Following the mass withdrawals from small banks in the spring of 2023, the future of smaller financial institutions was unclear. To help you understand what is going on in the sector and what we expect to happen in the future, our highly-experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest...
Deposit outflows from small and midsize banks have stabilized. Depositors seem less concerned with losing uninsured money now that the FDIC (Federal Deposit Insurance Corp) has stepped in to insure all deposits at two banks: Silicon Valley Bank and First Republic Bank. Instead, depositors want higher returns.
Via money market accounts and other fixed-income instruments, savers have access to beefy and low-risk rates of return well above the yield on bank-held deposits. Note that banks are seeking fewer cash infusions from the Federal Reserve. Borrowing from the central bank’s emergency facilities has stabilized recently, while short-term borrowing from the Fed has returned closer to normal levels.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Still, there are many signs of rising anxiety about banking conditions among lenders. Recent surveys of senior loan officers show a sharp tightening of lending terms. The expectation of a slower economy and labor market has forced lenders to set aside funds for potential loan losses. Lenders will also pull back from riskier products and markets, restricting consumer credit.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
Read more
-
Cord Cutting Could Help You Save Over $10,000 in 10 YearsHow cutting the cord can save you money and how those savings can grow over time.
-
The '8-Year Rule of Social Security' — A Retirement RuleThe '8-Year Rule of Social Security' holds that it's best to be like Ike — Eisenhower, that is. The five-star General knew a thing or two about good timing.
-
Blue Collar Workers Add AI to Their ToolboxesThe Kiplinger Letter AI can’t fix a leak or install lighting, but more and more tradespeople are adopting artificial intelligence for back-office work and other tasks.
-
America's Surprising Strengths in Manufacturing and ExportsThe Kiplinger Letter Despite common perceptions that the U.S. doesn't build things anymore, American factories are still hard at work. A special report from The Kiplinger Letter.
-
Tax Rule Change Could See Millions Lose Health InsuranceThe Kiplinger Tax Letter If current rules for the health premium tax credit (PTC), a popular Obamacare subsidy, aren't extended, 3.7 million people could lose their health insurance.
-
Travel Trends You Can Expect This SummerThe Kiplinger Letter Domestic trips will trump foreign travel amid economic uncertainties, though some costs are down.
-
AI Goes To SchoolThe Kiplinger Letter Artificial intelligence is rapidly heading to K-12 classrooms nationwide. Expect tech companies to cash in on the fast-emerging trend.
-
The Economic Impact of the US-China Trade WarThe Letter The US-China trade war will impact US consumers and business. The decoupling process could be messy.
-
What DOGE is Doing NowThe Kiplinger Letter As Musk's DOGE pursues its ambitious agenda, uncertainty and legal challenges are mounting — causing frustration for Trump.
-
A Move Away From Free TradeThe Letter President Trump says long-term gain will be worth short-term pain, but the pain could be significant this year.
