adminThe recent troubles at New York Community Bancorp Inc. are not a sign of systemic problems in the U.S. banking system, a top Federal Reserve official said Wednesday.
“A single bank missing its revenue expectations and increasing its provisioning does not change the fact that the overall banking system is strong, and we see no signs of liquidity problems across the system,” said Fed Vice Chair for Supervision Michael Barr, in a speech to a meeting of the National Association of Business Economics in Washington.
Barr said there were “a few patches and pockets of risk” in the sector, including the value of office commercial real estate in certain central business districts, Barr said.
NYCB stock
NYCB,
plunged earlier in February after the bank posted a surprise quarterly loss and disclosed trouble with its commercial real-estate loans.
Shares of regional banks remain under pressure this week after the surprisingly strong consumer inflation data released Tuesday.
Later, during a question-and-answer session, Barr said that the problems facing medium and small banks are “old-fashioned type of risks that banks face in any credit circumstance.”
On the positive side, loan-to-values look better than the last downturn. On the negative side, vacancy rates are higher because of the changing nature of work.
“There is going to be price compression, there are going to be losses … that banks are provisioning,” he said.
“I think we’ll see that play out over a long period of time, but I don’t expect the kind of acute pressure that we saw … in the unique circumstances last March,” when Silicon Valley Bank and Signature Bank failed, Barr said.
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