New York, March 13 US President Joe Biden's words of reassurance on Monday have done little to calm markets as "worries raced around that other smaller US banks could become the latest dominos to fall", as per an expert, media reports said.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said her admission that fresh regulations may be needed to stop further failures exposes weaknesses in the current system and now lawmakers will be asked to toughen the rules, The Guardian reported.
So, even though the collapse has centred on a small tech-focused corner of the financial system, the fall-out risks spreading. The era of cheap money has hurtled to an end and investors are waking up to some dramatic highly unintended consequences, she added.
Streeter said the realisation that regulatory action isn't stopping the rot has led to sharp falls in some of Wall Street's biggest banking names in early trade such as Wells Fargo down 7.5 per cent, Citigroup down 6 per cent, and Bank of America down 7 per cent. Despite the pretty bold regulatory action, investors have still been shaken by the events of the past few days and are highly nervous about spilling over and creating pools of fresh problems.
The freefall of shares in a raft of smaller lenders including First Republic Bank, Western Alliance Bancorp, and PacWest Bancorp shows the extent of the contagion concerns with shareholder confidence evaporating, Streeter said, The Guardian reported.
Investor have dumped bank stocks around the world. In London, Standard Chartered is down 6 per cent with Barclays losing 5 per cent. The market is sending a consistent message today: it fears that a US recession is about to start, The Guardian reported.
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