On Tuesday’s broadcast of the Fox News Channel’s “America Reports,” Fox News Contributor Robert Wolf, who also worked on President Obama’s Economic Recovery Advisory Board and Council for Jobs and Competitiveness and was Chairman for UBS Americas and President for UBS Investment Bank, stated that there is “a banking crisis,” and that while “systemically important” institutions are fine, “We’re definitely going to have more issues with the regional banks.”
Wolf said, “Yes, there’s a banking crisis, but it’s not with the money center banks and the systemically important financial institutions like J.P. Chase and Bank of America. We’re definitely going to have more issues with the regional banks.”
He added that “the average American’s going to be fine, because their deposits are safe.”
Wolf further stated that taxpayers aren’t going to be on the hook “because the FDIC is really that — those fees are paid by the banks. Yes, there could be a sense where it’s passed on. Where the average American [is] getting hurt is the regional banks haven’t been paying them sufficient fees on their deposits. They should be making 4%, not 0.5%. So, they’re going to continue to lose deposits, but they’re going to have issues with commercial real estate, and that’s where most of their loans are.”
Wolf added that while the San Francisco Federal Reserve did a poor job supervising Silicon Valley Bank, “we should understand that they changed the regulations both Democrats and Republicans under Trump…they changed it from 100 billion in assets to 250 billion in assets on capital adequacy. So, these banks were all getting less regulation, they had less capital, and they really just stretched their entire assets to try to make more money. First Republic a year ago was trading at 150. Today, all the investors got wiped out, as did the management. That’s bad management, that’s risk, that’s greed, and I think that they deserved to go out of business. So, I’m all supportive of Jamie getting another amazing deal. But I’m glad it’s not hurting the depositors.”
Co-host Sandra Smith then asked, “Okay, not hurting the depositors, but what about in the form of tighter lending standards as a result of all of this? There is great concern that could be the case.”
Wolf responded, “I think that will be the case. I think that a lot of loans on small banks are office lending and commercial lending and they’re going to get hit by that. I also think FICO scores — and there’s some debate going on — but I also think people looking for mortgages and people looking on their credit, it’s going to be tougher, because I think we’re going into an environment where half the people think we’re going into a recession and half the people think we’re going to have inflation staying, so it’s not an easy environment for anyone right now.”
Follow Ian Hanchett on Twitter @IanHanchett
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