Possibility of Bank Contagion Lingers

Possibility of Bank Contagion Lingers

First Republic stock down 65% amid fears of regional bank contagion 


Treasury yields are falling as depositors fleeing banks seek a safe haven.  The demand for US Treasuries is driving up the bond prices, thus reducing the yields.  

Two things are necessary to restore confidence in banks.  One is to remove the $250,000 limit on insured deposits.  This limit is of ancient lineage dating from when $250,000 was real money.  The other is to re-separate commercial deposit-based banking from investment banking.  The repeal of the Glass-Steagall Act in 1999 is the cause of the financial crises in the 21st century.  Can economists and the neoliberal economists face up to their mistake?


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