Recently, regional banks in the U.S., such as Zions Bank and Western Alliance Bank, have seen their stock prices plummet due to loan fraud incidents. Zions Bank wrote off $50 million in loans, while Western Alliance Bank was involved with $98.6 million in unpaid loans, leading to the KBW Bank Index experiencing its largest drop in six months, with a loss of over $100 billion in market value for 74 large banks in a single day.
The incidents stemmed from the related banks providing loans to affiliated investment funds for acquiring non-performing commercial mortgage loans, but it was discovered that the collateral had been transferred, priority liens were fabricated, and funds from guarantee accounts were siphoned off. This is a continuation of the recent credit explosion, following the bankruptcies of subprime auto loan institutions like Tricolor and auto parts suppliers like First Brands, which also caused losses for institutions like JPMorgan.
Market concerns about the widening cracks in the credit market are growing. Although large banks have strong risk resistance, regional banks are more severely impacted. The industry's provisioning levels are differentiated, with some institutions inadequately prepared for risks, while the 'sell first, ask questions later' investment sentiment has intensified market volatility. Wall Street is beginning to be wary of the more hidden credit risks behind the capital frenzy.
