Fed Warning Signs Point to Growing Troubles for Smaller Banks
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The Fed's statement excluded previous language that "The U.S. banking system is sound and resilient," indicating issues in the banking sector.
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Recent bank failures like Silicon Valley Bank have spooked depositors and hurt smaller community banks more than big banks.
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Smaller banks hold more commercial real estate loans, which are risky right now amid rising rates and falling demand.
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Top megabanks like JPMorgan and Bank of America saw earnings rise 11% in 2023 while smaller banks' income dropped.
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The Fed's lack of reassurance about the banking system's soundness suggests trouble could spread from banks to the wider economy.