SVB collapse – latest: Credit Suisse to borrow £44.5bn after crash amid fears of economic crisis

Credit Suisse will borrow up to £44.5bn from the Swiss National Bank to strengthen its liquidity, the lender said.

The troubled banking giant said it was taking decisive action to shore up its finances after its shares nosedived 30 per cent on Wednesday.

Shares in the Swiss bank plummeted after its top shareholder Saudi National Bank said it would not provide any further financial assistance. However, Swiss regulators announced that the country’s central bank would give Credit Suisse liquidity if needed, helping mitigate earlier concerns.

This comes after Wall Street expert Robert Kiyosaki, famed for predicting the Lehman Brothers’ failure, pegged Credit Suisse as the next major bank most likely to collapse.

The concerning outlook for the bank comes as SVB – whose Friday collapse sparked concerns of a financial crisis – is back open for business.

New CEO Tim Mayopoulos urged customers to return to the bank, saying it is now opening new accounts and making new loans. He served as CEO of Fannie Mae bringing it back to profitability after the 2008 financial crisis.

Six regional financial institutions remain under tight scrutiny but the response from regulators to protect depositors appears to have addressed market concerns.

Key Points

• Dow Jones closes 280 points lower, dogged by fears for future of Credit Suisse

• DOJ and SEC to probe stock sales ahead of Silicon Valley Bank collapse, report says

• ‘Rapid deterioration’ of operating environment sees Moody’s cut US banking outlook

• New York State Department of Financial Services takes over Signature Bank

• Biden to ask Congress ‘to strengthen the rules for banks'

Bank runs now happen at speed of social media

02:50 , Oliver O'Connell

A bank run conjures images of “It’s a Wonderful Life,” with anxious customers crammed shoulder to shoulder, desperately pleading with a harried George Bailey to hand over their money.

The failure of Silicon Valley Bank last week had the panic but few other similarities, instead taking place on Twitter, message boards, cell phones and bank websites.

What made the failure of Silicon Valley Bank unique compared to past failures of large banks was how quickly it collapsed. Last Wednesday afternoon, the $200 billion bank announced a plan to raise fresh capital; by Friday morning it was insolvent and under government control.

Read more:

Bank runs used to be slow. The digital era sped them up

Why did Silicon Valley Bank collapse?

00:50 , Oliver O'Connell

The collapse of the 16th largest bank in the US sent ripples through global markets on Monday as governments and businesses scrambled to figure out what the impact would be and how it could be contained.

Silicon Valley Bank collapsed on Friday after failing to raise new capital last week.

On Monday, the UK government said that HSBC would take over the UK wing of the bank.

But what was SVB, why did it collapse, and are other banks at risk? We examine these questions here.

Why did Silicon Valley Bank collapse and are other lenders at risk?

Worst one-day performance for London stockmarket since start of Covid pandemic

Wednesday 15 March 2023 22:50 , Oliver O'Connell

Fears that the economy might be on the edge of another “2008-style crisis” caused shares in top European banks to plunge and dragged London’s FTSE 100 down to its lowest level this year.

Troubled bank Credit Suisse saw its share price drop by as much as a quarter to a new record low, causing its shares to be temporarily suspended on the Swiss market.

Investors were shaken by the collapse of Silicon Valley Bank (SVB) in the US over the weekend, sparking concerns about the viability of the “too big to fail” Credit Suisse.

London stock market suffers heavy losses as banking crisis fears intensify

Dow Jones closes 280 points lower, dogged by fears for future of Credit Suisse

Wednesday 15 March 2023 20:50 , Oliver O'Connell

The Dow Jones Industrial Average closed 280 points (0.87%) lower on Wednesday, dogged by concerns over the future of Credit Suisse, which has a large US and international presence beyond its home base in Switzerland.

The S&P ended the day down 0.7% at 3,891.97, and the Nasdaq Composite managed to creep up 0.05% at 11,434 by the close of trading.

At one point the Dow was down 725 points and the S&P briefly saw all of this year’s gains erased.

There was something of a rebound in the afternoon when Swiss regulators announced that the country’s central bank would give Credit Suisse liquidity if needed, helping mitigate earlier concerns when it was reported by Reuters that Saudi National Bank, the institution’s largest investor, said it couldn’t provide further funding.

Credit Suisse had earlier said it had found “certain material weaknesses in our internal control over financial reporting” for the years 2021 and 2022.

Fears over the future of the bank stem from the crisis that emerged in US regional banks following the collapse of Silicon Valley Bank and Signature Bank over the weekend.

Credit Suisse shares sink as key investor vows no more help

Wednesday 15 March 2023 20:30 , Oliver O'Connell

Battered shares of Credit Suisse lost more than one-quarter of their value Wednesday, hitting a record low after its biggest shareholder — the Saudi National Bank — told outlets that it would not inject more money into the ailing Swiss bank.

The turmoil in the Credit Suisse stock price prompted an automatic pause in trading of the bank’s shares on Switzerland’s market and brought down shares of other European banks by as much as double digits. That fanned new fears about the health of financial institutions in the wake of the collapse of Silicon Valley Bank in the United States and worries about midsized lenders.

Credit Suisse stock was down more than 27% at around 1.6 Swiss francs in mid-afternoon trading on the SIX stock exchange Wednesday. That’s down more than 85% from February 2021.

Credit Suisse shares sink as key investor vows no more help

Bank runs now happen at speed of social media

Wednesday 15 March 2023 19:50 , Oliver O'Connell

A bank run conjures images of “It’s a Wonderful Life,” with anxious customers crammed shoulder to shoulder, desperately pleading with a harried George Bailey to hand over their money.

The failure of Silicon Valley Bank last week had the panic but few other similarities, instead taking place on Twitter, message boards, cell phones and bank websites.

What made the failure of Silicon Valley Bank unique compared to past failures of large banks was how quickly it collapsed. Last Wednesday afternoon, the $200 billion bank announced a plan to raise fresh capital; by Friday morning it was insolvent and under government control.

Read more:

Bank runs used to be slow. The digital era sped them up

Lawmaker’s praised for viral video explanation of Silicon Valley Bank’s collapse

Wednesday 15 March 2023 19:20 , Oliver O'Connell

A congressman has been widely praised for posting a two-and-a-half-minute video to Twitter and TikTok clearly laying out the Silicon Valley Bank situation.

North Carolina Democrat Jeff Jackson, originally from Chapel Hill, was elected to the US House of Representatives for the state’s 14th District in 2022.

