Moody’s put banks on review on Monday
Moody’s Investors Services, a credit rating system, has put several banks under review for possible downgrades after collapse of the Silicon Valley bank (SVB).
Federal Deposit Insurance Corporation (FDIC) announced the closure of Silicon Valley Bank on Friday amid massive bank runs, raising fears that the bank could collapse in the future.
Following this crash, Moody’s placed First Republic Bank (FRC), Zions (ZION), Western Alliance (WAL), Comerica (CMA), UMB Financial (UMBF) and Intrust Financial under review, meaning these banks are now perceived as more risky investments. creditors.
“Today’s rating action reflects First Republican Bank’s high reliance on more confidence-sensitive uninsured deposit financing, its high volume of unrealized losses in its available-for-sale and held-to-maturity portfolios, and low capitalization relative to its peers.” , — stated in the company’s message about the rating of the First Republican Bank.
SIGNATURE BANK CLOSED DUE TO COLLAPSE OF SILICON VALLEY BANK
“If the bank has to face a higher-than-expected outflow of deposits and liquidity buffers prove insufficient, the bank may have to sell assets, leading to the crystallization of unrealized losses,” Moody’s said in a First Republic report.
The firm also stated that banks have significant amounts of deposits that exceed the FDIC insurance threshold of $250,000.
Following the failure of the SVB, federal regulators announced Sunday that New York’s Signature Bank is closing, reportedly to protect the financial system and consumers. Moody’s downgraded Signature Bank and withdrew future ratings after its collapse.
Steve Moore, a former Trump White House adviser and chief economist at FreedomWorks, told Fox News’ Harris Faulkner that while he doesn’t believe in a general crisis, several banks could be at risk after SVB collapse.
“I agree with the president that we do not have a general banking crisis. The system is solid, but I do think that you have a lot of big banks that are experiencing some issues.” Moore warned on Monday. “And SVB, a Silicon Valley bank, might just be the tip of the iceberg here. And I think it’s important for people to understand how this potential banking crisis happened. It’s not because there aren’t enough banking regulators, as Biden is trying to say. It’s because of the huge inflation and the trillions and trillions of dollars of borrowing that the federal government has made that has put our financial system in great danger and great danger.”
Bradford Betz of Fox News contributed to this report.
Credit: www.foxbusiness.com /