Consulting firm McKinsey reports that banks are in a sensitive state right now, and many are unlikely to survive the next economic downturn, according to Reuters. McKinsey's report says that as many as one-third of banks could fail in the event of a significant contraction, as their equity costs exceed their returns. These are mostly banks mired in older business models, as the report said the ones that do well will be those that can leverage technology and adapt to a radically revamped business model. 

But even in the immediate term, the banking system has been experiencing significant turbulence, as the Federal Reserve continues to inject capital into the overnight repurchase agreement (repo) market, mostly recently $99.9 billion last night and $58.15 billion the night before, according to the Wall Street Journal. Daily liquidity injections have been taking place since the end of the summer as a way to loosen conditions in a tightening repo market. The repo market is often compared to banking's circulatory system, as these short-term overnight loans help banks meet daily operational needs and liquidity concerns. When the costs for these loans grow too high, as has lately been the case, then that constant flow of money slows down, and suddenly there's a lot less credit to go around for everyone. This is essentially one of the things that happened during the global financial crisis a decade ago, and the Fed's recent moves indicate a desire to avoid repeating that in 2019.  

Though the Fed’s intervention has helped stabilize conditions, CNBC notes that the fact the central bank even needs to intervene in the first place is not a good sign, and this has led to questions about the sustainability of these regular liquidity injections. The market does not seem eager for this to become a long-term practice, yet there does not seem to be much insight into when overnight repos will once more be capable of standing on their own. Until then, it is a situation comparable to needing regular doses of expensive medication to stay alive. 

CNBC said that while similar measures were taken to stimulate the economy in the wake of the 2008 crisis, these actions are being undertaken merely to retain what’s already there and prevent a disaster.