At 2am on Monday morning, he filmed a video for social media explaining how the Silicon Valley Bank crisis began, what was being done about it, and to discourage panic.

North Carolina lawmaker’s video explanation of the SVB collapse earns praise online

Schumer: US needs strong, bipartisan legislation on banking

Wednesday 15 March 2023 19:06 , Oliver O'Connell

The United States needs “strong legislation” on banking regulation, Senate Majority Leader Chuck Schumer said on Wednesday, “hopefully” something bipartisan.

Schumer made the comments in response to a question on whether he would support legislation spearheaded by Democratic Senator Elizabeth Warren, which would reinstate banking regulations and oversight rolled back under former President Donald Trump.

He declined to say whether he would support the legislation, insisting that he has faith in President Joe Biden, Treasury Secretary Janet Yellen and the US Federal Reserve.

Reuters

Signature not targeted for crypto activities says New York senator

Wednesday 15 March 2023 18:50 , Oliver O'Connell

New York Senator Kirsten Gillibrand was asked if she had any concerns about whether Signature Bank was targeted and failed by regulators unfairly for its crypto activities.

She said no, adding that the bank appeared to have “had other stability issues”.

Former Rep Barney Frank said on Monday that he believes the state officials behind the action were trying to make an example of Signature Bank.

“This was just a way to tell people, ‘We don’t want you dealing with crypto,’” Frank told The Associated Press in a telephone interview.

Mr Frank is a board member of Signature Bank and was one of the pioneers of the landmark Dodd-Frank Act, which was enacted after the 2008 financial crisis to better insulate the banking system from shocks.

I asked Sen. Gillibrand just now if she had any concern on whether New York's Signature Bank was targeted and failed by regulators unfairly for its crypto activities.

She said no, saying the Signature appeared to have "had other stability issues"

— Brendan Pedersen (@BrendanPedersen) March 15, 2023

New York’s financial regulator has pushed back on former Rep Frank’s comments, saying its decision to close Signature Bank had “nothing to do with crypto,” citing what it called “a significant crisis of confidence in the bank’s leadership” that occurred over the weekend after regulators shuttered Silicon Valley Bank.

But NYDFS denied his claims in a statement on Tuesday, saying that its decision to close Signature Bank on Sunday and appoint the Federal Deposit Insurance Corp as receiver “was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.”

“The decisions made over the weekend had nothing to do with crypto. Signature was a traditional commercial bank with a wide range of activities and customers,” an NYDFS spokesperson said.

“DFS has been facilitating well-regulated crypto activities for several years, and is a national model for regulating the space,” they said.

The spokesperson added that as withdrawal requests ballooned over the weekend, Signature Bank failed to provide reliable and consistent data.

Mr Frank said he was surprised the regulator said the decision to close the bank was not related to cryptocurrency.

“I think that was a factor,” he said in an interview. “I’m puzzled as to why it was closed.”

He added that to his knowledge, bank executives were working to provide data to regulators.

“What we heard from our executives is that the deposit situation had stabilised and they would be getting the capital from the discount window and I continue to be convinced that if we had opened on Monday given the announcements of those two policies, we would have been in a reasonably good shape and certainly functional,” he said.

With reporting from Reuters

Worst one-day performance of London stock market since start of Covid pandemic

Wednesday 15 March 2023 18:35 , Oliver O'Connell

Fears that the economy might be on the edge of another “2008-style crisis” caused shares in top European banks to plunge and dragged London’s FTSE 100 down to its lowest level this year.

Troubled bank Credit Suisse saw its share price drop by as much as a quarter to a new record low, causing its shares to be temporarily suspended on the Swiss market.

Investors were shaken by the collapse of Silicon Valley Bank (SVB) in the US over the weekend, sparking concerns about the viability of the “too big to fail” Credit Suisse.

Anna Wise reports on today’s market activity.

London stock market suffers heavy losses as banking crisis fears intensify

Watch: SenatorJohn Kennedy says fed intervention at SVB was ‘bailout’

Wednesday 15 March 2023 18:10 , Oliver O'Connell

“You can put perfume on a pig, but it still smells like a pig.”

“You can put perfume on a pig, but it still smells like a pig.”

— Sen. John Kennedy (R-LA) argues President Biden insuring depositors at Silicon Valley Bank and Signature Bank was a “bailout” pic.twitter.com/AqETPEQhtG

— The Recount (@therecount) March 15, 2023

Gallego takes aim at Sinema over 2018 bank deregulation vote

Wednesday 15 March 2023 17:45 , Oliver O'Connell

Democratic Rep Ruben Gallego slammed independent Sen. Kyrsten Sinema of Arizona on Tuesday for backing a bank deregulation bill he says contributed to the collapse of Silicon Valley Bank, highlighting Sinema’s Wall Street ties as he campaigns for her seat.

The contrast over the 2018 legislation feeds Gallego’s push to portray Sinema as a friend of powerful interests, a central theme of the Senate campaign he launched in January.

“It’s not like we received different information. We got the same pitches as all the members of Congress,” Gallego told reporters outside Silicon Valley Bank’s offices in Tempe. “But when push came to shove, and the vote came to the floor, I voted to protect Arizona and she voted to protect Wall Street.”

Gallego slams Sinema over 2018 bank deregulation vote

Treasury officials reviewing US exposure to Credit Suisse, report says

Wednesday 15 March 2023 17:30 , Oliver O'Connell

TREASURY officials are actively reviewing the US financial sector’s exposure to Credit Suisse, people familiar tell @SalehaMohsin @v_dendrinou, on @TheTerminal

US officials are working closely with European regulators.

— Kate Davidson (@KateDavidson) March 15, 2023

The US Treasury is monitoring the situation surrounding Credit Suisse and is in touch with global counterparts about it, a Treasury spokesperson said on Wednesday as the bank came under renewed market pressures after a major shareholder ruled out providing new capital.

Asked about Treasury’s involvement in the Credit Suisse matter, a Treasury spokesperson said in an emailed statement: “Treasury is monitoring this situation and has been in touch with global counterparts.”

Reuters

Ayanna Pressley adds voice to Warren and Porter’s call for reversal of bank regulation rollback

Wednesday 15 March 2023 17:15 , Oliver O'Connell

Congresswoman Ayanna Pressley has added her voice to growing calls for a reversal of 2018 Republican-led legislation that rolled back regulations put in place after the 2008 global financial crisis.

Rep Pressley applauds the efforts of Senator Elizabeth Warren and Rep Katie Porter in presenting a bill to do just that.

