by FreedomWorks chief economist Steve Moore says inflation, government bonds and “woke” priorities put banks “at risk.”
Moody’s Investors Services, a credit rating system, has been reviewing several banks for a possible downgrade following the collapse of Silicon Valley Bank (SVB).
The Federal Deposit Insurance Company (FDIC) on Friday announced the closure of Silicon Valley Bank amid a bank run, a move that raised concerns about the potential for future bank failures.
Following this collapse, Moody’s put First Republic Bank (FRC), Zions (ZION), Western Alliance (WAL), Comerica (CMA), UMB Financial (UMBF) and Intrust Financial under scrutiny, meaning the banks are now seen as riskier investments be perceived by lenders.
“Today’s rating action reflects First Republic Bank’s heavy reliance on more confidence-sensitive uninsured deposit funding, its high amount of unrealized losses on its available-for-sale and held-to-maturity securities portfolios, and low capitalization relative to peers,” said the company about the rating of First Republic Bank.
SHUTDOWN OF SIGNATURE BANK IN CONNECTION WITH THE COLLAPSE OF SILICON VALLEY BANK
Silicon Valley Bank was shut down by California regulators on Friday morning and placed under the US Federal Deposit Insurance Corporation. (Justin Sullivan/Getty Images)
“If faced with higher-than-expected deposit outflows and liquidity support proved inadequate, the bank could have to sell assets, which could result in unrealized losses,” Moody’s said of First Republic.
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The company also said the banks have sizeable deposits in excess of the FDIC’s $250,000 insurance threshold.
After the SVB’s failure, federal authorities announced Sunday that New York-based Signature Bank is closing, reportedly to protect the financial system and consumers. Moody’s downgraded Signature Bank’s rating and withdrew future ratings after its collapse.
US Treasury Secretary Janet Yellen. (Alberto Pezzali/AP Newsroom)
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 an overall crisis, several banks could be at risk after the SVB collapses.
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“I agree with the President that we do not have a general banking crisis. The system is solid, but I think you have a lot of big banks that are in trouble,” Moore warned Monday. “And SVB, the Silicon Valley Bank, might just be the tip of the iceberg here. And I think it’s important that people understand how this potential banking crisis came about. It’s not because there aren’t enough banking regulators, as Biden is trying to say. It is because of the massive inflation and the trillions and trillions of dollars in loans that the federal government has made that has put our financial system in great peril and great peril.
Fox News’ Bradford Betz contributed to this report.
