“There is a little bit of a tendency to kind of breathe a sigh of relief on mornings like this,” David Hunt, chief executive of $1.2tn asset manager PGIM, told Milken attendees digesting the First Republic rescue. “Actually, we’re just starting the implications for the US economy.”
Rishi Kapoor, chief executive of Bahrain-based Investcorp, said there was “no doubt that the second- and third-order effect on the banking sector ... is going to cause constraining financial conditions”. Meanwhile, Kristalina Georgieva, head of the International Monetary Fund, blamed “complacency” for the US bank failures. “We know there was unnecessary deregulation ... and now we saw the price to pay. We saw supervision has not been up to par.”
However, some speakers at the conference said the turmoil had demonstrated the overall resilience of American banks. “When you take a step back and look at the structure of the US financial system, it’s incredibly sound,” said Citigroup chief executive Jane Fraser.
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