Make no mistake: the Silicon Valley Bank collapse was made possible by Republicans’ dangerous bank deregulation during the Trump era.

Congress must reverse those harmful policies, & I'm proud to join @SenWarren & @RepKatiePorter on a bill to do just that.https://t.co/54zGaqonan

— Congresswoman Ayanna Pressley (@RepPressley) March 15, 2023

How the 2008 global financial crisis still fuels today’s populist politics

Wednesday 15 March 2023 16:45 , Oliver O'Connell

Mike Pence and Bernie Sanders are hardly political allies.

But in the aftermath of two large bank failures, the conservative former vice president and the democratic socialist senator are striking remarkably similar tones. Pence, a Republican, bemoaned that “we live in a world where certain politically favored businesses are propped up, backstopped and bailed out by government.” Sanders, an independent who caucuses with Democrats, said “we cannot continue down the road of more socialism for the rich and rugged individualism for everyone else.”

Their sentiment reflects the populism that has coursed through both political parties in the 15 years since shaky financial institutions last spurred anxiety about the broader economy. The 2008 financial crisis unleashed a political realignment that rejected perceived elites and establishment figures, often with unpredictable results for Democrats and Republicans alike.

Read more:

How the last banking tumult fuels today's populist politics

Dow down 660pts at lunchtime in New York

Wednesday 15 March 2023 16:30 , Oliver O'Connell

Stocks on Wall Street have fallen so far on Wednesday amid newly strengthened concerns about the financial sector as shares of Credit Suisse, which had a large US operation, fell by more than 15 per cent.

The Dow Jones Industrial Average dropped 644 points, or 1.6%. The Nasdaq Composite lost 1.1%, while the S&P 500 fell 1.8%.

The crisis in the financial sector began with US regional banks after Silicon Valley Bank and Signature Bank collapsed due to poor management decisions as the Federal Reserve continued to hike interest rates to counter inflation.

Credit Suisse was fingered as a larger possible casualty on Monday due to internal weaknesses and shares of the troubled bank fell to an all-time low.

Saudi National Bank, the bank’s largest investor, said on Wednesday it could not provide any more funding, according to a Reuters report.

Earlier this week, Credit Suisse said itt had found “certain material weaknesses in our internal control over financial reporting” for the years 2021 and 2022.

As Credit Suisse dragged down the banking sector in European Bank sector, so followed big US banks — Citi was down 6 per cent, Goldman Sachs 5.5 per cent, Wells Fargo 5 per cent, and Bank of America 2.5 per cent.

After a rebound on Tuesday, regional US banks also fell back in trading on Wednesday.

Elizabeth Warren laughs at concept of banks doing their own testing

Wednesday 15 March 2023 16:15 , Oliver O'Connell

Senator Elizabeth Warren laughed out loud at the concept of banks being qualified to do their own stress testing during an appearance on CNBC this morning.

Host Sara Eisen asked about the legislation Senator Warren is sponsoring to undo the Trump administration’s roll back of bank regulations put in place after the 2008 global financial crisis.

“We've had a number of those CEOs on the shows in the last few days, Fifth Third, Schwab, they do their own stress testing,” said Eisen to laughter from the senator.

“I'm sorry,” Ms Warren said. “I taught school for many, many years and I did not let my students do their own testing.”

She continued: “The testing that is meaningful is the testing that comes from the outside. And it's also the testing where you don't give the answers in advance," she continued. "The whole point of stress testing is for someone on the outside of the bank to say, hmm, what could go wrong here and to make sure that the bank could withstand those kinds of problems like a sudden increase in interest rates.”

“And for these banks to say not to worry, we're testing ourselves is truly laughable,” the senator concluded.

Watch:

What happened to Credit Suisse today?

Wednesday 15 March 2023 15:50 , Oliver O'Connell

Credit Suisse shares slumped by as much as 30% on Wednesday after its largest shareholder said it could not provide further support, prompting the Swiss bank’s CEO to make new assurances on its financial strength.

Saudi National Bank (SNB), which holds 9.88 per cent of Credit Suisse, said it would not buy more shares on regulatory grounds.

Shares in Credit Suisse, which is battling to recover from a string of scandals that have undermined the confidence of investors and clients, were down about 17 per cent in early afternoon trading, after shedding as much as 30p per cent to a new record low.

In a sign that regulatory authorities are tracking developments, European Central Bank (ECB) officials contacted lenders it supervises to ask about financial exposures to Credit Suisse, a source familiar with the matter told Reuters, confirming a Wall Street Journal report.

Meanwhile, the falls in Credit Suisse’s market value also prompted action among politicians with French Prime Minister Elisabeth Borne saying that Finance Minister Bruno Le Maire would speak with his Swiss counterpart in the coming hours.

“The Credit Suisse situation is for the Swiss authorities to deal with,” Borne said in the French Senate.

Credit Suisse CEO Ulrich Koerner moved to calm nerves, saying the bank’s liquidity base remained strong and was well above all regulatory requirements. Koerner had said earlier in the week Credit Suisse’s liquidity coverage ratio averaged 150 per cent in the first quarter of this year.

The Swiss National Bank declined to comment on the fall in shares Credit Suisse shares.

Credit Suisse on Tuesday published its annual report for 2022, which said it had identified "material weaknesses" in controls over financial reporting and had not yet stemmed customer outflow.

Switzerland’s second-biggest bank had seen fourth-quarter customer outflows rise to more than 110 billion Swiss francs ($120bn).

Exane analysts said they saw a bailout by the Swiss National Bank and financial regulator Finma, possibly with one or more other banks, as the “most likely scenario” facing Credit Suisse.

They also raised the possibility of a u-turn by Saudi National Bank, which upped its stake in Credit Suisse last year as part of a capital raise to bolster its financial strength.

“We cannot because we would go above 10 per cent. It’s a regulatory issue,” SNB Chairman Ammar Al Khudairy told Reuters on Wednesday.

Reuters

How Washington came to the rescue of US banks

Wednesday 15 March 2023 15:20 , Oliver O'Connell

After the sudden collapse of Silicon Valley Bank, California Democratic Rep. Maxine Waters started furiously working the phones to find out what was going on with the failed lender — and what would happen to its panicked depositors.

Waters, former chair of the House Financial Services Committee, had her doubts that another bank would step up as a savior and buy the defunct institution.

“Banks don’t just wake up and say: ‘Oh, there’s a problem with another significant bank and they’ve collapsed. Let’s just take it over,’’’ she said.

