Despite concerns about bad loans at midsize U.S. banks, Moody’s Ratings senior analyst downplays systemic risk. Bank stocks fell Thursday after Zions, Bancorp, and Western Alliance Bancorp revealed bad loans related to auto lender bankruptcies. JPMorgan Chase CEO’s “cockroach” comment raised alarm, but analyst sees low default rates and strong economy.

Default rates on high-yield debt remain low, expected to drop below 3% in 2026. U.S. economy shows resilience, defying worries over labor market weakness and impact of tariffs. Analyst Pinto notes optimism at banking conference, cites strong GDP growth and potential credit quality improvement.

Market sentiment improved Friday after Thursday’s sell-off. SPDR S&P Regional Banking ETF, tracking mid-market leaders, fell 6.2% Thursday but rose 2% in premarket trading Friday. Analyst remains positive on credit quality amid strong GDP growth and expected interest rate decline.

Read more at CNBC: Moody’s says the banking system, private credit markets are sound despite worries over bad loans