Watchman Banks Are In Trouble: New York Community Bancorp Cut To ‘Junk’ By Moody’s 33% Of Deposits Uninsured,the Crash is Coming

By SRH,

HNewsWire Reporting:

Embattled regional bank New York Community Bancorp received another blow Tuesday evening when Moody's Investors Service lowered its credit rating to junk status.

Moody's downgraded New York Community Bancorp due to "challenges" stemming from the lender's unexpected loss in the commercial real estate market. The downgrade reduced the bank's credit rating by two notches from its prior level, indicating a significant lack of faith in the bank's capacity to repay its debt holders.

"NYCB's core historical commercial real estate lending and significant and unanticipated loss on its New York office and multifamily property could create potential confidence sensitivity," according to the assessment released by Moody's Investors Service.

Following the downgrading, New York Community Bancorp shares fell 17% in after-hours trading on Tuesday evening. This loss comes on top of a 22% selloff in regular trading.

Credit downgrades can exacerbate difficulties for struggling businesses by increasing borrowing rates.

Moody's warned that New York Community Bancorp's funding and liquidity are considered as a "relative weakness" in comparison to its peers, citing its reliance on market-sensitive wholesale borrowing, which can dry up during times of stress.

Furthermore, Moody's reported that a third of the bank's deposits are uninsured. Customers at Silicon Valley Bank withdrew uninsured deposits last year, resulting in a conventional bank run.

"The bank could face significant funding and liquidity pressure if there is a loss of depositor confidence," Moody's said in a statement.

New York Community Bancorp has lost more than half of its market value after announcing the unexpected loss a week ago, reducing its dividend and increasing its loan loss reserves.

Moody's is keeping New York Community Bancorp's credit rating under review, indicating that future downgrades are probable.

A request for comment was not responded to quickly by New York Community Bancorp.

During a hearing on Tuesday, Treasury Secretary Janet Yellen declined to address New York Community Bancorp's difficulties.

However, Yellen told the House Financial Services Committee that US officials are "carefully monitoring the current banking stress," and that regulators are collaborating with banks to help them manage the risks posed by faulty real estate loans.... She is Lying!

"I am concerned. I believe it is doable, though certain institutions may be strained by this issue," Yellen added.