So began a frenetic weekend of nonstop briefings with regulators, lawmakers, administration officials and President Joe Biden himself about how to handle the demise of the nation’s 16th-biggest bank and a go-to financial institution for tech entrepreneurs. At the core of the problem was tens of billions of dollars — including money companies needed to meet payrolls — sitting in Silicon Valley Bank accounts that were not protected by federal deposit insurance that only goes up to $250,000.

Something needed to be done, federal officials agreed, before Asian stock markets opened Sunday evening and other banks faced the potential for waves of panicked withdrawals Monday morning.

Washington reacts on the fly to Silicon Valley Bank failure

Warren and Blumenthal push for SVB executives probe

Wednesday 15 March 2023 14:50 , Oliver O'Connell

Senators Elizabeth Warren and Richard Blumenthal have written to the Securities Exchange Commission and the Department of Justice pressing for an investigation into whether Silicon Valley Bank executives broke the law.

Sens. Warren & Blumenthal write to the SEC and DOJ pressing for an investigation into whether Silicon Valley Bank execs broke the law: pic.twitter.com/0O1rXmN1ys

— Andrew Solender (@AndrewSolender) March 15, 2023

Why did Silicon Valley Bank collapse and are other lenders at risk?

Wednesday 15 March 2023 14:30 , Rachel Sharp

The collapse of the 16th largest bank in the US sent ripples through global markets on Monday as governments and businesses scrambled to figure out what the impact would be and how it could be contained.

Silicon Valley Bank collapsed on Friday after failing to raise new capital last week.

But what was SVB, why did it collapse, and are other banks at risk? We examine these questions here:

Why did Silicon Valley Bank collapse and are other lenders at risk?

Democratic Rep Gallego slams Kyrsten Sinema over deregulation vote

Wednesday 15 March 2023 14:00 , Rachel Sharp

Democratic Rep. Ruben Gallego slammed independent Sen. Kyrsten Sinema of Arizona on Tuesday for backing a bank deregulation bill he says contributed to the collapse of Silicon Valley Bank, highlighting Sinema’s Wall Street ties as he campaigns for her seat.

The contrast over the 2018 legislation feeds Gallego’s push to portray Sinema as a friend of powerful interests, a central theme of the Senate campaign he launched in January.

“It’s not like we received different information. We got the same pitches as all the members of Congress,” Gallego told reporters outside Silicon Valley Bank’s offices in Tempe. “But when push came to shove, and the vote came to the floor, I voted to protect Arizona and she voted to protect Wall Street.”

A spokesperson for Sinema, Hannah Hurley, said the senator is not focused on the election and declined to respond to Gallego’s comments.

Sinema on Sunday applauded the Biden administration’s announcement that people who deposited money at the bank would have prompt access to it.

“The federal government must now ensure those responsible are held accountable, while maintaining stability for all Americans who rely on our banking system,” she said in a statement.

How much the regulatory rollback contributed to the Silicon Valley Bank failure is a matter of debate. The Federal Reserve announced Monday it will review its supervision of the bank to understand how it might have better managed its regulation. The Federal Reserve has faced stringent criticism for missing signs the bank was at risk.

Silicon Valley Bank doesn’t have branches in Arizona but has hundreds of employees working from a lakefront office in a Phoenix suburb.

Gallego said he supports the Biden administration’s intervention to protect bank customers, adding, “This could have really spiraled out of control.” He said the banking system needs new safeguards for the modern world, where fears can spread quickly through social media and people can respond instantly by moving their money electronically.

A Gallego spokesperson said he will co-sponsor legislation to repeal the 2018 rollback, which was introduced Tuesday by Sen. Elizabeth Warren, D-Mass., and Rep. Katie Porter, D-Calif.

Sinema left the Democratic Party last year after frequently bucking the party and the White House. She has not said whether she will run for reelection in a three-way contest against a Democrat and Republican in one of the most closely watched 2024 Senate races.

Sinema was one of 50 Democrats who voted for the 2018 legislation rolling back provisions of the Dodd-Frank financial regulation measure, which President Barack Obama signed in 2010 in response to the financial crisis that spawned the Great Recession. Gallego voted against it.

The Associated Press contributed to this report

Citadel founder says US shouldn’t bail out depositors

Wednesday 15 March 2023 13:30 , Rachel Sharp

The founder of Citadel hedge fund has said that the US shouldn’t guarantee the deposits for customers at Silicon Valley Bank and Signature Bank after the two institutions failed.

Ken Griffin told the Financial Times that if the Biden administration refused to bail out customers it would be a “great lesson in moral hazard”.

“There’s been a loss of financial discipline with the government bailing out depositors in full,” he said.

“The US is supposed to be a capitalist economy, and that’s breaking down before our eyes.

“Losses to depositors would have been immaterial, and it would have driven home the point that risk management is essential.”

He added: “We’re at full employment, credit losses have been minimal, and bank balance sheets are at their strongest ever. We can address the issue of moral hazard from a position of strength.”

His comments came before it emerged that Citadel had bought a 5.3 percent stake in Western Alliance.

On Sunday, the Biden administration promised to protect depositors at the two failed banks, in a move that appears to have helped reduce market concerns.

Breaking: UK will avoid recession in 2023, chancellor says

Wednesday 15 March 2023 13:00 , Rachel Sharp

The UK will not enter a “technical recession” this year, the UK’s chancellor Jeremy Hunt told the Commons.

Starting his Budget, Mr Hunt said the British economy is “proving the doubters wrong” in the face of “enormous challenges.”

He added that the UK economy is “on the right track.”

The chancellor said: “We remain vigilant, and will not hesitate to take whatever steps are necessary for economic stability. Today the Office for Budget Responsibility forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year.

“They forecast we will meet the prime minister’s priorities to halve inflation, reduce debt and get the economy growing. We are following the plan and the plan is working. But that’s not all we’ve done.”

Read the story here:

UK will avoid recession in 2023, chancellor says

Signature Bank was under criminal investigation when New York regulators seized it

Wednesday 15 March 2023 12:30 , Rachel Sharp

Signature Bank was the focus of a criminal investigation when New York regulators seized it over the weekend, it has been revealed.

Sources told Bloomberg that Justice Department investigators in Washington and Manhattan were investigating the bank over whether it had taken appropriate steps to detect possible money laundering operations.

The Securities and Exchange Commission (SEC) was also investigating the matter, the sources said.

New York regulators shuttered the bank – which predominantly serves crypto clients – on Sunday, making it the second US bank to shutter in just three days.

