(Bloomberg) - Recent banking failures shows how regulators are overwhelmed by too many institutions, causing them to overlook regional banks, Todd Lemkin, Canyon Partners’ chief investment officer said.
First Republic Bank became the latest bank failure Monday after it was seized by regulators and subsequently acquired by JPMorgan Chase & Co. in a Federal Deposit Insurance Corp.-led takeover. Four US lenders, including Silicon Valley Bank and Signature Bank, have collapsed this year, leading to turmoil in the industry and spreading fears of a broader contagion.
“It’s very challenging to see how many institutions are functioning,” Lemkin said at the Milken Institute Global Conference in Beverly Hills Wednesday. “We need a consolidation. We need less banks.”
Canyon Partners is Dallas-based alternative-asset manager.
Pacific Investment Management Co. Chief Executive Officer Emmanuel Roman pointed to rising interest rates that put the regional banks at risk and said that if the labor market continues to run hot, the Fed could choose to raise rates more. The Fed this afternoon raised rates by 25 basis points to a target range of 5% to 5.25%, lightly hinting at a pause for the next meeting.
“Pausing doesn’t mean stopping,” Roman said at the Milken conference. “When you raise rates, things break.”
By Richard Annerquaye Abbey and Josyana Joshua
