Banks Rebound (But Doubt Remains)

Banks like First Citizens and First Republic Bank saw their shares rebound on Monday morning two weeks after the largest U.S. banking collapse since the global financial crisis. But some are saying we aren’t out of the woods yet.

First Citizens announced on Monday that it agreed to buy Silicon Valley Bank’s deposits and loans from the Federal Deposit Insurance Corp. Following this announcement, shares of First Citizens rose more than 40% after markets opened.

Meanwhile, shares of First Republic went up by 25% in premarket trading on Monday after a consortium of banks gave the struggling bank a $30 billion lifeline. Following the sudden collapse of SVB and Signature Bank, it originally looked as though First Republic would be next, as its stock price had fallen nearly 62% over the course of trading on March 13.

These moves suggest that the banking crisis may be coming to a close in the U.S. But not everyone is bullish.

In an interview with CBS’s “Face the Nation,” Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said that the banking crisis could tip the U.S. towards a recession.

“It definitely brings us closer right now,” Kashkari said. “What’s unclear for us is how much of these banking stresses are leading to a widespread credit crunch. And then that credit crunch, just as you said, would then slow down the economy.”

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For more news, information, and analysis, visit the Active ETF Channel.