Democrats vow to give SVB donations back

Wednesday 15 March 2023 12:00 , Rachel Sharp

Several Democrats are vowing to hand back donations they received from Silicon Valley Bank’s former CEO Greg Becker and its political action committee (PAC) in the wake of the bank’s sudden collapse.

A source told CNBC Senate Majority Leader Chuck Schumer has vowed to give the funds to charity.

Mr Schumer received a $5,800 donation from Mr Becker to his campaign in June 2021 and a $2,700 donation from its PAC in 2016, records show.

Meanwhile, Rep Maxine Waters said she will hand back the $2,500 donation she was given by the bank’s PAC, reported Politico.

Bitcoin price resurgence revives ‘digital gold’ comparisons

Wednesday 15 March 2023 11:30 , Rachel Sharp

Bitcoin’s recent price revival has once again bolstered the cryptocurrency’s reputation as a form of “digital gold” among some analysts, who claim it serves as a safe-haven asset during times of geopolitical and economic crisis.

The world’s leading cryptocurrency is up more than 10 per cent over the last week, despite turmoil among the banking and tech sector.

Bitcoin’s price trajectory actually mirrored that of gold’s during the collapse of Silicon Valley Bank (SVB) earlier this week, having previously followed a similar path to stocks.

Read the full story:

Bitcoin price resurgence revives ‘digital gold’ comparisons

Credit Suisse stocks plunge to new record low

Wednesday 15 March 2023 11:10 , Rachel Sharp

Credit Suisse stocks plunged to a new record low, dropping by more than 21 percent on Wednesday morning as the fallout from the collapse of Silicon Valley Bank (SVB) continues.

Shares in the struggling Swiss bank plummeted for a second consecutive day after its top shareholder Saudi National Bank said it would not provide any further financial assistance.

“We cannot because we would go above 10 percent. It’s a regulatory issue,” Saudi National Bank Chairman Ammar Al Khudairy told Reuters on Wednesday.

Concerns are mounting that the Swiss bank could be the next to collapse after it revealed it had found “material weaknesses” in its financial report on Tuesday.

Wall Street expert Robert Kiyosaki, famed for predicting the Lehman Brothers’ failure, has pegged Credit Suisse as the next major bank most likely to collapse.

New Silicon Valley Bank CEO brings experience and ‘humility’

Wednesday 15 March 2023 10:00 , Oliver O'Connell

In a message to clients, newly appointed Silicon Valley Bank CEO Tim Mayopoulos says: “I look forward to getting to know the clients of Silicon Valley Bank. I come to this role with humility. I also come to this role with experience in these kinds of situations.”

He explains: “I was part of the new leadership team that joined Fannie Mae in the wake of the financial crisis in 2008-09, and I served as the CEO of Fannie Mae from 2012-18. I am very proud of work we did there to restore the company to profitability and to stabilize the housing finance system in a period of unprecedented challenge.”

Mr Mayopoulos adds: “I also come with experience in and an appreciation for the innovation economy. Until recently, I was the president of a Silicon Valley-based software company that provides technology to financial institutions to serve their consumer banking customers. I know how important Silicon Valley Bank has been and continues to be to the success of its clients and the innovation ecosystem.”

Tough decisions ahead as Fed criticised for missing red flags before bank failure

Wednesday 15 March 2023 09:30 , Oliver O'Connell

The Federal Reserve is facing stinging criticism for missing what observers say were clear signs that Silicon Valley Bank was at high risk of collapsing into the second-largest bank failure in U.S. history.

The Fed was the primary federal supervisor of the bank based in Santa Clara, California, that failed last week. The bank was also overseen by the California Department of Financial Protection and Innovation.

Critics point to many red flags surrounding Silicon Valley Bank, including its rapid growth since the pandemic, its unusually high level of uninsured deposits and its many investments in long-term government bonds and mortgage-backed securities, which tumbled in value as interest rates rose.

Read more:

Fed, under criticism for bank failure, faces tough decisions

Premium: Has enough been done to calm Wall Street over the banking crisis?

Wednesday 15 March 2023 09:00 , Oliver O'Connell

James Moore, The Independent’s chief business commentator, writes:

Just what we needed right now: another banking crisis. But after the bloodbath at the beginning of the week, a rally quickly got underway. Regional banks in the United States – in real danger of experiencing a run on their deposits while larger rivals benefit from inflows – found some support.

Has enough been done to calm Wall Street over the banking crisis?

Private equity firms interested in SVB loan book, reports say

Wednesday 15 March 2023 08:30 , Oliver O'Connell

CNBC reports that private equity firms Apollo Global Management and KKR are among the institutions reviewing a book of loans held by Silicon Valley Bank. The network cites people familiar with the discussions who requested anonymity.

Two of the sources said Apollo may be interested in acquiring a piece of the business but it is unclear if the FDIC would prefer a single buyer for the whole bank.

Bloomberg earlier reported a number of private equity firms were interested in the bank’s loan portfolio, including Ares Management, Blackstone, and Carlyle Group, in addition to Apollo and KKR.

New Silicon Valley Bank CEO: ‘We are open for business’

Wednesday 15 March 2023 08:00 , Oliver O'Connell

Tim Mayopoulos, the new CEO of Silicon Valley Bank — now technically known as Silicon Valley Bridge Bank — has declared the bank is open for business.

In a message posted to the company’s website and emailed to customers, Mr Mayopoulos said: “We are doing everything we can to rebuild, win back your confidence, and continue supporting the innovation economy. We recognise the past few days have been an extremely challenging time, and we are grateful for your patience.”

He continued: “We are open for business and are hard at work bringing all systems and solutions back online to support you. We are making new loans and fully honoring existing credit facilities.

“The number one thing you can do to support the future of this institution is to help us rebuild our deposit base, both by leaving deposits with Silicon Valley Bridge Bank and transferring back deposits that left over the last several days.”

Underlining the announcement yesterday that depositors have full access to their money, and that both new and existing deposits are fully protected by the FDIC, he characterised the bank as now among the safest in the country thanks to the actions of regulators.

The bank is actively opening new accounts of all sizes and making new loans, Mr Mayopoulos added.

Lawmaker’s explanation of Silicon Valley Bank’s collapse goes viral

Wednesday 15 March 2023 07:30 , Oliver O'Connell

A congressman has been widely praised for posting a two-and-a-half-minute video to Twitter and TikTok clearly laying out the Silicon Valley Bank situation.

North Carolina Democrat Jeff Jackson, originally from Chapel Hill, was elected to the US House of Representatives for the state’s 14th District in 2022.

At 2am on Monday morning, he filmed a video for social media explaining how the Silicon Valley Bank crisis began, what was being done about it, and to discourage panic.

