Week of 03/13-03/17 Bank closures, fear lingers as we approach the Federal Reserve policy meeting

We started the week with the continuation of the downward momentum created by the SVB bank closure, but the market quickly turned around as Biden announced all deposits will be secured in order to increase confidence in the banking system. This comes after depositors lost access to their money due to the bank closure and were only going to be up to 250K by the Federal Deposit Insurance Corporation (FDIC). Fear still remains as both the Silicon Valley Bank and Signature Bank both closed this week. To make matters worse, First Republic bank lost a third of its value as other regional banks like PacWest and Western Alliance lost close to 20%. As the government seeks solutions for the bank crisis, an emergency package of $30 billion dollars is being funded by major banks (JPMorgan Chase, Bank of America, Citigroup and Wells Fargo) to help First Republic bank with $5 billion each. Goldman Sachs as well as Morgan Stanley are also helping with $2.5 billion each and five regional banks are also adding $1 billion each. This type of actions is what ignites fear to investors as the banking system navigates with uncertainty. The Fed has a tough decision next week to either keep fighting inflation by raising interest rates or pause/limit interest rate hikes to help the banks during this crisis.