The head of the FDIC, Jerome Powell, Janet Yellen, and other financial heavy-hitters met for an emergency closed-door meeting over the weekend, alarming some market participants. While no details were given about what was said, there is speculation that the meeting was called due to concerns over Deutsche Bank, which made the headlines due to debate over its obligation to pay a $14bn fine. Many are now speculating over possible government intervention, however, Yellen stated that the big banks are in a strong financial position, whilst pledging ample liquidity and backing up depositors.
—
Janet Yellen Holds Emergency Meeting with Financial Officials
Financial officials, including Janet Yellen, Jerome Powell, Gary Gensler, and others held an emergency meeting that wasn’t planned, on April 12, 2019. This meeting is closed to the public, and officials released their statement as the market closed. It’s important to understand what was discussed in this meeting as it can affect the overall market and cryptocurrency.
No Need to Worry About Banks – For Now
Reports from the meeting state that Janet Yellen and Jerome Powell agree that the banks are fine and the public should have faith in them. The Federal Reserve will provide plenty of liquidity and stand behind depositors. Not all depositors will be backed up, but most will be as long as their bank can’t cause contagion. However, if a bank can cause contagion, the government will back it up, which causes concern among people wondering if their deposits are insured.
Emergency Meeting and What It Could Mean
When there’s an emergency meeting, it means everything may not be okay in the finance sector. Though officials are saying most banks are fine, they’re also not telling us what’s going on. It’s wise to be ready in case of a market drop, and keeping cash on hand could be wise. You don’t know where something is going to collapse and the government steps in, so having liquidity is important.
Market Discount Opportunities
A market drop could offer discounts on some assets, which might be a getting time to buy. During times of volatility, assets can be bought at lower prices which could be a potentially smart move. Be ready and have liquid assets on hand for potential opportunities.
Federal Intervention in Commercial Real Estate Market
The commercial real estate market has seen a lot of movers, with businesses leaving cities and moving elsewhere. Those left behind the banks are stuck with the properties, and they’re expected to sell them to avoid holding them. This could lead to a fire sale, meaning there’s no liquidity currently in the system. The All-In Podcast hypothesizes that the federal government will likely invest trillions in these commercial buildings.
Possible Market Interventions
Last week alone, the Federal Reserve balance sheet showed $100B in gains – this could indicate an upcoming market intervention. Experts believe that the government will likely fund these commercial buildings, and this will lead to more printing. Investors should keep a close eye on what’s happening in the market and be ready to act when the timing is right.
