Former Federal Reserve regional presidents Robert Kaplan and Dennis Lockhart are becoming concerned over the recent US regional banking turmoil which has started engulfing one lender after the other this year.
(Bloomberg) — Former Federal Reserve regional presidents Robert Kaplan and Dennis Lockhart are becoming concerned over the recent US regional banking turmoil which has started engulfing one lender after the other this year.
Lockhart told Bloomberg on Thursday that the situation is “worrisome,” adding that he hopes Fed Chairman Jerome Powell has more information available. According to Kaplan, the ex-president of the Dallas Fed, the crisis is far from ended as the credit phase, which is “normally more serious,” has yet to begin.
“It looks like the markets are moving from one bank to the other and vulnerable deer in the herd are being kicked off,” Lockhart, the former Atlanta Fed President, said in a Bloomberg Television interview. “But I would like to believe that Jay Powell has information that suggest that the situation is contained or containable.”
PacWest Bancorp is the latest target of market worries about regional bank health, shedding more than half its value just hours after Powell declared regulators were getting closer to managing the upheaval that has toppled four US lenders this year.
PacWest fell as much as 60% in postmarket trading after people familiar with the matter said the lender has been weighing a range of strategic options, including a sale. Further declines for the KBW Regional Banking Index, which has fallen more than 30% from a peak in February, suggest worries in the sector remain high even after a government-brokered rescue of First Republic Bank by JPMorgan Chase & Co.
Read: PacWest’s 60% Drop Reignites Regional Bank Rout in Test for Fed
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.