Signs Are Mounting That a Debt Crunch is Looming
- Funding crunch complicates the Fed’s decision-making next week
- Lending is shrinking and the money supply is contracting
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Just when it seemed the US regional banking strains were starting to ease, First Republic Bank has leaped back into headlines, reigniting concerns of rising pain in the lending system.
Banks increased emergency borrowing from the Federal Reserve for the second week in a row in a sign of the ongoing stress in the system. Last week, the New York Fed reported that financial conditions in its region had deteriorated sharply.