JPMorgan CEO Warns of Deposit Flight as $78,000,000,000 Leaves US Banking System in One Week
There has been a dramatic spike in the number of clients withdrawing their money from U.S. institutions.
New data from the Federal Reserve Economic Data (FRED) system shows that $78 billion was transferred out of U.S. financial institutions between July 5 and July 12.
With large banks investing large sums of money to third-party intermediaries to bring in new deposits, the system was relatively stable for two weeks until the deposit outflow began. With money market accounts paying greater interest rates, banks are under pressure to compete.
According to the Wall Street Journal, JPMorgan Chase CEO Jamie Dimon recently issued a warning to shareholders about the importance of the banking industry responding to customer requests for higher interest rates and preventing additional deposit flights. “We have little wiggle room in pricing, and betas are going up across the board.”
According to Brian Foran, an analyst at Autonomous Research, Dimon’s warning is a “definite curb your enthusiasm moment” for the banking sector after a quarterly earnings spike.
The growth of remote and hybrid work settings has caused concern among US banks about the commercial real estate industry.
According to new research by S&P Global Market Intelligence, the number of U.S. banks that are “overexposed” to commercial real estate loans in accordance with regulatory requirements has increased by 30% in the last year, to 576.
