Al Mayadeen English

  • Ar
  • Es
  • x
Al Mayadeen English

Slogan

  • News
    • Politics
    • Economy
    • Sports
    • Arts&Culture
    • Health
    • Miscellaneous
    • Technology
    • Environment
  • Articles
    • Opinion
    • Analysis
    • Blog
    • Features
  • Videos
    • NewsFeed
    • Video Features
    • Explainers
    • TV
    • Digital Series
  • Infographs
  • In Pictures
  • • LIVE
News
  • Politics
  • Economy
  • Sports
  • Arts&Culture
  • Health
  • Miscellaneous
  • Technology
  • Environment
Articles
  • Opinion
  • Analysis
  • Blog
  • Features
Videos
  • NewsFeed
  • Video Features
  • Explainers
  • TV
  • Digital Series
Infographs
In Pictures
  • Africa
  • Asia
  • Asia-Pacific
  • Europe
  • Latin America
  • MENA
  • Palestine
  • US & Canada
BREAKING
Al Mayadeen's correspondent: The Lebanese Army is continuing its investigations and will later announce any information that does not affect the confidentiality of the investigation
Al Mayadeen's correspondent: It has not yet been determined whether the detainees belong to ISIS or another organization
Al Mayadeen's correspondent: Around 10 people of different nationalities, including Lebanese nationals, were detained
Al Mayadeen's correspondent: The Lebanese army arrested a number of people in the Matn area of Mount Lebanon with possession it has not disclosed
Gaza Civil Defense spokesman: We have strong indications that there are martyrs, injuries, and trapped people in the Salah al-Din area
Gaza Civil Defense spokesman: Citizens should avoid Salah al-Din Street because anyone who approaches it is at risk of being directly targeted
Gaza Civil Defense spokesman: Reality is that there is a very limited retreat of the vehicles, with the occupation forces providing cover undeer fire up to Salah al-Din Street
Gaza Civil Defense spokesman: Claims that the Israeli occupation has withdrawn from areas in the neighborhoods of al-Zaytoun, al-Tuffah, and al-Shujaiya are false
Hamas: The two delegations stressed that any negotiations must lead to the achievement of our people's goals and aspirations, foremost among which is ending the war and the complete withdrawal of enemy forces
Hamas: A delegation from the Hamas leadership, led by the head of the leadership council, Mohammad Darwish, met with an Islamic Jihad delegation, headed by its Secretary-General, Ziyad al-Nakhalah

US banking crisis to worsen if structural problem not addressed

  • By Al Mayadeen English
  • Source: Agencies
  • 22 Mar 2023 15:38
  • 1 Shares
4 Min Read

Former Lehman Brothers executive Lawrence McDonald argues that Russia could benefit from the Us banking crisis, but China will not be able to avoid its impact.

  • x
  • Lehman Brothers employee leaves the building on Wednesday, June 10, 2008 in New York (AP).
    Lehman Brothers employee leaves the building on Wednesday, June 10, 2008 in New York (AP).

Former Lehman Brothers executive Lawrence McDonald revealed, on Wednesday, that 50 more US bank collapses could be underway if the US governemnt does not address structural issues.

Following the collapse of Silicon Valley Bank (SVB) and New York's Signature Bank, which marked a historic failure in the US banking system, many have attributed the collapses to soaring interest rates. It is worth noting that interest rates are still expected to further increase later this afternoon.

When asked about the possibility of more banks collapsing, McDonald said "Yeah, because it's just after the financial crisis, and this all goes back to Lehman," adding  "So Lehman failed and then it forced this too-big-to-fail system, and then, now this interest rate shock to the regional banks is moving hundreds of billions of dollars out of regional banks into the big banks... So you could have another 50 bank failures... unless they fix the structural problem."
 
McDonald said that until Washington bails out banks by obtaining deposit guarantees and the Federal Reserve trims down on interest rate increases, the American financial crisis would worsen and "There's going to be further damage."
 
McDonald explained that in doing so, the federal government would be "taking on bank deposit risk."

The Ex-Lehman Brothers executive argued that the Federal Reserve and its Chairman Jerome Powell did not recognize the risk of constant rate hikes for US regional banks.

