In the Market: Fed beware the banking crisis of March

- Cadence Bank CEO Dan Rollins calls the regional banking crisis from earlier this year "March madness." Six months on, the craziness has abated, but the industry is scarred and still dealing with its consequences.

Taken together, the lingering effects of the crisis complicate the U.S. Federal Reserve's calculus as it walks a fine line on interest rates, increasing the chance it might over-correct. Torsten Slok, chief economist at Apollo Global Management, said the banking crisis had "a magnifying effect" on the Fed's tightening but its full impact would come with a lag.His model shows it could add up to a 1.5% drag on U.S. GDP over the next four to six quarters.

Cadence's Rollins estimated the repricing of deposits may have been pulled forward "by a quarter or two." Cadence’s Rollins and Randy Chesler, CEO of Kalispell, Montana-based Glacier Bancorp, said they had borrowed under the program because it offered better terms and rates than alternative sources like the Federal Home Loan Banks .

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