US Federal Reserve will be mindful of the banking turmoil of March as it meets this week
«We don't want an asset that doesn't come with a full wallet,» Rollins said, referring to a trend since the crisis where banks want customers who want loans to also bring them their deposits. «We know that we're going to continue to be fighting for the dollars.»
Rollins' southeastern regional bank is not alone.
Interviews with half a dozen regional bank executives and economists show the March banking crisis has had a lasting impact on the regional banking industry and the economy.
The upheaval likely tightened credit conditions faster and beyond what the Federal Reserve's rate hikes alone had done until then. And while its effect has not been as severe as some had feared, there still is a risk.
Taken together, the lingering effects of the crisis complicate the U.S.
Federal Reserve's calculus as it walks a fine line on interest rates, increasing the chance it might over-correct.
The Fed, which meets this week, has previously said it is monitoring the conditions in the banking sector.
Mark Zandi, chief economist at Moody’s Analytics, said the muted impact of the crisis was perhaps «one of the reasons why the economy is navigating things more gracefully than many had feared.» But, he added, «The script is still being written.”
In April, Zandi had forecast that the economic drag from the banking crisis could have the same effect as a 50 to 75 basis point increase in the federal funds rate. He estimated so far it had been about 10-20 basis points but warned it may still be early innings.
Torsten Slok, chief economist at Apollo Global Management, said the banking crisis had „a magnifying effect“ on the Fed's tightening but its full impact would come with a lag.
His model shows it could add up to a 1.5% drag on U.S.
