US FDIC calls on banks to fix ‘inaccurate’ financial statements
The U.S. Federal Deposit Insurance Corporation (FDIC) on Monday called on some banks to fix their financial statements for “incorrectly” reducing the amount of uninsured deposits.
The banking crisis earlier this year has prompted regulators to draft new rules to make the industry more resilient.
In May, the FDIC had said it would charge a “special assessment” fee to recoup losses to its deposit insurance fund from the collapse of three U.S. banks.
That fee would be determined by the amount of uninsured deposits a bank held at the end of last year, the banking regulator had said.
The regulator said some banks were “not reporting estimated uninsured deposits in accordance with the instructions.”
“The chief financial officer (or the individual performing an equivalent function) and multiple directors of each insured depository institutions are required to attest to the correctness (of the report),” the FDIC wrote in a letter posted on its website.
Banks could submit up to three years of revisions, or more if appropriate, the regulator added.
With banking authorities tightening the standards, the companies are worried that going too far could add undue pressure to the industry at a time when many lenders are expecting demand for loans to taper off later in the year.
The Dow Jones Industrial Average rose 113.89 points, or 0.33%, to 34,509.03, the S&P 500 lost 4.62 points, or 0.10%, to 4,505.42 and the Nasdaq Composite dropped 24.87 points, or 0.18%, to 14,113.70.
For the week, the Dow was up 2.3%, the S&P 500 rose 2.4% and the Nasdaq advanced 3.3%. The S&P 500 remains up 17% for the year to date.
Among other financial company reports, Citigroup shares fell 4% after the lender’s quarterly profit tumbled, while BlackRock was down 1.5% after it posted a decline in quarterly revenue.
Some strategists said bank stocks may have sold off following recent strong gains.
The S&P banks index snapped a five-session winning streak along with the KBW regional bank index, which was down 1.9% on the day.
An index of high profile tech-related shares edged lower a day after registering a record high close.
Tesla, whose shares rose 1.3%, is the first of the growth giants to report, with earnings expected on Wednesday.
Volume on U.S. exchanges was 10.72 billion shares, compared with the 11.04 billion average for the full session over the last 20 trading days.
Declining issues outnumbered advancing ones on the NYSE by a 2.73-to-1 ratio; on Nasdaq, a 2.33-to-1 ratio favored decliners.
The S&P 500 posted 40 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 97 new highs and 60 new lows.
Offsetting some of the day’s upbeat tone, a separate report showed weekly jobless claims unexpectedly fell last week, indicating that the labor market remains tight.
Focus also is shifting to the second-quarter U.S. earnings season kicking off this week. Shares of JPMorgan Chase ended up 0.5% ahead of its quarterly results due before the opening bell Friday.
“We might have another quarter here where the positive sentiment will continue,” said Alan Lancz, president of Alan B. Lancz & Associates Inc. in Toledo, Ohio.
“As long as expectations and guidance are in line, that’s what a lot of institutional investors will be looking at.”
Delta Air Lines ended near flat after rising on news it lifted its full-year profit outlook, citing a relentless post-pandemic travel boom.
PepsiCo shares jumped 2.4% after the company raised its annual revenue and profit forecasts for the second time.
Among the day’s other gainers, shares of Google parent Alphabet Inc shot up 4.7%. It said it was rolling out its artificial-intelligence chatbot Bard in Europe and Brazil, easing worries about overseas regulatory issues.
Recent weakness in the U.S. dollar could be among positives for U.S. multinational companies for future earnings, strategists said.
Volume on U.S. exchanges was 10.82 billion shares, compared with the 11.11 billion average for the full session over the last 20 trading days.