Read more:

North Carolina lawmaker’s video explanation of the SVB collapse earns praise online

Are we in the clear yet? Not according to some experts

Wednesday 15 March 2023 07:15 , Oliver O'Connell

A Wall Street expert has revealed which bank he believes will fail next, following the Silicon Valley Bank (SVB) collapse.

SVB folded on Friday after failing to raise new capital after it sold government bonds at heavy losses to reimburse customers withdrawing their cash.

Now Robert Kiyosaki, who accurately predicted the 2008 Lehman Brothers’ collapse, warned that Credit Suisse could be at risk as the volatile bond market crashes, with rising interest causing bonds to fall in price.

Kate Plummer has the story.

Wall Street expert predicts next major bank to fold

Class action suit filed against Silicon Valley Bank parent

Wednesday 15 March 2023 06:45 , Oliver O'Connell

A class action lawsuit is being filed against the parent company of Silicon Valley Bank, its CEO and its chief financial officer, saying that company didn’t disclose the risks that future interest rate increases would have on its business.

The lawsuit against SVB Financial Group, CEO Greg Becker and CFO Daniel Beck was filed in the US district court for the Northern district of California. It is looking for unspecified damages to be awarded to those who invested in SVB between June 16, 2021 and March 10, 2023.

The lawsuit from shareholders led by Chandra Vanipenta says some quarterly and annual financial reports from SVB didn’t fully account for warnings from the Federal Reserve about interest rate hikes.

Class action suit filed against Silicon Valley Bank parent

After blame laid on Trump administration, Pence deflects to Biden for Silicon Valley Bank collapse

Wednesday 15 March 2023 06:15 , Oliver O'Connell

Former Vice President Mike Pence has joined the choir of conservative voices trying to pin the Silicon Valley Bank collapse on Democrats while Democrats try to do the same to them.

In an editorial for The Daily Mail, Mr Pence takes aim at Joe Biden and the Democrats, claiming that “just like 2008,” the party has “increased spending by over $10 trillion” that “fueled record inflation, inevitably requiring the FED to raise interest rates.”

He laid some of the blame on the bank, which collapsed on Friday, and laced his criticisms with conservative media buzzwords.

Graig Graziosi reports on what the former vice president said.

Pence: Biden to blame for SVB collapse

‘Woke banks’ become Republican scapegoat for SVB collapse

Wednesday 15 March 2023 05:45 , Oliver O'Connell

For months, right-wing media figures and Republican elected officials have blamed a “woke” agenda for what they perceive is the collapse of American institutions, from its schools and workplaces to the banks that facilitate their businesses.

The historic failure of Silicon Valley Bank is likely the result of a host of compounded factors that have nothing to do with so-called “wokeness,” from Donald Trump-era cuts to regulations that were put in place during the last financial crisis to the bank’s untenable concentration in an explosion of venture capital firms and tech startups as it careened into reality, rising interest rates and panic.

Alex Woodward reports.

Republicans blame ‘wokeness’ for Silicon Valley Bank’s collapse

Demise of SVB disrupts the disruptors in tech

Wednesday 15 March 2023 04:45 , Oliver O'Connell

Silicon Valley Bank’s collapse rattled the technology industry that had been the bank’s backbone, leaving shell-shocked entrepreneurs thankful for the government reprieve that saved their money while they mourned the loss of a place that served as a chummy club of innovation.

Silicon Valley Bank's demise disrupts the disruptors in tech

BUT New York regulator says Signature Bank closure ‘nothing to do with crypto’

Wednesday 15 March 2023 03:15 , Oliver O'Connell

New York’s financial regulator has pushed back on former Rep Barney Frank’s comments, saying its decision to close Signature Bank had “nothing to do with crypto,” citing what it called “a significant crisis of confidence in the bank’s leadership” that occurred over the weekend after regulators shuttered Silicon Valley Bank.

Mr Frank is a board member of Signature Bank and was one of the pioneers of the landmark Dodd-Frank Act, which was enacted after the 2008 financial crisis to better insulate the banking system from shocks.

“I think part of what happened was that regulators wanted to send a very strong anti-crypto message,” Mr Frank told CNBC on Monday. “We became the poster boy because there was no insolvency based on the fundamentals.”

But NYDFS denied his claims in a statement on Tuesday, saying that its decision to close Signature Bank on Sunday and appoint the Federal Deposit Insurance Corp as receiver “was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.”

“The decisions made over the weekend had nothing to do with crypto. Signature was a traditional commercial bank with a wide range of activities and customers,” an NYDFS spokesperson said.

“DFS has been facilitating well-regulated crypto activities for several years, and is a national model for regulating the space,” they said.

The spokesperson added that as withdrawal requests ballooned over the weekend, Signature Bank failed to provide reliable and consistent data.

Mr Frank said he was surprised the regulator said the decision to close the bank was not related to cryptocurrency.

“I think that was a factor,” he said in an interview. “I’m puzzled as to why it was closed.”

He added that to his knowledge, bank executives were working to provide data to regulators.

“What we heard from our executives is that the deposit situation had stabilised and they would be getting the capital from the discount window and I continue to be convinced that if we had opened on Monday given the announcements of those two policies, we would have been in a reasonably good shape and certainly functional,” he said.

Signature was a commercial bank with private client offices with nine national business lines including commercial real estate and digital asset banking.

With reporting from Reuters

Barney Frank claims Signature Bank seized to send banks a message

Wednesday 15 March 2023 02:45 , Oliver O'Connell

A regulatory takeover of a New York-based bank was intended to send a message to U.S. banks to stay away from the cryptocurrency business, a former member of Congress who was on the bank’s board says.

Former US Rep. Barney Frank said Monday that he believes the state officials behind the action were trying to make an example of Signature Bank.

“This was just a way to tell people, ‘We don’t want you dealing with crypto,’” Frank told The Associated Press in a telephone interview.

Signature Bank seized to send banks a message, director says

Voices: Ghosts of the 2008 financial crisis loom over Biden’s response

Wednesday 15 March 2023 01:15 , Oliver O'Connell

Eric Garcia writes:

When President Joe Biden announced on Monday that people who had deposited their money in the now-unraveled Silicon Valley Bank would have their money available, he emphasised that American taxpayers would not be left on the hook.

Similarly, he added that the people responsible at the bank would need to be fired and that investors in Silicon Valley Bank would not be made whole, arguing that they took a risk and now have to suffer the losses.

