Wellington Management
March 20, 2023
Tracing our history to 1928, Wellington Management is one of the largest independent investment management firms in the world. We serve as a trusted adviser for institutions in more than 60 countries.

Tight money: Banks feeling the squeeze of higher rates

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Friday, March 10, 2023 witnessed the collapse of the Silicon Valley Bank Financial Group (SVB), the second-largest bank failure in US history after the demise of Washington Mutual during the 2008 financial crisis. Days later, two other banks followed suit, raising concerns about contagion risk across the banking sector. Not surprisingly, global market volatility has spiked amid the turmoil. 

The bank failures highlight the unintended consequences of today’s tighter US financial conditions in the wake of Fed interest-rate hikes over the past year or so. As such, some observers are bracing for a systemic liquidity crisis and potential “feed-through” damage to the broader economy. To help prevent that scenario and boost public confidence, the Fed and the FDIC have taken decisive steps, including the launch of new liquidity facilities.

The situation remains highly fluid and continues to evolve rapidly, with risks and outcomes still very uncertain as of this writing. In the meantime, to help you understand and navigate this landscape, we have compiled a curated collection of timely insights from our investors and other experts.

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