Treasury: US banks have ‘substantial’ liquidity, deposit flows are stable

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“We continue to closely monitor market developments,” a Treasury official said. “The banking system has substantial liquidity and deposit flows are stable.”

Shares of Los Angeles-based PacWest were down 60% after the lender confirmed it was exploring strategic options. Western Alliance’s stock was down 58.2%, despite a statement from the bank saying it had no unusual deposit outflows and had adequate liquidity.

Experts say the share price moves do not reflect the banks’ fundamentals and are likely a result of short-selling activity following the collapse of First Republic Bank (OTC:FRCB) and its sale to JPMorgan Chase (NYSE:JPM) & CO on Monday.

First Republic was the third major casualty of the biggest crisis to hit the U.S. banking sector since 2008.