How much longer will America’s regional banks hold up?

of story is unfolding in the banking system? At first glance it would appear to be a tragic drama. In the past fortnight, four banks have met their end: two crypto lenders, the dominant bank in Silicon Valley and most recently a global systemically important bank. There have been 11th-hour interventions to protect customers, the creation of emergency-lending facilities and a marriage between two giant rival firms. But look again and perhaps it is a science-fiction tale. Thomas Philippon, a professor of finance at New York University (), is experiencing the vertigo of time travel. “It really feels like we are back in the 1980s,” he said at a recent talk. In that decade, high inflation prompted extreme monetary tightening, which was meted out with enthusiasm by Paul Volcker, chairman of the Federal Reserve. This undermined the health of “savings and loans” banks (&s), consumer-savings institutions also known as “thrifts”, which mostly lent long-term fixed-rate mortgages. They faced a cap on the rate they could pay on deposits, which led to flight. And they held fixed-rate assets. When interest rates rose, these mortgages lost a considerable amount of value—essentially wiping out the thrift industry’s net worth.