Regulations were also partly to blame, he said, noting that required stress tests failed to take into account rapidly rising interest rates. He added that rules on capital requirements had encouraged banks to load up on government bonds, which have dropped in value as rates have risen and threatened to saddle lenders with large losses like the one that rattled depositors at Silicon Valley Bank.
Inflation F.A.Q.
What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.
What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.
What causes inflation? It can be the result of rising consumer demand. But inflation can also rise and fall based on developments that have little to do with economic conditions, such as limited oil production and supply chain problems.
Is inflation bad? It depends on the circumstances. Fast price increases spell trouble, but moderate price gains can lead to higher wages and job growth.
How does inflation affect the poor? Inflation can be especially hard to shoulder for poor households because they spend a bigger chunk of their budgets on necessities like food, housing and gas.
Can inflation affect the stock market? Rapid inflation typically spells trouble for stocks. Financial assets in general have historically fared badly during inflation booms, while tangible assets like houses have held their value better.
“This is not to absolve bank management — it’s just to make clear that this wasn’t the finest hour for many players,” Mr. Dimon wrote. “All of these colliding factors became critically important when the marketplace, rating agencies and depositors focused on them.”
Banking regulators faced skeptical questioning at congressional hearings last week, prodded on why they had not done more to stop Silicon Valley Bank from imploding.
President Biden has called for increased scrutiny of banks with $100 billion to $250 billion in assets, like Silicon Valley Bank. The Federal Reserve is investigating how it failed to stop vulnerabilities at the bank, which could result in tighter regulation and supervision.
Mr. Dimon, who has long taken issue with some of the complexities of financial regulations imposed after the 2008 financial crisis, cautioned against “knee-jerk, whack-a-mole or politically motivated” rule-making in response to the current tumult.
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