Bank / Credit Union

Financial expert Michael Milken: Banking collapses present 'no financial crisis'

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May 3, 2023

The recent collapse of Silicon Valley Bank, Silvergate Bank and First Republic, with the later purchased by JPMorgan Chase this week, has raised questions about a potential financial crisis. However, Michael Milken, financier and chairman of the Milken Institute, doesn't believe the events represent a banking crisis, but rather that banks are making basic mistakes, according to a Yahoo! Finance report.

"This is not the 1980s, it's not the 1970s, it's not the Great Financial Crisis," Milken said at the 2023 Milken Institute Global Conference. "But it's a lesson again that we need to match those that buy long-term assets with those that have long-term liabilities like pension funds, insurance companies. And that our financial institutions cannot run a mismatched book of short-term liabilities and long-term assets."

He added that "the banking system itself has built up substantial equity and safeguards. So this isn't really an issue for the overall banking system."

Fellow analysts agree, including David Chiaverni, at Wedbush, who stated, "While this [deal] represents yet another regional bank failure in the last month or so, we do believe that this should be an idiosyncratic situation and not lead to bank contagion." Jane Fraser, CEO of Citi, believes the financial system has stabilized following JPMorgan Chase's acquisition of First Republic Bank, according to the Yahoo report.