Ghosts of the 2008 financial crisis loom over Biden’s response to Silicon Valley Bank

DOJ and SEC to probe stock sales ahead of Silicon Valley Bank collapse, report says

Wednesday 15 March 2023 00:15 , Oliver O'Connell

The US Department of Justice and the Securities and Exchange Commission are investigating the collapse of Silicon Valley Bank, The Wall Street Journal reports, citing people familiar with the matter.

The tech and start-up-focused lender based in Santa Clara, California, was taken over by regulators on Friday during a run on its deposits, making it the second-largest bank failure in US history.

It is not unusual for there to be such investigations when large financial institutions or public companies collapse or suffer unexpected losses, but the separate probes will also look at stock sales that company bosses made days before the bank failed.

SVB: Justice Department and SEC to probe stock sales ahead of collapse

Lawmaker’s explanation of Silicon Valley Bank’s collapse goes viral

Tuesday 14 March 2023 23:45 , Oliver O'Connell

A congressman has been widely praised for posting a two-and-a-half-minute video to Twitter and TikTok clearly laying out the Silicon Valley Bank situation.

North Carolina Democrat Jeff Jackson, originally from Chapel Hill, was elected to the US House of Representatives for the state’s 14th District in 2022.

At 2am on Monday morning, he filmed a video for social media explaining how the Silicon Valley Bank crisis began, what was being done about it, and to discourage panic.

Read more:

North Carolina lawmaker’s video explanation of the SVB collapse earns praise online

Voices: The Silicon Valley Bank collapse has made three things horrifically clear

Tuesday 14 March 2023 23:15 , Oliver O'Connell

It was no Lehman Brothers moment, but there are three hard lessons to be learned from the past few days, writes David Callaway.

The Silicon Valley Bank collapse has made three things horrifically clear

Biden says banking system is ‘safe’ and vows accountability for executives

Tuesday 14 March 2023 22:45 , Oliver O'Connell

President Joe Biden reassured Americans that the nation’s banking system is safe after Silicon Valley Bank collapsed last week and said there would be accountability for financial executives.

The president’s actions come after the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation announced on Sunday evening that depositors for Silicon Valley Bank would have access to their money.

Eric Garcia filed this report from Washington, DC, on Monday.

Biden says banking system is ‘safe’ after Silicon Valley Bank collapse

Tuesday 14 March 2023 22:15 , Oliver O'Connell

Jeremy Hunt hails ‘great resilience’ as HSBC rescues Silicon Valley Bank UK branch

Recap: Why did Silicon Valley Bank collapse?

Tuesday 14 March 2023 21:45 , Oliver O'Connell

The collapse of the 16th largest bank in the US sent ripples through global markets on Monday as governments and businesses scrambled to figure out what the impact would be and how it could be contained.

Silicon Valley Bank collapsed on Friday after failing to raise new capital last week.

On Monday, the UK government said that HSBC would take over the UK wing of the bank.

But what was SVB, why did it collapse, and are other banks at risk? We examine these questions here.

Why did Silicon Valley Bank collapse and are other lenders at risk?

Top GOP Senate Finance member: No new banking rules needed

Tuesday 14 March 2023 21:25 , Oliver O'Connell

Senator Mike Crapo, the top Republican on the Senate Finance Committee told CNN’s Manu Raju that no new banking rules were needed following the collapse of Silicon Valley Bank, arguing the system is in place, but better supervision is needed.

Mr Crapo was the author of the 2018 bill that led to the rollback of the Dodd-Frank regulations put in place after the 2008 global financial crisis.

“The regulatory system is in place. The regulatory authorities that Congress has given to the Fed and the FDIC are completely adequate for the system to work,” he said.

“We simply need to have better supervision, and probably, like I said, a little tuning up of how the regulatory stress testing works with regard to liquidity issues in the banks right now.”

Crapo added: “We simply need to have better supervision, and probably, like I said, a little tuning up of how the regulatory stress testing works with regard to liquidity issues in the banks right now.”

— Manu Raju (@mkraju) March 14, 2023

Watering down financial regulations sees Trump blamed for Silicon Valley Bank collapse

Tuesday 14 March 2023 21:15 , Oliver O'Connell

Critics looking to assign blame for the collapse of Silicon Valley Bank have found possible culprits in Donald Trump and Republican senators.

Though little known outside of Silicon Valley, the SVB was the leading lender to tech firms and startups before it crumbled on Friday.

Graig Graziosi reports.

Trump blamed over Silicon Valley Bank collapse for cutting down financial regulations

Watch: UK arm of Silicon Valley Bank sold to HSBC for £1

Tuesday 14 March 2023 20:45 , Oliver O'Connell

UK arm of Silicon Valley Bank sold to HSBC for £1

Tough decisions ahead as Fed criticised for missing red flags before bank failure

Tuesday 14 March 2023 20:32 , Oliver O'Connell

The Federal Reserve is facing stinging criticism for missing what observers say were clear signs that Silicon Valley Bank was at high risk of collapsing into the second-largest bank failure in U.S. history.

The Fed was the primary federal supervisor of the bank based in Santa Clara, California, that failed last week. The bank was also overseen by the California Department of Financial Protection and Innovation.

Critics point to many red flags surrounding Silicon Valley Bank, including its rapid growth since the pandemic, its unusually high level of uninsured deposits and its many investments in long-term government bonds and mortgage-backed securities, which tumbled in value as interest rates rose.

Read more:

Fed, under criticism for bank failure, faces tough decisions

Dow Jones closes up 330 points as bank shares bounce back

Tuesday 14 March 2023 20:12 , Oliver O'Connell

The Dow Jones Industrial Average closed up 330 points on Tuesday as investors signaled that they believe the risk of contagion to the wider banking network has been contained by regulators following the failure of Silicon Valley Bank and Signature Bank over the weekend.

The Dow Jones Industrial Average ended up 329.28 points, or 1%, at 32,153.89, ending a five-day losing streak. The S&P 500 added 64.54 points, or 1.67%, to close at 3,920.30. The Nasdaq Composite climbed 239.31 points, or 2.1%, to end at 11,428.15.

In addition to an improved perception of the banking system, the Labor Department's CPI report showed consumer prices cooled in February, largely in line with market expectations, with headline and core measures notching welcome annual declines.

Even so, inflation has a considerable way to go before approaching the central bank's average annual 2% target.

But signs of economic softness, combined with the regional banking scare, have increased the odds that the Federal Reserve will implement a modest, 25 basis-point hike to its key interest rate at the conclusion of its two-day policy meeting on 22 March.

