Yesterday, Federal Reserve Chairman Jerome Powell reassured Americans that the banking system is sound. He said, “There were three large banks really from the very beginning that were at heart of the stress we saw in early March” (SVB, Signature, First Republic) and “Those have all now been resolved.” But shortly afterward, Beverly Hills-based PacWest Bancorp announced that it was “weighing strategic options” and its shares plunged by over 46%.
As of this writing early Thursday morning, fears about banks had driven the Dow down over 250 points. In an attempt to calm markets and prevent a bank run, PacWest insisted that, “Our cash and available liquidity remains solid and exceeded our uninsured deposits.”
The market plunge wasn’t helped by news from Powell that the Fed was raising interest rates another 25 basis points to fight inflation. That’s the 10th consecutive interest rate hike, and the first time the key rate has been over 5% in 16 years.
I wish I had some better news or some good financial advice for you, but right now, it’s all I can do to resist posting that clip of Leslie Nielsen from “The Naked Gun” standing in front of an exploding fireworks factory and saying, “Move along! Nothing to see here!”