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IPFS News Link • Central Banks/Banking

Regional Banks Still Shaky Six Months After Major Collapses

•, by Jason Cohen

Silicon Valley Bank and Signature Bank collapsed in March to start the crisis, marking two of the largest bank failures in U.S. history. Since then, America's biggest bank JPMorgan Chase's stock has risen in value, and the institution notched record earnings after acquiring First Republic Bank in May, the biggest bank that failed in the 2023 crisis, and the second-largest collapse ever.

Moreover, regional bank stocks, including PacWest BancorpWestern Alliance BancorporationZions Bancorporation and Comerica Incorporated have all significantly declined since March, losing between 25% and 70% of their value. While many of the largest banks' stocks have also declined, they have not fallen as dramatically.

"I continue to be concerned about the banking sector, and regional banks in particular," E.J. Antoni, a research fellow at the Heritage Foundation's Grover M. Hermann Center for the Federal Budget, told the Daily Caller News Foundation. "Thus far we have not seen any significant improvements in the balance sheets of those regional banks, nor any indication that current market trends will reverse."

Federal Reserve Chair Jerome Powell raised the possibility of more interest rate hikes due to high inflation in an August speech at the Jackson Hole Economic Symposium. The Fed has raised interest rates 11 times since March 2022 to fight inflation, bringing the federal funds rate within a range of 5.25% and 5.50%, the highest since January 2001.

"The only regionals that have a hope of making it through the current storm are those who prudently hedged against interest rate risk – but they seem few and far between," Antoni told the DCNF.

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