America's worst banking crisis since the collapse of Lehman Brothers is pushing the U.S. economy closer to a recession, a regional Federal Reserve president has warned. On Sunday, Minneapolis Fed boss Neel Kashkari predicted that the combination of depreciating long-dated securities held by banks—often Treasury and government agency bonds—as well as loans granted to the troubled office real estate market would likely trigger further losses in the financial sector. And yes, that has recession ramifications.
Capital markets have been freezing the banking sector's perceived weaker regional lenders out of the credit system, he argued, starving them of access to liquidity and increasing the chances that economic activity would shrink, potentially to the point of a recession that, in the words of the Wall Street Journal’s Nick Timiraos, has been predicted to be about six months away for well over a year now.
