The regional bank collapse of early 2023 shook the financial sector and set the tone for banks for the rest of the year. Big Bank CEOs testified before Congress last week, responding to lawmakers' new capital requirement proposals.

RBC Capital Markets Managing Director Gerard Cassidy joins Yahoo Finance Live to discuss how bank stocks could be expected to react to the Federal Reserve's interest rate pause in December, the potential for a 2024 soft landing, and current credit conditions.

"If rates were to come down and refinancing activity picks up at the long end of the curve, we don't want the Fed cutting too aggressively because that would suggest maybe the economy is weaker than expected," Cassidy explains, "but if you get one or two Fed fund rate cuts in 2024, the yield curve starts to come down a bit — that's very positive for the banks because the credit picture really improves..."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

This post was written by Luke Carberry Mogan.