Regional banks are under stress based on the "cockroach theory" of credit. If you find one, there usually are more. If we have one credit problem with short-term and factor lending, there usually will be other firms that may have a problem. Credit problems are generally not just one-off. There can be fraud in some cases, but fraud is usually caused by stress in the system. Firms may not plan fraud. They are forced to cut corners, which generally leads to illegal action. One cut corner leads to others, which leads to cover-ups.
Smaller banks have diversified portfolios, but a loss across several business sectors can have an impact on earnings and impair the sale of loans. We are not near the earlier lows in April associated with tariffs. Again, selling is based on higher uncertainty.
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