Former Treasury Secretary Steve Mnuchin is leading an investment group that is trying to rescue New York Community Bancorp (NYCB) with a $1 billion rescue plan. Investments will come from Liberty Strategic Capital, Hudson Bay Capital and Reverence Capital Partners. The plan focuses on regional banks that have recorded difficult conditions in 2023.
Yahoo Finance anchors Brad Smith and Seana Smith recap the local bank failures of 2023.
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Editor's note: This article was written by Nicholas Jacobino
video transcript
Brad Smith: Troubles at New York Community Bancorp have put the regional lender back in the spotlight, nearly a year after the failures of three high-profile banks.
An unexpected loss in the fourth quarter sent NYCB stock plummeting shortly after the start of the year. Now, the troubled lender has received $1 billion in funding from a group of companies led by former U.S. Treasury Secretary Steve Mnuchin in a bid to regain investor confidence here.
Some of the bank's current problems can be traced back to the crisis that occurred 12 months ago. So let's look back here, Sheena.
Sheena Smith: Okay. we will. Now, on March 8, 2023, Silicon Valley Bank announced that it had incurred a loss of $1.8 billion as a result of selling investments to hide increased withdrawals. The next day, SVB stock plummeted, causing panic and a bank run.
By the end of the day, depositors had attempted to withdraw $42 billion. Now, on March 10th, shortly after Signature Bank, federal regulators seized SVB.
Local stocks plummeted. And President Biden addressed the nation seeking to reassure Americans that the banking system is safe.
Brad Smith: That is correct. But my confidence wavered. We've had problems with some banks. UBS–They agreed to buy Credit Suisse to prevent it from collapsing. And First Republic received a $30 billion infusion from 11 banks. But that wasn't enough. Regulators seized the bank on May 1 and sold it to JPMorgan Chase.
