Commentary
The market experienced a complete change of landscape in March from a very bullish outlook of no recession to a severe crisis within two to three weeks. While a particular bank run is often unpredictable, the backdrop that causes it is not. Two weeks ago, I argued that this time was not a specific bank problem but a systematic one. Now the stories have become clear that the few failed banks were quite sound in asset holdings (such as sovereign bonds) and liquidity. By contrast, the earnings potential of these failed banks worsened significantly.
