![](https://i.imgur.com/CLvY2jA.png")
05-05-2023, 08:34 AM
Allison Morrow, CNN
Published 2:06 PM EDT, Thu May 4, 2023
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When Silicon Valley Bank crumbled on March 10, it was a Main Street problem — scared depositors rushed to pull out their money, and the bank ran out of cash. A classic bank run.
Seven weeks later, despite the government’s intervention to backstop depositors and extend credit to banks, the panic has taken root on Wall Street, which is now feeding on its own anxiety.
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Western Alliance was also flagging Thursday after the Financial Times reported that the bank was exploring a sale. The Arizona lender denied the report, helping its stock pare some losses. It was still down 33% midday in New York, and has lost more than 65% of its value this year.
Similarly, southeastern regional bank First Horizon was teetering, having scrapped a US$13 billion merger with Canada’s TD bank.
While this latest crop of regional banks bears some similarities to the three that failed this year, they don’t appear to have the same reliance on uninsured deposits that got the others in trouble.
PacWest reported Thursday that withdrawals had slowed and that 75% of its deposits were insured and the bank remained flush with cash.
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In normal times, those numbers might have alleviated investors’ fears, Moya said. But these aren’t normal times.
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“Confidence in a financial institution is built over decades and destroyed in days,” he wrote. “As each domino falls, the next weakest bank begins to wobble.”
......
There is so much pessimism percolating on Wall Street, smaller banks are going to get crushed. PacWest isn’t hurting because it made bad bets or mismanaged its company — it’s just the next one on the list, analysts say.
Gutting regional banks would have massive implications for the US economy, as those smaller operations tend to offer businesses sector-specific expertise that they can’t get from Wall Street power players like JPMorgan Chase or Bank of America.
......
Almost by definition, those specialized lenders are not as diversified in their holdings. Many have loaded up on Treasuries, which, ironically “are the most boring of all possible investments.”
Another problem: Who wants to buy a struggling bank, even at a discount, if you can get it for pennies on the dollar after it fails — complete with a guarantee against losses, backed by Uncle Sam?
That means we can expect more bank failures, and more Wall Street panic, in the weeks and months ahead.
https://edition.cnn.com/2023/05/04/busin...index.html
Published 2:06 PM EDT, Thu May 4, 2023
......
When Silicon Valley Bank crumbled on March 10, it was a Main Street problem — scared depositors rushed to pull out their money, and the bank ran out of cash. A classic bank run.
Seven weeks later, despite the government’s intervention to backstop depositors and extend credit to banks, the panic has taken root on Wall Street, which is now feeding on its own anxiety.
......
Western Alliance was also flagging Thursday after the Financial Times reported that the bank was exploring a sale. The Arizona lender denied the report, helping its stock pare some losses. It was still down 33% midday in New York, and has lost more than 65% of its value this year.
Similarly, southeastern regional bank First Horizon was teetering, having scrapped a US$13 billion merger with Canada’s TD bank.
While this latest crop of regional banks bears some similarities to the three that failed this year, they don’t appear to have the same reliance on uninsured deposits that got the others in trouble.
PacWest reported Thursday that withdrawals had slowed and that 75% of its deposits were insured and the bank remained flush with cash.
......
In normal times, those numbers might have alleviated investors’ fears, Moya said. But these aren’t normal times.
......
“Confidence in a financial institution is built over decades and destroyed in days,” he wrote. “As each domino falls, the next weakest bank begins to wobble.”
......
There is so much pessimism percolating on Wall Street, smaller banks are going to get crushed. PacWest isn’t hurting because it made bad bets or mismanaged its company — it’s just the next one on the list, analysts say.
Gutting regional banks would have massive implications for the US economy, as those smaller operations tend to offer businesses sector-specific expertise that they can’t get from Wall Street power players like JPMorgan Chase or Bank of America.
......
Almost by definition, those specialized lenders are not as diversified in their holdings. Many have loaded up on Treasuries, which, ironically “are the most boring of all possible investments.”
Another problem: Who wants to buy a struggling bank, even at a discount, if you can get it for pennies on the dollar after it fails — complete with a guarantee against losses, backed by Uncle Sam?
That means we can expect more bank failures, and more Wall Street panic, in the weeks and months ahead.
https://edition.cnn.com/2023/05/04/busin...index.html
