Rate hikes by the Federal Reserve are to blame for bank failures in the U.S., according to business analyst Liz Peek.
"Why are banks failing? Because of the Fed rate hikes. What is the Fed poised to do tomorrow? Hike rates again. It is almost unimaginable to me," she told Fox Business anchor Elizabeth MacDonald during the May 3 edition of "Evening Edit."
Peek pointed out that three of the four largest bank failures in U.S. history had been marked by the Fed's continued rate hikes. She commented: "We have never ever had [a] financial shock [before], such as bank failures. So yes, we have a problem. All these banks have a lot of underwater assets and that's the problem here."
According to MacDonald, credit rating companies Moody's and Fitch have already warned of another U.S. debt downgrade. In response, Peek mentioned that it would be "more than embarrassing" if the Biden administration was hit by this downgrade.
Peek, a Fox News contributor and columnist, added that Americans have been witnessing an unprecedented rate hike response from the Federal Reserve since last year. She pointed out that it was too abrupt and the banks were not able to adjust. The analyst expressed belief that while big banks are not vulnerable at this time, some commercial real estate loans are going to go bad.
The "Evening Edit" host ultimately remarked that the the American family will be the one to bear the heaviest burden during a banking crisis and debt downgrade crisis. She added that 401K retirement, pension and savings accounts are already taking hits. The clients are also paying higher bank fees due to the bank failures, added MacDonald.
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Government may not be ready for more bank failures
MacDonald also talked about the unlimited spending of President Joe Biden's administration and its push for the suspension of the debt limit without conditions. She also cited reports of trading desks being concerned that the White House and Congress are not ready for more possible bank failures. The host also noted that regional banks took hits a day after financial giant JPMorgan Chase took over the now-collapsed First Republic Bank. (Related: More bank failures coming? FDIC takes control of First Republic Bank after second-biggest collapse in nation's history.)
Rep. Beth Van Duyne (R-TX), a member of the House Ways and Means Committee, joined MacDonald's program to discuss the matter.
Van Duyne agreed with the host that the banks are already stretched thin. The congresswoman pointed out that the problem was the bank's zero percent interest business model, adding that these banks did not make corrections when they should have.
She also mentioned that the problem is a direct result of the Biden administration's policies as shown by the extraordinary amount of spending. Moreover, Van Duyne noted that the Biden administration was lying when it claimed that "inflation was transitory."
The Texas representative said Americans are now seeing banks going out of business and this is going to continue. Van Duyne also agreed with the banks' remarks that there won't be many white knights like JP Morgan to come in and save the day the next time.
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Watch Elizabeth MacDonald on "Evening Edit" discussing the failure of banks across the United States.
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