This morning U.S. Federal Reserve chairman Jerome Powell openly lied to financial reporters during a press conference stating without a hint of irony that the US banking system is "sound and resilient."
Ironically even as Powell was speaking the news broke that another bank collapse was on its say.
Shortly after the conference closed, Bloomberg reported that California-based bank, PacWest Bancorp., was weighing a range of strategic options, including a sale.
The Beverly Hills-based bank - whose financial conditions it appears has been far worse than the Fed, which had just hiked interest rates another 25bps (a quarter of one per cent,) calculated for - has been working with consultants and also been considering selling a huge slice of its business to raise capital according to Bloomberg. While it is open to an outright if the right offer (i.e. any offer,) comes along, , the company hasn’t yet started a formal auction process.
According to the report, and similar to other recent bank collapses SVB and FRC, "a potential buyer would also have to potentially book a big loss marking down some of its loans, a spokesperson said."
the next regional bank collapse was on its say.
Shortly after the close, Bloomberg reported that another regional, California-based bank (of course), PacWest Bancorp., was weighing a range of strategic options, including a sale.
The Beverly Hills-based bank - whose financial conditions it appears has been far worse than the Fed, which just hiked another 25bps, thought - has been working with a financial adviser and has also been considering a breakup or a capital raise, according to Bloomberg sources. While it is open to a sale, the company hasn’t started a formal auction process.
According to the report, and in a similar way to ,other recent bank collapses SVB and FRC, "a potential buyer would also have to potentially book a big loss marking down some of its loans, a spokesperson said."
Following publication of the Bloomberg report, PacWest - which had $28 billion in deposits at last check (far less as of this moment) and $44 billion in assets, saw its stock plunge more than 60% in the space of a few hours.
Earlier we reported that First Horizon tumbled as much as 40% after saying it and Toronto-Dominion Bank mutually agreed to terminate their merger agreement amid uncertainty around regulatory approvals.
Meanwhile, with the Fed still burying its head in the sand as an epic bank crisis hurtles towards the USA, Powell may be hopeing that a avalanche of bank failures will make the Fed's job of sparking a recession, credit crisis and deflationary bust easier.
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