Downgrade stirs concerns of regional bank failures

Its shares fell nearly 14 percent early Wednesday following the downgrade, which Moody’s attributed to the “multi-faceted financial, risk-management and governance challenges facing” the bank.

 

The bank’s shares had recovered slightly to a loss of 2.5 percent on the day, but they have fallen nearly 40 percent over the past week.

 

The losses over the past week have triggered a wider sell-off in regional bank stocks. The KBW Nasdaq Regional Banking Index, which tracks the performance of regional banks, has fallen 12 percent in the last week.

 

Prior to the downgrade on Tuesday, Rep. Ritchie Torres (D-N.Y.) pressed Treasury Secretary Janet Yellen at a House Financial Services hearing about “signs of volatility” at the bank.

 

“New York Community Bank is the largest multifamily portfolio lender in New York City, with more than $37 billion in multifamily loans,” Torres said. “By way of contrast, Signature had far less — $15 billion in multifamily loans.” 

 

Torres was referring to Signature Bank, whose assets were
purchased by NYCB after if failed during a spate of trouble for regional banks in March.

 

“A crisis at New York Community Bank would not only destabilize the banking system, it would destabilize the largest multifamily housing market in the United States,” he added.

 

Yellen declined to comment on NYCB specifically but emphasized that the federal Financial Stability Oversight Council has “long been aware” that commercial real estate could create “financial stability risk or losses in the banking system.”

 

The Hill’s Julia Shapero has more here.

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