Banking Crisis 2023

Concerns about a credit crunch in the market have highlighted mortgage lenders' reliance on other institutions for funding.

The Federal Reserve wants a smaller balance sheet to help rein in inflation. But uncertainty in the banking system is pushing it in the opposite direction.

Bond market investors continue to drive down the benchmark 10-year Treasury yield, even after short-term rates were boosted 25 basis points on Wednesday.

The San Francisco bank said the move is designed to "foster closer alignment with the shareholder experience and signal commitment to the bank and all of its stakeholders." The company's stock price has fallen 89% this year, and government officials have reportedly been working with industry leaders on a rescue deal.

More hikes are likely as the Board is confident its bid to quell inflation won't deepen a nascent banking crisis.

Financial tightening stemming from two recent bank collapses has served as its own check on inflation, according to Federal Reserve Chair Jerome Powell. He said the relatively small rate hike announced Wednesday was not the result of financial stability concerns.

The Los Angeles company says it secured $1.4 billion of cash from a financing facility from Atlas SP Partners after clients drew down an additional 20% of the bank's deposits. Deposit levels have "stabilized," PacWest says.

Mortgage professionals are carefully monitoring indicators of whether turbulence in the financial markets will continue to put downward pressure on rates.

Wall Street leaders and U.S. officials discussing an intervention at First Republic Bank are exploring the possibility of government backing to encourage a deal that would shore up the lender, people with knowledge of the matter say.

The firm is the latest mortgage player to distance itself from the turmoil on Wall Street.