Last Updated on May 4, 2023 by Bitfinsider
Bill Ackman of Pershing Square warns of increased systemic risk in the US banking sector if prompt corrective action is not taken, amid PacWest Bancorp’s stock continuous decline. According to Ackman, the US regulators’ inability to reform the insurance regime has “hammered more nails in the coffin” and the banking system is at risk. The stock of PacWest Bancorp is currently down approximately 37%, and over the past five days, it has down more than 42% in value.
Ackman’s most recent comments suggest that PacWest, the second weakest bank in the current situation, may succumb to a domino effect following the recent failure of First Republic Bank. He further stated that, in the face of ongoing stock price declines, no regional bank could survive poor news or negative data.
“As each domino falls, the next weakest bank begins to wobble. We are running out of time to fix the problem, we need a systemwide deposit guarantee regime now,” he warned.
Over the past few days, the PacWest stock started to exhibit signs of weakness, which caused the KBW Nasdaq Bank Index, a benchmark stock index of the banking industry, to decline by more than 5%.
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