Can The Fed Keep Raising Rates Amidst A Banking Crisis? | Michael Howell
Inflection Point
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Shadow Banking
There's an enormous amount of demand for funding outside of strictly banks, which this is broadly referred to as the shadow banking sector. The forcing function isn't depositors leaving, it's capital calls. So my question to you is, are we being a little bit too myopic here about focusing on any one particular bank failure? And maybe we're missing the forest for the trees when there's a problem in this kind of shadow banking and extended credit. I think that the way that the Federal Reserve initially addressed the SVB problem was to say it was an idiosyncratic problem. This is an outlier. But the solution they put in is actually a general solution for lots of things.
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