Federal Reserve Chairman Jerome Powell attempted to reassure Americans that “the U.S banking system is sound and resilient” at an afternoon press conference Wednesday, arguing conditions in the sector have “broadly improved” since the collapse of Silicon Valley Bank and Signature Bank in March. But his message was undercut by a plunge in multiple regional bank stocks in after-hours trading.
Shares of PacWest Bancorp, for example, tumbled more than 30% after the lender announced that it is exploring “strategic options” for its business, including a potential sale. And there were also broad declines in the sector in response to the Fed’s announcement earlier in the day that it would be hiking interest rates to their highest level since 2007, even in the face of recent banking instability highlighted by the failure of First Republic just last week. It’s a decision that has left even the most seasoned of investors feeling nervous and predicting further regional bank drama.
