Stocks climbed as technology shares rebounded from an earlier selloff. Scaffolding across from the New York Stock Exchange (NYSE) in the Financial District of New York, U.S., on Friday, March 5, 2021. It’s time for the Fed to pull in the reins on stimulus and allow interest rates to rise,” he added. “The Fed’s policy of low rates and massive asset purchases worked well to get out of the downturn, but when you keep extending it you can cause unintended consequences.” “The bubbles today are broader and deeper in a variety of categories, not just housing,” Killinger said. But Killinger is worried about bubbles in many other parts of the economy that threaten the stability of the markets.Īlthough housing prices have surged again, Killinger is more nervous about the fact that 0% interest rates and big bond purchases by the Federal Reserve have sparked a broader mania in other assets, including cryptocurrencies and non-fungible tokens (NFTs), meme stocks, blank check SPAC mergers and exotic exchange-traded funds. Subprime lending, the practice of giving mortgages to people with less-than-worthy credit histories, isn’t nearly as prevalent as it was during the last housing boom. “But the health of the industry is great, earnings are good and oversight is strong. “Regulated banks do have more concentrated market share now so they have to be more careful,” Killinger said. People walk past Washington Mutual Inc.'s headquarters Septemin Seattle. (MS), as well as others that received government bailouts in 2008. That group of institutions also includes Bank of America The good news is that Killinger thinks JPMorgan Chase and other “too big to fail banks” are in much better shape now after laws like Dodd-Frank and the Volcker Rule were put into place in the wake of the financial crisis to make big banks safer. The Global Financial Crisis led to a wave of new federal rules that were designed to strengthen the balance sheets of top banks and ensure that another catastrophe like 2008 could never happen again. Killinger spoke to CNN Business about the similarities and differences between now and 13 years ago. (JPM) for a fire-sale price of $1.9 billion. WaMu was seized by regulators in September 2008 and sold to JPMorgan Chase WaMu was one of several top financial firms to collapse during the financial crisis last decade, but the giant savings and loan with more than $300 billion in assets still ranks as the biggest-ever bank failure. Kerry Killinger was named CEO of WaMu in 1990 and was fired in September 2008 – just weeks before the bank failed as a growing number of mortgage loans went bad. The former CEO of Washington Mutual is worried that another bubble is brewing.
The banking world nearly caved in 13 years ago.
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