The regional banking crisis is expanding

Axios ^ | May 4, 2023 | Dan Primack

[ConservativeInPA]

Federal Reserve chair Jay Powell yesterday said that the U.S. banking system is "sound and resilient."

The big picture: It was akin to a sports team owner giving the coach a vote of confidence. If you're compelled to say it, things really aren't going well.

Driving the news: PacWest reportedly is exploring strategic options, including a possible sale, acknowledging "discussions are ongoing" with "several potential partners and investors."

Shares in the Los Angeles-based lender were down 71% on the year as of yesterday's market close, and got further routed at today's open. Phoenix-based Western Alliance also is seeking help, per an FT report that sent its shares tumbling even further. [Update: Western Alliance is denying the FT report, adding that it has not hired advisors. Trading of its shares have been halted multiple times].

[TomGuy]

This is beginning to look like the economic crisis in 2007-2008. IIRC, it was in February. I was watching some of the Sunday news-talk programs. I noticed an eerie pattern. Guests on some of those program were from the GWBush economics and commerce sectors. They were all parroting the same theme: ‘The economy is in great shape. The economy is strong.’ I thought it strange that these guys were touting the economy when usually these news-talk programs were about politics and foreign policy. About 4 months later the GWBush economy began to crash. As with the current economic disaster, they began throwing money at the problem with the multi-billion dollar bail-outs. One was The Emergency Economy Stabilization Act of 2008. [Sort of sounds like Biden’s Inflation Reduction Act.]

[Steely Tom]

An “expanding regional crisis” when a Democrat is President.

[teeman8r]

will the banking crisis hit those banks that don’t meddle in woke ideology? i know a lot of financial institutions are intertwined and government imposes a lot of regulations, but they’re bankers first right?

[cuban leaf]

I’ve been watching this unfold for years. What I find interesting in my area is that people that normally pay no attention to this stuff are getting scared.

IMO, this will be MUCH worse than 2007-2008, probably by an order of magnitude.

[wardamneagle]

Hay Powell doesnt have a clue.

[C210N]

This is beginning to look like the economic crisis in 2007-2008.

We didn't have a 'Bretton Woods' moment out of 2008. This time we will make 'Bretton Woods' look like a minnow in the sea.

[allendale]

Banks that have financed major projects or bought into such deals in major cities such as San Francisco, LA, Chicago. NYC and Atlanta are in bad shape. Huge office complexes in those places are running 30-40% vacant. The owners are not able to service their mortgages and loans made against the purported values of as little as one ear ago. Loans nationwide are at risk of default. The only collateral was the property itself and in a declining commercial real estate market foreclosures actually don’t help the banks. The problems in these cities given the crime, decreased tax revenues, political mismanagement and the loss of productive citizens is making the situation even worse. Very shaky economic times ahead. Already huge layoffs in the financial and tech industries. Predict Ford and GM heavily invested in EVs they can’t sell will also soon be facing layoffs, financial strain and tough times.

[Mariner]

Compel them all...ALL..to mark all “assets” to market.

Let the chips fall where they may.

That includes JP Morgan, Citi, BofA and Wells Fargo.

[ConservativeInPA]

Yep, and liquidate. They will take a 30% to 40% loss on those assets. Sucks to be a shareholder, but that’s the risk you take when submit that buy order.

In other news … all regional bank stocks closed down today. The market just gave Jay Powell the single finger salute.

[Darksheare]

“the U.S. banking system is “sound and resilient.””

Well, now we know that the opposite is true.

[beef]

“That includes JP Morgan, Citi, BofA and Wells Fargo.”

I certainly hope they go, too. I am concerned that they will be the only ones left standing, and when the dust settles, they will turn their attention to debanking US.

[Sam Gamgee]

Yes I went from bullish on energy to bearish as a result of these banking crisis’. Numbers came in last month for India and China, and demand for oil is falling. We are heading back into a recession. So many numbers coming out to confirm this that the only question is how hard and how long. It’s world wide and no one will be left unscathed.