When the Fed’s out of Options, You are the Last Man Standing

A growing chorus is warning the next stage in the bank crisis could be freezing your bank account to save dying banks. As Luke Gromen put it, they “chain the threater doors shut before lighting it on fire.”

A few weeks ago, flamboyant money manager Hugh Hendry was on Bloomberg warning that continuing floods of money out of bank deposits and into money markets could drive the Treasury and the Fed to *lock* people into their banks, adding, “I would recommend you panic.”

Meanwhile, Izabella Kaminska, a former editor at the Financial Times, tweeted that since we’ve now discovered banks apparently don’t hedge interest rate risk at all — which is now killing them — regulators may conclude the only way to stabilize the banking system is to “bring back bank frictions” — “frictions” as in make it difficult or impossible to withdraw your money.

https://www.profstonge.com/p/next-step-in-the-bank-crisis-locking