Arezou

Regional bank crisis may be far from over, experts warn

By Chris Matthews

Regulators should stay vigilant as headwinds remain, say analysts

The stock-market panic over the regional banks has subsided for now, but experts say that regulators should remain focused on shoring up the stability of the sector amid economic headwinds that could persist for years to come. Shares of regional banks like PacWest Bancorp Corp. PACW, -6.46% have rebounded in the past week following news that their deposit bases had stabilized, with the SPDR S&P Regional Banking ETF gaining nearly 15% from its early March lows….A new variable for regulators to consider is the speed with which runs on Silicon Valley Bank and Signature Bank occurred, according to Karen Petrou, co-founder of the banking advisory firm Federal Financial Analytics, Inc. “The most radically new lesson of the recent crisis is the vulnerability of banks to viral runs,” she said, noting that new technology has enabled panic to spread much faster than in previous eras, carving out a new terrain for regulators to navigate….Petrou said that these new realities mean that Congress should increase deposit insurance for business transaction accounts and regulators must get serious about improving bank supervision and becoming much more assertive when they see behavior that could lead to worries about bank solvency. There were quite a lot of opportunities for regulators to step in and turn these failed banks around,” she said. “We’ve got to have much better supervision.”

https://www.marketwatch.com/story/regional-bank-crisis-may-be-far-from-over-experts-warn-2b793d95

 …

Consensus on Fed’s post-crisis reforms might be elusive

By  Kyle Campbell

There is a lack of consensus on the Federal Reserve Board about what bank regulation and supervision should look like after the recent string of regional-bank failures. Michael Barr, the Fed’s vice chair for supervision, laid out several changes he’d like to see in his report on the failure of Silicon Valley Bank last month. But remarks by Fed Gov. Michelle Bowman raised questions among policy analysts about how much of Barr’s post-crisis agenda will actually be adopted. Karen Petrou, managing partner at Federal Financial Analytics, said the language of Bowman’s speech indicates some fundamental disagreements within the Fed that could prove difficult to bridge. “[Fed Chair Jerome] Powell has essentially decided that he endorsed the Barr report and then you have Bowman saying only one board member saw it. Clearly, there seems to be some internal issues there in terms of transparency and collegiality,” Petrou said. “Whether those continue and then how they drive what the others do is much harder to predict because it’s not policy, it’s personal.”

https://www.americanbanker.com/news/consensus-on-feds-post-crisis-reforms-might-be-elusive

 …

After Dimon’s First Republic purchase, tougher banking regulations loom

New rules forcing the big banks to increase their capital reserves are in the works, along with changes for regional banks

By David Lynch

When regulators earlier this month needed someone to take the failed First Republic Bank off their hands, they chose Jamie Dimon, the chief executive of JPMorgan Chase, putting him in position to boost his company’s annual profits by half a billion dollars….“The biggest focus will be the midsize regional banks. That’s where the thrust of the changes are going to be,” said Karen Petrou, managing partner of Federal Financial Analytics. “But the endgame will affect JPMorgan. It is likely to significantly increase capital requirements for some of the biggest banks.”Together, the flurry of regulation promises to reshape the competitive landscape…

https://www.washingtonpost.com/business/2023/05/10/jpmorgan-jamie-dimon-banking-regulations/

 …