The American Banking Crisis Shows Its Effects

Former Goldman Sachs CEO Lloyd Blankfein indicated today that the banking crisis in the United States will accelerate tightening across overall credit policies and lead to a slowdown in the American economy. In an interview with CNN, he stated, "This situation will definitely lead, one way or another, to something resembling an interest rate hike. Banks will have to, as you know, due to tension, pressure, and uncertainty, use their capital to deal with their crisis." He explained, "Banks will reduce lending based on their deposits, and as a result, credit will indeed decline. Fewer loans mean less growth. Therefore, some of the functions of the Federal Reserve related to attempting to slow down the economy will be implemented here (in banks)." Former President Donald Trump's economic advisor and Goldman Sachs President Gary Cohn told CBS News that Federal Reserve Chair Jerome Powell is in a "difficult position."