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Signs the banking crisis is over

Bank earnings this week, including reports from Bank of America (BAC), Goldman Sachs (GS) and especially smaller regional banks, will give investors a better indication and more definitive signs on whether the recent banking crisis is over. Better-than-expected results in the past week from bellwethers like JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) calmed the market to a large extent, but there is still reason for caution.

Yahoo Finance spoke to several banking experts who gave their assessment on the current environment. American Banker’s John Heltman says it’s too early to call the crisis over before we see quarterly results from more mid-size regional banks. Quant Insight Head of Analytics Huw Roberts says he feels the crisis is largely contained and credits the Fed for restoring order. ‘I think you have to give credit to the Fed and other authorities for the speed at which they moved,’ he said.

Key video moments:

00:00:13 banking crisis 'feels contained'

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00:00:40 why deposits are 'leaving the system'

00:00:55 moving from crisis to stabilization phase

Video transcript

INES FERRE: Is the banking crisis over?

HUW ROBERTS: I hope so. It does feel like it's largely contained. And although they have their detractors, I think you have to give credit to the Fed and other authorities for the speed at which they moved. I think maybe the debate now has probably moved on to the extent that we're seeing the big bank, kind of small regional bank divide open up. And that's what this week's earnings will be so critical on.

BEN LAIDLER: We're not saying there's a banking crisis, but we have lived through a scare. So I think deposits are leaving the system. They're being attracted into money market funds by the 5% rates that are on offer versus the sub 1% you get at your bank. That predates SVB and the recent banking scare. So I think that's going to continue.

MICHAEL ROSE: We think we are moving from the crisis phase to the stabilization phase. And I think as we move into earnings season, what we're going to see is trends that we expected to envelop as the banking crisis did play out, which is deposits, deposits, deposits, meaning flows, deposit flows, deposit costs, and the mix of deposits, changing from those that are non-interest bearing to interest bearing.

BRIAN SOZZI: Do you think the crisis is over, or this might flare up again over the summer?

JOHN HELTMAN: I think it's too early to say with any definitive knowledge. The place to watch is the midsized regionals, the PNCs, the M&Ts.