BlackRock boss fears ‘elongating crisis’ for US regional banks
Larry Fink, CEO of American asset management giant BlackRock. Michael M. Santiago/GETTY IMAGES NORTH AMERICA/Getty Images via AFP
Larry Fink castigates the sudden rise in rates to fight inflation and believes that it is the “price to pay for years of easy money”.
It is still too early to know how the banking status but it is possible that the American regional banks find themselves in a “lingering crisis“Warned Larry Fink, boss of the American asset management giant, on Wednesday. BlackRock. The sudden rise in rates designed to fight inflation after years of very accommodating monetary and budgetary policies is the “price to pay for years of easy money“, he says in his annual letter to investors. This ascent has in passing exposed “cracks in the financial system», which led to the failure of SVB and two other banks.
“It is still too early to know the extent of the damage.“says the manager. “The response from regulators has so far been swift and decisive action has averted contagion risks“. But when the Fed has tightened policy in the past, it has sometimes led to “spectacular financial failures“, like the crisis of the American savings banks (Savings and Loans) which “eternalizedin the 1980s and 1990s and led to the bankruptcy of more than 1,000 establishments.
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“We don’t know yet if the consequences of easy money and regulatory changes will ripple through the entire U.S. regional banking sector (as in the savings bank crisis), with more foreclosures and closures to come.“warned Larry Fink. For him, it seems in any case already “inevitable» that some banks should reduce the amount of loans they grant in order to strengthen their balance sheets and that capital requirements be tightened.
