Salem Radio Network News Wednesday, March 22, 2023


U.S. bank stocks add to losses as regulators shutter SVB Financial

By Noel Randewich and Caroline Valetkevitch

(Reuters) -Shares of U.S. banks extended recent losses on Friday, with regional banks the hardest hit, as the failure of SVB Financial Group reverberated across the financial industry.

A California banking regulator on Friday closed SVB, putting the tech-heavy lender into receivership in the largest bank failure since the 2008 financial crisis.

The state regulator appointed the Federal Deposit Insurance Corp (FDIC) to dispose of SVB’s assets in an episode that spilled over into other U.S. and European banks and sparked fears about hidden risks in the sector.

While SVB’s stock was halted on Friday, shares of other mid-sized U.S. banks added to recent, heavy losses. The S&P 500 regional banks index dropped 6%, bringing its loss this week to 20%, its worst week since 2009.

U.S. banks have lost over $100 billion in stock market value over the past two days, with European banks losing around another $50 billion in value, according to a Reuters calculation.

SVB’s crisis comes as the U.S. Federal Reserve, locked in a battle against inflation, is raising interest rates and ending an era of cheap money, exposing vulnerabilities in the market. Investor fears about an aggressive rate hike at the Fed’s next meeting later this month were eased, however, on Friday by signs of cooling wage growth in the February jobs report.

The S&P 500 banks index, which includes all banks in the benchmark index, was down 1% and heading for a 12% loss for the week, its worst week since the global market meltdown in March 2020 following the start of the coronavirus pandemic.

“There are obvious cracks in the system, and the worry is if the Fed raises rates in two weeks, will that break something in the banking system? That’s why the banks are selling off and the market is nervous,” said Jake Dollarhide, chief executive at Longbow Asset Management in Tulsa, Oklahoma.

Signature Bank dropped 22%, while San Francisco-based First Republic Bank fell about 15%.

Among other regional banks getting hit hard on Friday, shares of Western Alliance Bancorp were down about 38% and PacWest Bancorp shares were down 33% after those stocks were halted several times due to volatility.

Bank of America fell 0.8%. JPMorgan & Chase, the most valuable U.S. bank, rebounded 2.8%, but was still on track to close down sharply for the week.

(Reporting by Noel Randewich; Editing by Leslie Adler)


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