Contagion spreads to heavyweights Wells Fargo, Bank of America and JP Morgan
- Western Alliance Bancorp’s stock price dropped by three quarters, First Republic Bank dived 67 percent and PacWest Bancorp plunged more than 35 percent
- Major US banks were also hit: Wells Fargo down 7.5 percent, Bank of America 7.4 percent, Citigroup 5.8 percent and JP Morgan 2.7 percent
- Biden attempted to shore up trust just minutes before the market opened, telling reporters: ‘Americans can have confidence that the banking system is safe’
Trading was temporarily halted in dozens of regional banks this morning as shares fell by up to 75 percent when the market opened after Joe Biden claimed ‘US banking is safe.’
Major US banks were also hit as contagion fears spread through the sector with Wells Fargo plummeting 7.5 percent, Bank of America falling 7.4 percent, Citigroup plunging 5.8 percent and JP Morgan down 2.7 percent.
Regional bank Western Alliance saw its stock price plunge by three quarters as the opening bell sounded on Wall Street, while shares in First Republic dived 67 percent and PacWest by more than 35 percent. Trading circuit breakers were swiftly implemented to protect the market from rampant volatility.
Biden addressed the nation from the Roosevelt Room in the White House as he attempted to avert a broader catastrophe from sweeping the financial system following the collapse of Silicon Valley Bank on Friday.
‘Americans can have confidence that the banking system is safe,’ he said just minutes before the market opened.
The declines came despite US authorities on Sunday guaranteeing customers of SVB their money would be safe and ready to withdraw Monday following a run on the bank Friday that triggered the second-largest collapse in history, the worst since 2008.
The Fed also announced a new Bank Term Funding Program that will offer loans for up to a year to banks in return for premium collateral like Treasuries.