The predicament facing the banking system has become front and center, and the Fintwit is having a field day discussing the crisis.
On Saturday, billionaire entrepreneur and tech CEO Elon Musk commented on a tweet by financial blog Zero Hedge. The blog had shared a series of charts underlining the importance of small and medium banks, which have been most impacted by the recent banking crisis.
The charts showed that small/medium banks account for about:
- 50% of the commercial and industrial lending in the U.S.
- 60% of residential real estate lending
- 80% of commercial real estate lending
- 40% of consumer lending
The tweet raised the specter of another great depression if the Fed does not contain the regional bank collapse.
In response, Musk said, “This is a serious risk.”
This is a serious risk
— Elon Musk (@elonmusk) March 18, 2023
Over the weekend, the CEO of Tesla (NASDAQ:TSLA) also offered a couple of solutions after Y Combinator co-founder Paul Graham shared a Washington Post story about the “terrifyingly fragile” condition of several banks.
He suggested that the Federal Deposit Insurance Corporation do “unlimited coverage” of deposits to prevent bank runs and that the Treasury stop issuing “ridiculously” high-yield bills that make parking money in low-interest savings accounts unviable.
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