Regional bank earnings may expose critical weaknesses, according to Sheila Bair, former chair of the U.S. Federal Deposit Insurance Corp.
Their quarterly numbers begin hitting Wall Street this week.
“I’m worried about a handful of them,” Bair told CNBC’s “Fast Money” on Tuesday. “I think some of them are still overly reliant on industry deposits, have a lot of concentrated commercial real estate exposure, and then I think the larger picture really is the potential instability of their uninsured deposits even for the healthy ones if we have another bank failure.”
Bair, who ran the FDIC during the 2008 financial crisis, is nervous that regional bank issues from 2023 aren’t fully resolved.
“Congress should reinstate the FDIC’s transaction account guarantee authority so that they can stabilize those deposits,” she said. “This is still a problem for the regional banks, and fingers crossed that there’s [not] another failure. We’re just not quite sure what’s going to happen.”
Regional banks are having a tough year so far. The SPDR S&P Regional Bank ETF (KRE)
is down almost 13%, and only four of its members are positive for 2024.
www.cnbc.com/2024/04/16/regional-bank-failures-may-be-ahead-fmr-fdic-chair-sheila-bair-warns.html