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Pacific Western Bank and Silicon Valley Bank Logos

Jaap Arriens via Reuters Connect

Banking crisis continues

First Republic Bank, seized and sold to JPMorgan Chase on Monday, was supposed to be the last victim of the US financial-sector crisis. But there’s still plenty of volatility in the regional banking market — which began with the collapse of SVB in March.

The latest on the apparent chopping block? PacWest. The LA-based midsize lender saw its shares plummet by more than 50% Thursday before news broke that it was selling a $2.7 billion loan portfolio.

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Larry Summers explains the banking crisis
Larry Summers explains the banking crisis | GZERO World

Larry Summers explains the banking crisis

On GZERO World, Ian Bremmer and former US Treasury Secretary Larry Summers discuss a range of topics, including the global banking system, the impact of AI on the labor market, and a controversial solution for rebuilding Ukraine.

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The next economic crisis Larry Summers is worried about
The next economic crisis | Larry Summers | GZERO World

The next economic crisis Larry Summers is worried about

On GZERO World, Ian Bremmer and former US Treasury Secretary Larry Summers discuss the policy response to the recent banking crisis involving Silicon Valley Bank and the Biden administration's actions.

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Is your money safe? Larry Summers on the banking crisis
Is your money safe? | Larry Summers on the banking crisis | GZERO World

Is your money safe? Larry Summers on the banking crisis

Banks, in many ways, are the backbone of the economy, but when Silicon Valley Bank and Signature Bank recently failed, it raised some tough questions about the stability and regulation of financial institutions. On GZERO World, Ian Bremmer and former US Treasury Secretary Larry Summers dive deep into the crisis and explore the complex factors that led to the banking turmoil.

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Ian Explains: Banking turmoil and the panic pandemic
Ian Explains: Banking turmoil and the panic pandemic | GZERO World

Ian Explains: Banking turmoil and the panic pandemic

There’s talk of another surge. We're talking, of course, about…banking.

Much of what’s driving today’s banking drama—resulting in the most significant government intervention since the Great Recession—is a virus more contagious than COVID-19: panic, Ian Bremmer explains on GZERO World.

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The banking crisis, AI & Ukraine: Larry Summers weighs in
The banking crisis, AI & Ukraine: Larry Summers weighs in | GZERO World with Ian Bremmer

The banking crisis, AI & Ukraine: Larry Summers weighs in

The recent spate of bank failures has caused significant turbulence in markets and left investors jittery across the globe, from Silicon Valley to Switzerland. But is this a sign of a systemic banking crisis or of a more fundamental flaw in capitalism? In an interview with Ian Bremmer on GZERO World, former US Treasury Secretary Larry Summers provides an in-depth analysis of the situation.

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Getty Images/Chip Somodevilla

Podcast: Larry Summers breaks down the banking crisis

Transcript

Listen: On the GZERO World podcast, Ian Bremmer and former US Treasury Secretary Larry Summers discuss the recent bank failures that are disrupting global markets and worrying investors worldwide. They discuss whether the current situation constitutes a banking crisis and explore the role of inflation in contributing to the problems. As an inflation expert, Summers provides valuable insights and predictions on the duration of the financial turmoil.

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A graph comparing the US Federal Funds Effective Interest Rate with the year-on-year percentage change in inflation.

Luisa Vieira

The Graphic Truth: US interest rates vs. inflation

All eyes are on the US Federal Reserve, as it is set to announce Wednesday whether it’ll raise interest rates amid the recent banking turbulence.

The Fed’s decision will hinge on what central bankers think is a bigger priority: fighting inflation or stabilizing the financial sector following the recent collapses of Silicon Valley Bank and Signature Bank.

While it could stay the course in its inflation fight with another rate hike, the Fed is coming under growing pressure to ease investors’ anxieties by leaving interest rates be. But doing that risks giving in — temporarily, at least — to lasting inflation. The longer the Fed waits to control rising prices, the worse chance it has to reach its 2-3% inflation target without triggering a recession.

Also, high-interest rates are partly to blame for the recent financial turmoil on both sides of the Atlantic. Right-leaning critics argue that near-zero rates for too long made lending too cheap. Meanwhile, some on the left say that raising rates too quickly made borrowing too expensive, hurting the balance sheets of banks like SVB.

What do you think the Fed’s next move should be? Let us know here.

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