The U.S. Consumer Fears Bank Safety
Following this week’s newest 25 basis point increase to the federal funds rate, traumatic outcomes have continued to unfold for regional banks across the country. With no loosening on monetary policy in sight until the next year, several banks and investors have resumed panicking over the strength of the financial industry. On Thursday’s trading day, LA-based bank PacWest plummeted over 50% in stock as they analyze strategic options potentially like First Republic’s acquisition by JPMorgan. Another regional bank to sink was Tennessee-based First Horizon, shares of which dropped 33% following their financial uncertainty and recently terminated merger agreement with TD Bank. Other banks to experience similar volatile price movements were Western Alliance and Zions Bancorp, with shares of both falling 38% and 12%, respectively.
As a banking crisis unfurls in a similar fashion to the Great Recession of 2008, Gallup pollsters have recently concluded the American consumer’s sentiment surrounding the safety of money in banks. Of the adults polled, the majority at 30% still retain that they are not too worried about their deposits, however, 29% of participants say they are moderately worried. Around 19% of respondents claim to be very worried over their money’s safety, with the remaining stating no worries in this environment. The results of the survey showed striking similarity to the results of the same survey conducted in 2008 shortly after the fall of Lehman Brothers, potentially mirroring similar sentiment to the strength of the banking industry. Nevertheless, this poll isn’t conducted regularly, so it is up to investors to decide whether this banking crisis is simply a drop in the bucket or a deep tide that has previously caused years-long turmoil.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
