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Regional banks were gripped by fear of a wider financial crisis

by SuperiorInvest

Regulators decided to close Signature Bank after it “failed to provide reliable data and created a lack of confidence in the bank’s management,” said Adrienne A. Harris, New York State’s superintendent of financial services.

“Everybody’s breathing heavily today, and maybe I’m missing it, but I think things should calm down,” Lloyd Blankfein, who was chief executive of Goldman Sachs during the 2008 financial crisis, said in an interview.

It was hard to tell whether shareholders were reacting to real vulnerabilities they saw in these companies’ finances or to the possibility that they would suffer the same fate as Silicon Valley and Signature. Nor was there an obvious reason why companies as large as Charles Schwab, with roughly $350 billion in deposits, and as small as Western Alliance, with $62 billion in deposits, were targeted. The Silicon Valley bank had about $175 billion in deposits before last week, and Signature had less than $100 billion before the shutdown.

“Schwab got a lot bigger and the question is: Did they make the same mistakes as SVB?” asked Robert Siegel, a lecturer at Stanford’s business school.

Schwab issued a statement Monday saying it was “well-positioned to navigate the current environment” and called itself a “safe harbor in the storm.”

Expecting a bloodbath on Monday, First Republic, the nation’s 14th largest bank, said a day earlier that it could raise $70 billion if needed from sources including the Federal Reserve and JPMorgan Chase, the nation’s largest bank by assets. Its shares still lost nearly three-fifths of their value on Monday — at one point touching $30, a low not seen since late 2010.

PacWest Bancorp, a Los Angeles-based bank that lends to small and medium-sized businesses, also sought to quell concerns about its stability, emphasizing on Monday that it has access to $14 billion in funding through a mix of cash, marketable securities and credit. line from the Federal Home Loan Bank of San Francisco and access to the Federal Reserve’s discount window, a lending program that provides quick liquidity.

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