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Two converging crises are testing American confidence in their financial well-being.
There’s a banking crisis, which regulatory officials and big American banks very much want you to believe is ending after decisive action over the weekend to take over and swallow up another failing bank.
And there’s a debt crisis, which is becoming more urgent as the US approaches the “X-date” – when it would default – and on which opposing lawmakers aren’t currently talking to each other.
Treasury Secretary Janet Yellen said Monday the X-date could arrive as soon as June 1. But it has been a moving target.
President Joe Biden on Monday called the top four congressional leaders, including House Speaker Kevin McCarthy, to discuss raising the debt ceiling, according to two sources familiar with the matter.
Americans woke up Monday to news that a third US bank, First Republic, had failed. Having catered to wealthy coastal clients, First Republic had been on the edge of collapse since March, when two other regional banks failed.
First Republic Bank was taken over by the Federal Deposit Insurance Corporation on Monday, and most of its assets were sold to JPMorgan Chase. The culmination of government regulators and the banking industry came together to protect creditors and maintain confidence in the banking system as a whole without exposing taxpayers to an unpopular bailout.
“Nobody is crying over First Republic Bank,” said Christine Romans, CNN’s chief business correspondent, during an appearance on “CNN This Morning.”
“But you don’t want chaos and turmoil to spread to the rest of the banking system,” she added, explaining the takeover.
The former Treasury Secretary Larry…
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