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Despite assurances from the federal government, including from President Joe Biden himself, bank stocks were hit hard Monday, in part over fears of depositors removing their cash from regional banks and moving it to larger banks that they consider more secure.
“Banks of various sizes in different parts of the country — from San Francisco-based First Republic Bank to Salt Lake City-based Zions Bank — found themselves battling market turmoil as customers rushed to withdraw their deposits and investors, worried about more runs, dumped bank stocks,” The New York Times reported.
MarketWatch reported on the subject under the headline, “Regional banks are seeing flight of deposits to too-big-to-fail megabanks” (behind a paywall).
“Investors are dumping regional-bank stocks despite a fresh federal backstop,” the site wrote.
If investors and customers both decide on their own that they don’t trust government regulators to protect their interests in regional banks, that can only cause problems for those banks.
After regulators suddenly seized two banks over the long weekend, some customers and investors did, in fact, fear that the overall U.S. banking system was in trouble.
Tucker Carlson even went on his show last week after the collapse of Silicon Valley Bank and declared, “[I]t could be time to buy gold and stockpile food.”
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