McDonald stressed "Powell was on the Hill [two weeks] ago telling us that the banking system was fine... he doesn't understand this like interest rate risk for the regional banks - and it's unconscionable," adding "he [Powell] was either lying or didn't understand what he's done. It's one of the two."

Related News

S&P downgrades US banks credit ratings, shares drop

US Treasury's Adeyemo: Recession looming if US defaults on debt

A US crisis will impact China, Russia?

McDonald said China would not have been able to avoid impact as a result of the US banking crisis since its economy is "very exposed to the European economy and the US consumer, so China doesn't avoid this at all."

The banker argued that since Russia is a "hard asset country" and benefits from increasing gold prices, meaning it would gain from the American financial crisis.

McDonald warned that Washington may be required to present a significantly larger backstop that covers deposits more than $250,000.

US banking sector 'stabilizing' after recent turmoil: Yellen

After the recent failures of Silicon Valley Bank and Signature Bank rattled the industry, the US banking sector is "stabilizing," Treasury Secretary Janet Yellen will state at the summit on Tuesday, according to already prepared remarks. 

A crisis of confidence was triggered by the collapses, with many customers withdrawing their money and depositing it in larger institutions, considered too big for the government not to bail them out if faced with failure. However, "aggregate deposit outflows from regional banks have stabilized" following authorities' moves to shore up confidence and stem contagion, according to Yellen's remarks. 
 
"Our intervention was necessary to protect the broader US banking system," she will say in a speech to the American Bankers Association's Washington DC summit, adding that similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion."

Following SVB's collapse, the US Treasury, US Federal Reserve, and US Federal Deposit Insurance Corporation set out plans to ensure the bank's customers would be able to access their deposits. A similar exception was announced for Signature Bank. 
 
The Fed additionally introduced a new lending tool for banks in an effort to prevent a repeat of SVB's quick demise, and has since launched a drive with other major central banks to improve banks' access to liquidity.

Read more: Rep congressman blames SVB, other banks failure on 'Bidenflation'

  • US Banks
  • Lehman brothers
  • US
  • Banking sector
  • banking crisis
  • SVB collapse
  • Signature Bank

Most Read

Hezbollah SG reveals war details on Al Mayadeen for the first time

Hezbollah SG reveals war details on Al Mayadeen for the first time

  • Politics
  • 8 Jul 2025
Major ambush in Gaza kills 6 Israeli troops, injures dozens

Major ambush in Gaza kills 5 Israeli troops, injures 14

  • Politics
  • 8 Jul 2025
Israeli soldiers are seen in Beit Hanoun ahead of an operation by the al-Qassam Brigades, undated (Al-Qassam Brigades Military Media)

'Israel' on blast as media exposes report discrepancies in Gaza ambush

  • Palestine
  • 8 Jul 2025
Yemen Navy sinks ETERNITY C ship, shares footage of operation

Yemen Navy sinks ETERNITY C ship, shares footage of operation

  • Politics
  • 9 Jul 2025

Coverage

All
The Ummah's Martyrs

Read Next

All
The Freedom Flotilla ship Handala as it departs for Gaza, where it aims to break the maritime blockade at a port in Syracuse, Sicily in southern Italy on July 13, 2025. (AFP)
Palestine

Freedom Flotilla's Handala departs Sicily in bid to break Gaza siege

The container ship CMA CGM Laperouse, left, docks at the Georgia Ports Authority's Port of Savannah, Sept. 29, 2021, in Savannah, Ga (AP)
Politics

US shipbuilding woes deepen as tariffs, outdated policies backfire

Gaza war raises ethical questions for ex-Obama, Biden officials
Politics

Mercenary firm tied to Gaza war crimes hires Obama-Biden PR operatives

'Israel' targets children in Gaza collecting water
Palestine

'Israel' strikes Gaza kids fetching water, blames it on 'malfunction'

Al Mayadeen English

Al Mayadeen is an Arab Independent Media Satellite Channel.

All Rights Reserved

  • x
  • Privacy Policy
  • About Us
  • Contact Us
  • Authors
Android
iOS