SMM

Weakness within the US banking system has begun to spread, with otherwise healthy banks set to suffer and credit availability contracting across the economy, said Mohamed El-Erian, chief economic adviser to Allianz.
He noted in an interview that there has been another round of volatility in the banking sector recently, with renewed concerns following the recent bankruptcy of First Republic Bank and its acquisition by JPMorgan Chase. This is the third bank failure in two months and is the combined result of the Fed's aggressive tightening cycle, poor financial regulation and management, Elian said.
He argued that the banks are entering the second phase, and banks that are not particularly badly managed suddenly become vulnerable as well. 
This runs counter to the views of Fed Chairman Jerome Powell. He still insisted at a news conference earlier that things had improved in the US banking sector and that the worst is over. In response, Erian mocked that Powell's comments could end up damaging the Fed's credibility and adding to the bank's poor communication record.
In fact, this is not the first time that Erian has warned about the banking crisis. He has previously said that the Fed should address the banking turmoil, adding that the risk of further bank failures has not been eliminated and that it could undermine the extension of credit into the economy.
In his latest interview, Erian also said that the credit environment had begun to tighten and that the risk of further contraction was rising as the banking crisis continued to fester.
He warned that the US would be in a real banking crisis if banking problems triggered widespread financial contagion.
This would be a challenge for regulators, he noted, as controlling stress is critical. The US could also take steps to reform its federal deposit insurance system, he added.