SVB collapse: Moody's flags six other banks with concerning credit ratings
Moody's placed the banks on review Monday
Chief economist at FreedomWorks Steve Moore says inflation, government borrowing and ‘woke’ priorities put banks ‘in jeopardy.’
Moody's Investors Services, a credit rating system, put several banks on review for a potential downgrade following the collapse of Silicon Valley Bank (SVB).
The Federal Deposit Insurance Corporation (FDIC) announced the closure of Silicon Valley Bank on Friday amid a run on the bank, a move that raised concerns about the potential of future bank collapses.
Following that collapse, Moody's placed First Republic Bank (FRC), Zions (ZION), Western Alliance (WAL), Comerica (CMA), UMB Financial (UMBF) and Intrust Financial on review, meaning the banks are now perceived as more risky investments by lenders.
"Today's rating action reflects First Republic Bank's high reliance on more confidence sensitive uninsured deposit funding, its high amount of unrealized losses in its available-for-sale and held-to-maturity securities portfolios, as well as a low level of capitalization relative to peers," the firm said of the First Republic Bank rating.
SIGNATURE BANK SHUT DOWN IN CONNECTION WITH SILICON VALLEY BANK COLLAPSE
Silicon Valley Bank was shut down on Friday morning by California regulators and was put in control of the U.S. Federal Deposit Insurance Corporation. (Justin Sullivan / Getty Images)
"If it were to face higher-than-anticipated deposit outflows and liquidity backstops proved insufficient, the bank could need to sell assets, thus crystallizing unrealized losses," Moody's said of First Republic.
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The firm also stated that the banks have significant amounts of deposits that are above the FDIC's insurance threshold of $250,000.
Following the SVB failure, federal regulators announced on Sunday that New York-based Signature Bank was being shut down to reportedly protect the financial system and consumers. Moody's downgraded the rating of Signature Bank and withdrew future ratings after its collapse.
U.S. Treasure Secretary Janet Yellen. (Alberto Pezzali / AP Newsroom)
Steve Moore, former White House adviser under Trump and chief economist at FreedomWorks, told Fox News' Harris Faulkner that while he does not believe there is an overall crisis, several banks could be in jeopardy following the SVB collapse.
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"I agree with the president that we don't have an overall banking crisis. The system is sound, but I do think you have a lot of major banks that are in some trouble," Moore warned on Monday. "And SVB, the Silicon Valley Bank, may just be the tip of the iceberg here. And I think it's important for people to understand how this potential banking crisis happened. It's not because there aren't enough bank regulators, as Biden is trying to say. It's because of the massive inflation and the trillions and trillions of dollars of borrowing that the federal government has done that has put our financial system in great jeopardy and great peril."
Fox News' Bradford Betz contributed to this report.