Despite overcoming a crisis in 2023, America’s regional banks are still facing difficult times. The SPDR S&P Regional Banking exchange-traded fund has fallen roughly 13% this year, with specific banks like New York Community Bank, Bank OZK, and Webster Financial experiencing significant drops in share prices. During the first quarter, regional banks reported wide losses on their profits, with net income falling at banks like PNC Financial, M&T Bank, and US Bancorp. They also saw declines in net interest income, with projections for further decreases in the upcoming year.
Elevated interest rates have been a drag on regional lenders, as they have to pay more interest on deposits. This has put pressure on big banks as well, but their larger size has allowed them to weather the storm better. The collapse of smaller banks like Silicon Valley Bank, Signature Bank, and First Republic Bank has also benefited big banks as customers moved their funds to larger institutions. With the Federal Reserve expected to delay rate cuts due to strong economic indicators, the pain for regional banks is likely to continue.
The central bank closed the Bank Term Funding Program in March, which was established to help regional banks meet their liquidity needs after last year’s turmoil. Former FDIC chair Sheila Bair believes Congress should reinstate the transaction account guarantee program to help prevent another shock to uninsured deposits in the event of a bank failure. The challenges confronting regional banks are significant, particularly in the face of potential bank failures and the need to ensure liquidity in the financial system.
Tesla will seek shareholder approval for the 2018 pay package that made CEO Elon Musk one of the world’s richest people, despite a Delaware judge throwing out the package earlier this year. The pay package gave Musk options to buy 303 million split-adjusted shares of Tesla at a discounted price, but a drop in Tesla’s stock value has reduced its worth. Delaware Chancery Court Chancellor ruled Musk and the Tesla board failed to prove the compensation plan was fair, and the company is seeking shareholder ratification to restore stockholder democracy.
A new study published Wednesday found that climate change-related disasters could lead to a 19% reduction in global income over the next 26 years. Extreme heat waves, floods, and wildfires exacerbated by climate change could have significant financial impacts on individuals as well as big governments and corporations. While immediate actions to combat climate change could help mitigate some losses in the longer term, the economic damage from climate change is expected to take various forms, affecting agriculture, labor productivity, and cognitive abilities, among other areas.
The financial impacts of climate change are inevitable in the short term, with researchers suggesting that even with increased efforts to address the crisis now, losses will still occur. Extreme weather events and elevated temperatures can result in costly property damage, impact agricultural yields and labor productivity, and cause cognitive impairments. While governments and individuals may face economic challenges due to climate change, taking early action to reduce emissions and mitigate environmental damage could help stem some of the losses in the long run.
