Fed/ Kashkari: Banking woes are pushing US closer to recession

Minneapolis Fed President Neel Kashkari said the recent stresses in the banking system could push the U.S. economy closer to a recession. The recent stresses in the banking system, which resulted in the failures of Silicon Valley Bank and Signature Bank, will take time to resolve, Minneapolis Fed President Neel Kashkari said in an interview. Kashkari added that those stresses could push the U.S. economy closer to a recession. “We know that there are other banks that have long-term exposure to Treasuries and that have what we call duration risk on their books. We also know that there is a lot of commercial real estate in the banking sector and that there are probably some losses that will be passed on to the banking sector. So it will take time for that to fully sink in,” Kashkari said. Still, the Minneapolis Fed president noted that the banking system has plenty of capital to withstand these stresses. The recent stresses in the banking sector are definitely pushing us closer to a recession. What is unclear to us is how much of these banking stresses lead to a widespread credit crunch. That credit crunch would then slow the economy down,” he said.