Webinar Recap | Rising Interest Rates and the Bank Crisis
April 04, 2023 | BY Our Partners at Equinum Wealth Management
Equinum Wealth Management, a Roth&Co affiliate, hosted a webinar yesterday about rising interest rates and the bank crisis. Aron Pinson, CFA, Founder and Chief Investment Officer at Equinum, discussed the recent events of the bank failures and the importance of staying on top of these developments to make informed decisions with your money. Click here to watch the recording, or read a brief summary below.
The intense rise in interest rates has caused great paper losses on bank balance sheets. Had these banks held to maturity, these wouldn’t present any issues. But these losses were accompanied by excessive withdrawals, forcing these banking institutions to sell their holdings at a loss. That – along with the flame-fanning by some Silicon Valley elite – sparked a mass fear that people could say goodbye to their hard-earned dollars.
Though many believe that the Treasury, along with the FDIC insurance program, will cover any future losses, there are no guarantees. There are no style points for keeping extra uninsured funds at institutions where there is limited upside and potential downside.
At the same time – as Pinson briefly discussed – the potential stress area on banks stemming from commercial real estate. While this can prove to be a huge liability for many regional banks, there are still many unknowns as to how this will play out.
Either way, this newly added stress to the banking system has in itself added a huge restraint factor to the economy. Like Pinson mentioned in the webinar, as the news of the banks were unfolding, the expectation for future rate hikes came down drastically, and now the futures market indicates that the Fed is more likely to cut rates – multiple times – by the end of the year.
The biggest takeaway from it all?
It is crucial to work with a qualified team to ensure you’re making the best decisions for your money. Your financial team of experts needs to provide you with insights and advice tailored to your individual needs and goals. The economic landscape is ever-changing, and it’s important to stay on top of the news and events in the financial sphere.
Feel free to reach out to Equinum Wealth Management with any questions at [email protected].
The Roth&Co Team
This material has been prepared for informational purposes only, and is not intended to provide, nor should it be relied upon for, legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.