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  • Frank Tian

Stay Calm - What happened to banks/consumers

Stay calm.


The message from the SVB CEO was not enough.


It took a series of actions from the US president, the Treasury, multiple regulators and the banking industry to get the US banking system stabilized.


What is the impact on main street consumers?


📌 Interest rate


It is estimated the banking crisis is equivalent to a 100 bps rate increase. Thus consumers can have some breathing room with a slowdown/pause of the rate hike.


The Spring housing market has shown some signs of life.


📌 Access to credit


Banks will be careful to extend credit. This will lead to reduced credit access for marginal borrowers, which has been underway as credit performance is normalizing.


📌 Cost of safety


The safety of the banking system does not come without a cost. Though not directly borne by taxpayers, the FDIC cost will be covered by bank customers.


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