Regional bank failures: NYCB to receive $1B bailout
Former US Treasury Secretary Steve Mnuchin is leading an investment group to bail out New York Community Bancorp (NYCB) with a $1 billion rescue plan. The investment will come from Liberty Strategic Capital, Hudson Bay Capital, and Reverence Capital Partners. This plan puts the spotlight on regional banks, which recorded a difficult 2023.
Yahoo Finance Anchors Brad Smith and Seana Smith recap the regional bank failures of 2023.
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Editor's note: This article was written by Nicholas Jacobino
Video Transcript
BRAD SMITH: Trouble at New York Community Bancorp puts regional lenders back in the spotlight nearly one year following the collapse of three high profile banks.
A surprise fourth quarter loss sent shares of NYCB into a tailspin shortly after the start of the year. And now, the struggling lender is getting a $1 billion infusion from a group of firms led by former US Treasury Secretary Steve Mnuchin, as it looks to regain investor confidence here.
Now, some of the bank's troubles can be traced back to the crisis that unfolded 12 months ago. So let's take a look back here, Seana.
SEANA SMITH: All right. We will. Well, on March 8, 2023, Silicon Valley Bank announced $1.8 billion in losses after selling investments to cover up increasing withdrawals. The next day, SVB stock crashed and people panicked causing a bank run.
By the end of the day, depositors attempted to withdraw $42 billion. Now, on March 10, federal regulators seized SVB, not long after Signature Bank.
Regional stocks plunged. And President Biden addressed the nation trying to reassure Americans that the banking system is safe.
BRAD SMITH: That's right. But confidence faltered. Several banks experienced issues. UBS-- they agreed to acquire Credit Suisse to prevent it from collapsing. And First Republic got a $30 billion injection from 11 banks. But it wasn't enough. Regulators, they seized the bank on May 1. And it was sold to JPMorgan Chase.
