Today, JP Morgan Chase took over First Republic Bank after an unsuccessful attempt to keep FRB open. Although the banking sector's problems are not solved yet, this buyout destabilized a broad collapse. With the Fed presumably increasing the interest rates by a quarter percentage point again, financial stability runs a big risk. Banks will start implementing stricter credit conditions to minimize risk, which will affect consumption and small and medium-sized businesses. Policymakers believe that this is the early stage of chronic banking stress, with many small and mid-size banks looking to avoid SVB's and FRB's fallouts.
This will put pressure on the Fed to halt their interest rate hikes even though inflation is high. Labor Department's non-farm payroll is expected to report a 180,000 growth for April, down from 260,000 in March. Wage reports and their impact on inflation will be key for the Fed to take less aggressive policies, in the event of softening wages.
On the verge of a recession and a potentially bigger banking crisis, what are some measures that day-to-day citizens can take to diversify risk if their money is presumably not safe?
https://www.cnbc.com/2023/05/01/the-first-republic-deal-has-come-at-a-crucial-point-for-the-markets-and-economy.html
It's very interesting to see how larger banks, also known as "too big to fail," are becoming even larger. I would say its not a characteristic of a healthy banking system, and I wonder which bank will be the next in line to collapse and be acquired by a larger one for a pretty discounted price.
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