Tom Ozimek on credit tightening at small banks

Small banks lost $120 billion in deposits in the week that ended on March 15, a record drop.  Allianz chief economic adviser and noted economist Mohamed El-Erian wrote in a recent op-ed in Bloomberg that if deposit outflow from regional banks continues, this spells trouble. 

“This could become a big issue for local communities, regions, and sectors that fear that their access to loans will be curtailed because their traditional banking partners will have to shrink their balance sheets after losing deposits,” he wrote. 

El-Erian believes that the bank turmoil will slowly infect the real economy by squeezing access to credit.

~ Tom Ozimek, "Bank Turmoil Could Spread to Real Economy, Squeezing Credit Supply, Experts Warn," The Epoch Times, March 30, 2023