BlackRock CEO says the financial sector is open to a slow crisis- Larry Fink commented that the financial sector is open to a slow crisis.
- Fink added that more shutdowns would follow the fall of the SVB.
- The CEO of BlackRock (NYSE:) stated that the current turmoil is the price of a decade of easy money.
Larry Fink, CEO of investment management major BlackRock, commented Wednesday that the recent debacle of state-leased commercial bank Silicon Valley Bank (SVB) has posed the threat of a “slow-rolling crisis” for the US banking sector, “with more seizures and closures to come.” “
In a letter to investors and CEOs, Fink warned that inflation will continue and interest rates will continue to rise, making it more likely that more financial institutions will close.
Interestingly, the CEO warned that banking turmoil could worsen even after the fall of SVB, commenting that the current turmoil in the financial sector is the “price of easy money” including more than a decade of low interest rates.
Adding to his statements, he stressed that the damage is very widespread, quoting:
Is the domino starting to fall? It is too early to know the extent of the damage.
Significantly, Fink expected banks to cut back on lending, prompting more companies to turn to the capital market. He added that such a scenario would create better opportunities for investors and asset managers.
However, he reminded everyone that the financial industry will experience a “liquidity mismatch” after the regional banking crisis, prompting some asset holders to increase their exposure to high-yielding investments, which are not easy to trade.
In addition, Fink identified some other risks that the financial system should worry about, including geopolitical tensions and global fragmentation. He said these factors will severely affect the industry as inflation persists and investor returns decline.
Beyond the Financial Sector Open to Slow Crisis, BlackRock CEO Says Debuted in Coin Edition.
