish policies of the U.S. Federal Reserve, which has been consistently raising interest rates to bring inflation rates down to 2% since last year. About this, Piskorski explained:
There’s hundreds of banks that have the current market value of assets less than the face value of debt, and [the crisis] is mainly caused by the interest rate increase by the Fed.
This might cause the U.S. government to face an unsolvable dilemma, according to Gao Lingyun, of the Chinese Academy of Social Sciences in Beijing. The pickle being having to raise interest rates to lower inflation rates, but affecting the values of the loans made by the banks when these same rates were lower, increasing their risks of defaulting. This, in turn, might contribute to a future recession and other bank failures in more countries, Gao warned.
Tags in this story Banking system, First Republic Bank, Gao Lingyun, Jamie Dimon, Joe Biden, Tomasz Piskorski, U.S., U.S. Federal Reserve
What do you think about the possible repercussions of the collapse of First Republic Bank? Tell us in the comments section below.
Sergio Goschenko
India, Russia Mull Payment System Integration in Face of US Sanctions FINANCE | 18 hours ago 
China Ramped Up Gold Production During Q1 Amidst Steady Demand From Central Banks FINANCE | 24 hours ago
Image Credits: Shutterstock, Pixabay, Wiki Commons, Below the Sky / Shutterstock.com
Previous article
Russia Monitoring US Economy Amid Possible Default, Says Official
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Read disclaimerShow comments
More Popular News
In Case You Missed It
Draft Law Regulating Aspects of Crypto Taxation Submitted to Russian Parliament
A bill updating Russia’s tax law to incorporate provisions pertaining to cryptocurrencies has been filed with the State Duma, the lower house of parliament. The legislation is tailored to regulate the taxation of sales and profits in the country’s market … read more.
Today’s Top Ethereum and Bitcoin Mining Devices Continue to Rake in Profits Survey: Adoption in Argentina Grows, With 12 out of 100 Adults Having Invested in Crypto Iran to Increase Penalties for Unauthorized Cryptocurrency Mining Ethereum Foundation’s Financial Report Discloses It Holds $1.6 Billion in Assets, 80.5% Held in Ether