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US Banking System Issues Pushing Country Closer to Recession: He Says

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Washington, March 26 – Minneapolis Federal Reserve Bank President Neel Kashkari said problems in the US banking system could have a negative impact on the country’s real estate and construction market, bringing the US economy closer to recession.
“Certainly, it brings us closer now,” he said in an interview with CBS News on the question of whether the US banking problems affecting the country’s construction sector are bringing us closer to recession.
At the same time, Kashkari noted that it is still unknown whether the current difficulties in the financial sector will lead to a large-scale collapse in lending and how much it will affect the economy.

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The banker admitted that despite the constant discussion of the situation with the financial institutions themselves about possible risks, the banking supervisory authority is “not perfect” and can make mistakes.
He concluded by saying, “I am not saying that all the pressures are behind us. I expect this process to take time,” stressing that the banking system is still facing “fundamental challenges” and “regulatory difficulties.”
Problems in the US banking sector began on March 10 after regulators in California shut down Silicon Valley Bank, one of the twenty largest commercial banks in the US. This was the largest bank failure in the United States since the financial crisis of 2008. All SVB-insured deposits were transferred to a separate structure – the National Deposit Insurance Bank of Santa Clara. In addition, the authorities closed the large New York Signature Bank due to systemic risks, and the closure of the crypto-focused Silvergate Bank was also announced.
Contrary to statements by US officials that the country’s banking system remains safe, experts interviewed by the News Agency estimated that the US government would need at least $2 trillion to stabilize it, and another 50 banks may go bankrupt before the authorities solve the structural problem.
In addition, amid the bankruptcy of the SVB, US economists published a study in the Social Science Research Network that uninsured customers’ panic and withdrawal of money from banks threatens 186 credit institutions with problems that may not have enough assets.

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