Bank Run: Bitcoin Bull Says NYCB on Brink of Bankruptcy After Downgrade And Lawsuit
Highlights
- New York Community Bankcorp (NYCB) credit rating downgraded to a 'junk' by Moody's
- NYCB shareholders sue bank after the stock price tumbled to nearly 27-year low
- Arthur Hayes predicts a likely bankruptcy for New York Community Bankcorp and Bitcoin rally
Billionaire crypto investor Arthur Hayes on Wednesday said New York Community Bankcorp (NYCB) gradually moving from a ‘junk’ downgrade by Moody’s to ‘bankruptcy’ amid recent setbacks. He predicts Bitcoin price will rally in response to upcoming Fed money printing.
NYCB’s Bankruptcy Scenario by Arthur Hayes
New York Community Bankcorp (NYCB) credit rating was downgraded to junk. The bank is facing “multifaceted” financial risks and governance challenges, Moody’s wrote in a report on Tuesday.
NYCB shares tumbled 22% in trading hours and 17% after market close on Tuesday on bank run risks. The lender reported a loss in recent earnings and cut its dividend, stockpiling reserves to cover troubled loans tied to commercial real estate. New York Community Bank faces setbacks after acquiring assets and liabilities of troubled Signature Bank last year.
BitMEX co-founder Arthur Hayes took to X saying that this confirms a likely bankruptcy for New York Community Bankcorp (NYCB). Arthur Hayes earlier said BTFP and discount window won’t help as “CRE and multi-family residential loans are not eligible collateral.”
He expects Bitcoin to be volatile, but if NYCB and other banks’ stock prices continue to plunge a new bailout could come soon. Bitcoin price will rally similar to March 2023 price action.
Oh baby …
From junk to bankrupt, that’s the future.
And then more money printer go brrrr$BTC = $1mm pic.twitter.com/6Ia00GWYa5
— Arthur Hayes (@CryptoHayes) February 7, 2024
New York Community Bankcorp Sued by Shareholders
New York Community Bancorp was sued by shareholders after the stock price tumbled to nearly 27-year low, reported Reuters. The shares to open below $3.50 on Wednesday amid a number of troubles, including no Fed rate cuts in March anticipated by Fed Chair Jerome Powell.
In the class action filed in Brooklyn federal court, shareholders allege that NYCB defrauded them by failing to disclose increasing reserves for troubled loans tied to commercial real estate and cut dividends by 71% to shore up its balance sheet.
Meanwhile, crypto commentator Zerohedge noted in a post on X that NYCB has observed very little withdrawal of money from its retail branches. Essentially, it means that not many people are taking money out of their bank accounts at NYCB branches.
Regional bank stocks are under pressure, causing the KBW Regional Banking Index down about 12% this year, as per Yahoo Finance.
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