Bank Stocks Were Volatile Thursday: What Happened?

Several bank stocks were volatile Thursday after the FDIC proposed a plan to charge banks with high uninsured deposits.

What To Know: According to a Wall Street Journal report, the FDIC made the plan to help replenish a government insurance fund that lost more than $18 billion because of recent bank failures. 

The proposed assessment will reportedly be an annual charge of 0.125% of a bank’s uninsured deposits above $5 billion. The FDIC estimates that banks would see a 17.5% reduction in income over the span of one quarter if they are subject to the new rules.

What Else Is Going On: In a new regulatory filing, PacWest Bancorp PACW said deposits fell 9.5% last week on the heels of media reports indicating the regional bank was “exploring all of its options and having talks with potential investors and partners.”

As of May 10, PacWest said immediately-available liquidity was $15 billion and uninsured deposits totaled $5.2 billion, representing a coverage ratio of 288%.

In a Bloomberg interview released Thursday, JPMorgan Chase & Co JPM CEO Jamie Dimon indicated that short sellers who are targeting banks are probably partly responsible for problems in the broader financial sector.

The JPMorgan chief suggested that some short sellers may be using illegal means of targeting bank stocks with bearish bets.

Check This Out: JPMorgan CEO Jamie Dimon Calls For Ban On Shorting Banks: ‘Some People Are Unscrupulous’

PacWest closed Thursday down 22.7% at $4.68, Western Alliance Bancorp WAL closed down 2.07% at $26.91, JPMorgan shares were down 0.31%, Bank Of America Corp BAC closed up 0.22% and Wells Fargo & Co WFC closed up 0.13%, according to Benzinga Pro.

Photo: Thomas Breher from Pixabay.