The post A recession wouldn’t hit US banks all that hard now appeared on BitcoinEthereumNews.com.

US banks are walking into a potential recession with stronger balance sheets, tighter credit standards, and less exposure to financial landmines than they had just two years ago. This unexpected strength isn’t due to smart planning for the current economic disaster. It’s fallout from the chaos of early 2023, when Silicon Valley Bank, Signature Bank, and a few others collapsed and forced the entire banking industry to clean house. According to Bloomberg, that wave of self-preservation is now helping banks handle the messier environment created by tariffs and volatile markets. What triggered the 2023 crisis was the buildup of unrealized losses on government bonds after the Federal Reserve jacked up interest rates in 2022. Investors lost confidence, and deposits fled into higher-yielding alternatives like money market funds. That run didn’t happen because of bad lending—it happened because people didn’t want to leave their money in banks stuck with bonds paying next to nothing. Unlike the 2008 meltdown, where the problem was subprime loans and too much leverage, the solution in 2023 was surprisingly low-key. Most banks just waited. As the ultra-low-yield securities they’d bought during the pandemic started to mature, those paper losses began to shrink. That passive strategy bought banks time and space to reinvest at higher returns. PNC Financial Services Group Inc. said in its first-quarter report that 24% of its bond and swap portfolio will mature by the end of 2026. That will chop $1.7 billion off its unrealized losses. That’s not small change. Banks tighten lending, then return to offense During the cleanup, banks didn’t just sit on their hands. They also slammed the brakes on credit. The Fed’s Senior Loan Officer Opinion Survey confirmed that banks tightened lending rules in 2022 and 2023 at a pace matching the early 2000s and the last recession. While…

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Filed under: News - @ April 23, 2025 11:22 am