A top banker’s warning about “cockroaches” in the financial system seemed to come true as bad loan issues at two US regional banks ignited a global market panic. The news from Zions and Western Alliance revived fears of a 2023-style banking crisis.
The banks reported a combined $150 million in bad loans and write-offs, with one case involving alleged fraud. This followed the recent bankruptcies of Tricolor and First Brands, compounding fears of a “domino effect.”
Global markets reacted with alarm. In Europe, the FTSE 100 and Dax fell, dragged down by a €37.4 billion rout in the banking sector. Asian markets had already closed lower, with the Nikkei and Hang Seng down significantly.
Investors fled to safety, pushing gold to a new record high of $4,378 an ounce. The VIX “fear index” surged, reflecting the heightened state of alarm as investors brace for more bad news.
