The American Financial System: Banks are Asking for Money

Abstract

The paper reviews the causes and peculiarities of the almost simultaneous bankruptcy of four iconic American banks in their own way. While the first three banks specialized in serving customers from very specific segments of the financial market (crypto-exchanges, venture capital), the fourth is a traditional American bank. It is shown that the trigger for the bankruptcy of the banks in question was a sharp increase in the Fed’s key rate. However, the true cause of these bankruptcies is the loose monetary policy pursued by the financial regulator over the past decade and a half. The ultra-low key rate contributed to the formation of insufficient quality assets and liabilities in the U.S. banking system. The poor asset quality showed up at the first signs of a tightening of monetary policy. The paper proves that the American regulator has no easy solutions to this problem.