Gross: Regional Banks in for a Rocky Ride

Friday, June 27, 2008 11:29 AM

Regional banks are not immune from the strains of the financial meltdown and could be the next group of companies to feel the effects of it, warns Bill Gross, chief investment officer at Pimco.

Investors and regulators do not believe that regional banks such as Keycorp, Regions and BB&T are too big to fail, the bond fund guru told CNBC.

In fact, he said, regional banks could be in worse shape. They lack diversity in their funds, Gross said. Regional banks also have trouble, the same as larger banks, in getting access to capital in a tight credit market.

U.S. Treasury Secretary Henry Paulson’s recently commented that some banks are just too large to fail. Yet Paulson did not define where that line falls.

“How big is too big?