Credit rating agency Moody’s says the outlook for the US banking sector as a whole has worsened. Two banks, Silicon Valley Bank and Signature Bank, collapsed over the weekend as customers panicked and withdrew their money. According to Moody’s, other banks could suffer from customers looking to store their balances elsewhere.
The outlook for the U.S. banking system is now “negative,” according to Moody’s, while it was previously “stable.” This means that a credit rating downgrade is possible in the future.
The Federal Reserve, America’s central banking umbrella, made emergency loans available as collateral against certain bonds after the turmoil surrounding US banks. But according to Moody’s, the risks aren’t over yet. These are especially large for banks that have invested a lot of money in bonds whose value has fallen due to high interest rates. Even though many business customers or account holders have a large portion of their assets uninsured, this can put pressure on banks as they withdraw money as a precaution.
Silicon Valley Bank went bankrupt on Friday after a bank run that saw account holders withdraw $45 billion in assets. Control of Signature Bank in New York was taken over by the government on Sunday as customers here also came in large numbers for loans. The New York state financial regulator said it had lost confidence in Signature Bank directors because they could not share reliable data.
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