Trading has been halted in three banks this morning after shares fell as much as 75 percent when the market opened moments after Joe Biden claimed ‘US banking is safe’.

Western Alliance Bancorp’s stock price dropped by three quarters as the opening bell sounded while shares in First Republic Bank dived 67 percent and PacWest Bancorp plunged more than 35 percent. Trading was swiftly suspended to protect the market from rampant volatility.

According to Daily Mail, Major US banks were also hit as contagion fears spread through the sector with Wells Fargo falling 7.5 percent, Bank of America dropping 7.4 percent, Citigroup falling 5.8 percent and JP Morgan down 2.7 percent.


Biden attempted to shore up trust this morning as he told a press conference: ‘Americans can have confidence that the banking system is safe.’

The White House yesterday guaranteed that Silicon Valley Bank customers would be ‘made whole’ after US authorities took control following the biggest collapse by a financial institution since 2008.

SVB’s swift downfall on Friday – the second-largest banking collapse in history – has ignited anxiety over a contagion amid the Fed’s sharpest rate hike cycle since the early 1980s.

Biden defended his response to the financial meltdown in less than four minutes of remarks, stating the bosses at SVB should be fired and suggested that relaxed regulations under Donald Trump were partly to blame.

‘If the bank is taken over by FDIC, the people running the bank should not work there anymore,’ he said. He called for a ‘full accounting’ of what led to the shutdown of SVB and ‘why those responsible can be held accountable.’ ‘In my administration, no one is above the law. And finally, I must reduce the risk of this happening again,’ the president said.

He warned that those who backed the failed bank ‘knowingly took a risk and when the risk didn’t pay off, investors lose their money. That’s how capitalism works.’

The failure of SVB tore into global markets overnight as Biden slept, with European bank shares suffering their biggest drop in more than a year and bond markets seeing a gigantic repricing of rate hike bets.

The dollar slid too as Wall Street heavyweights such as Goldman Sachs predicted the Fed would no longer lift interest rates next week, capping the biggest three-day rally for short-dated Treasuries since 1987.

The yield on the 10-year U.S. Treasury note fell to 3.507 percent, from 3.694 percent Friday as Wall Street’s so-called ‘fear gauge’ spiked, with the the Cboe Volatility Index (VIX) rising to a five-month high at 27.84.

Europe’s bank index tanked 6 percent having shed 3.8 percent Friday. In Britain, banking stocks across the FTSE 100 and FTSE 250 have slumped nearly 4 percent despite HSBC’s takeover of the UK arm of SVB for £1 ($1.21).

‘We are seeing a classic flight to safety,’ said Tom Caddick managing director at Nedgroup Investments. ‘Higher interest rates and a slowing economy was always going to bite.’


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