Expert says financial markets have settled down since stunning bank failures

WASHINGTON (TND) — First Citizens Bank is buying $72 billion of Silicon Valley Bank's assets after a stunning collapse that shook financial markets.

Former White House economic adviser Steve Moore joined The National Desk’s Jan Jeffcoat Tuesday morning to discuss the developments.

“We’re starting to see some consolidation in the banking industry as a result of what's happened in recent weeks that started, of course, with Silicon Valley Bank failing. When we talked last week, you know, there was a very real fear of widespread contagion of bank failures, but now it looks Jan like maybe we've gotten over that hump.”

He says markets have settled down somewhat but it's important for people to realize why some banks have found themselves in trouble.

“As we discussed last week, there have been nine rate increases by the Federal Reserve, the federal funds rate, about a year ago, the federal funds rate was 0.5%. Now it's up to 5%. That's a gigantic increase in interest rates, and it caused a lot of financial stress for these banks," Moore said.

Whether or not the Fed will continue to raise rates is an "open question," he says, but pointed to high inflation as the driving factor.

You can watch the full interview below: