Downgrade stirs concerns of regional bank failures

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

The bank's shares had recovered slightly, with a loss of 2.5 percent that day, but they almost fell 40 percent over the past week.

Last week's losses triggered a broader liquidation on the values ​​of regional banks. The KBW Nasdaq Regional Banking Index, which tracks the performance of regional banks, fell 12 percent last week.

Before Tuesday's downgrade, Rep. Ritchie Torres (D-N.Y.) pressed Treasury Secretary Janet Yellen during 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, with more than $37 billion in multifamily loans,” Torres said. “In contrast, Signature had much less: $15 billion in multifamily loans.”

Torres was referring to Signature Bank, whose assets were
purchased by NYCB after failing during a wave of difficulties for regional banks in March.

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

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

Hill's Julia Shapero has more here.



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