With reporting from Reuters

Private equity firms interested in SVB loan book, reports say

Tuesday 14 March 2023 20:00 , Oliver O'Connell

CNBC reports that private equity firms Apollo Global Management and KKR are among the institutions reviewing a book of loans held by Silicon Valley Bank. The network cites people familiar with the discussions who requested anonymity.

Two of the sources said Apollo may be interested in acquiring a piece of the business but it is unclear if the FDIC would prefer a single buyer for the whole bank.

Bloomberg earlier reported a number of private equity firms were interested in the bank’s loan portfolio, including Ares Management, Blackstone, and Carlyle Group, in addition to Apollo and KKR.

New Silicon Valley Bank CEO brings experience and ‘humility'

Tuesday 14 March 2023 19:40 , Oliver O'Connell

In a message to clients, newly appointed Silicon Valley Bank CEO Tim Mayopoulos says: “I look forward to getting to know the clients of Silicon Valley Bank. I come to this role with humility. I also come to this role with experience in these kinds of situations.”

He explains: “I was part of the new leadership team that joined Fannie Mae in the wake of the financial crisis in 2008-09, and I served as the CEO of Fannie Mae from 2012-18. I am very proud of work we did there to restore the company to profitability and to stabilize the housing finance system in a period of unprecedented challenge.”

Mr Mayopoulos adds: “I also come with experience in and an appreciation for the innovation economy. Until recently, I was the president of a Silicon Valley-based software company that provides technology to financial institutions to serve their consumer banking customers. I know how important Silicon Valley Bank has been and continues to be to the success of its clients and the innovation ecosystem.”

Premium: Has enough been done to calm Wall Street over the banking crisis?

Tuesday 14 March 2023 19:20 , Oliver O'Connell

James Moore, The Independent’s chief business commentator, writes:

Just what we needed right now: another banking crisis. But after the bloodbath at the beginning of the week, a rally quickly got underway. Regional banks in the United States – in real danger of experiencing a run on their deposits while larger rivals benefit from inflows – found some support.

Has enough been done to calm Wall Street over the banking crisis?

New Silicon Valley Bank CEO: ‘We are open for business'

Tuesday 14 March 2023 19:05 , Oliver O'Connell

Tim Mayopoulos, the new CEO of Silicon Valley Bank — now technically known as Silicon Valley Bridge Bank — has declared the bank is open for business.

In a message posted to the company’s website and emailed to customers, Mr Mayopoulos said: “We are doing everything we can to rebuild, win back your confidence, and continue supporting the innovation economy. We recognise the past few days have been an extremely challenging time, and we are grateful for your patience.”

He continued: “We are open for business and are hard at work bringing all systems and solutions back online to support you. We are making new loans and fully honoring existing credit facilities.

“The number one thing you can do to support the future of this institution is to help us rebuild our deposit base, both by leaving deposits with Silicon Valley Bridge Bank and transferring back deposits that left over the last several days.”

Underlining the announcement yesterday that depositors have full access to their money, and that both new and existing deposits are fully protected by the FDIC, he characterised the bank as now among the safest in the country thanks to the actions of regulators.

The bank is actively opening new accounts of all sizes and making new loans, Mr Mayopoulos added.

The first ‘Twitter fueled bank run’

Tuesday 14 March 2023 18:52 , Oliver O'Connell

House Financial Services Committee Chairman Patrick McHenry (R-NC) labelled the Silicon Valley Bank collapse the “first Twitter-fueled bank run” on Friday.

In a statement, he said: “This was the first Twitter-fueled bank run. At this time, it is important to remain levelheaded and look at the facts — not speculation — when assessing the right path forward, I have confidence in our financial regulators and the protections already in place to ensure the safety and soundness of our financial system.”

This morning he joined CNBC’s Squawkbox to underline his statement saying: “I want to convey confidence to the American people that these agencies are doing the right thing.”

You can watch the whole interview segment here:

#NEW: Chairman @PatrickMcHenry joins @SquawkCNBC to discuss the failure of #SVB and Signature Bank:

"I want to convey confidence to the American people that these agencies are doing the right thing."

📺 WATCH 👇 pic.twitter.com/KdY8bGKFlJ

— Financial Services GOP (@FinancialCmte) March 14, 2023

Demise of Silicon Valley Bank disrupts the tech disruptors

Tuesday 14 March 2023 18:32 , Oliver O'Connell

Silicon Valley Bank’s collapse rattled the technology industry that had been the bank’s backbone, leaving shell-shocked entrepreneurs thankful for the government reprieve that saved their money while they mourned the loss of a place that served as a chummy club of innovation.

Read more:

Silicon Valley Bank's demise disrupts the disruptors in tech

Lawmaker’s explanation of Silicon Valley Bank’s collapse goes viral

Tuesday 14 March 2023 18:12 , Oliver O'Connell

A congressman has been widely praised for posting a two-and-a-half-minute video to Twitter and TikTok clearly laying out the Silicon Valley Bank situation.

North Carolina Democrat Jeff Jackson, originally from Chapel Hill, was elected to the US House of Representatives for the state’s 14th District in 2022.

At 2am on Monday morning, he filmed a video for social media explaining how the Silicon Valley Bank crisis began, what was being done about it, and to discourage panic.

Read more:

North Carolina lawmaker’s video explanation of the SVB collapse earns praise online

Six regional US banks under scrutiny

Tuesday 14 March 2023 17:52 , Oliver O'Connell

Moody’s Investors Service placed six other US banks on review for potential downgrades late on Monday, following the collapse of Silicon Valley Bank. The credit ratings firm also downgraded Signature Bank deep into junk territory.

On the firm’s watchlist are First Republic Bank, Zions, Western Alliance, Comerica, UMB Financial, and Intrust Financial. Moody’s cited the “extremely volatile funding conditions for some US banks exposed to the risk of uninsured deposit outflows.”

Shares of regional banks plummeted on Monday despite the federal government stepping in to prevent further bank runs.

When markets opened on Tuesday, regional bank shares rebounded strongly.

Watch: UrbanStems CEO talks about having 100% of cash with SVB

Tuesday 14 March 2023 17:32 , Oliver O'Connell

"We have a tough decision with whether we stay with them. We are not sure if there are any risks to leaving. We are not supposed to take our money out."

CEO of UrbanStems— which banks 100% of its cash assets with Silicon Valley Bank— joins to discuss SVB collapse: pic.twitter.com/o30rpVBMIr

— CNN This Morning (@CNNThisMorning) March 14, 2023

BUT New York regulator says Signature Bank closure ‘nothing to do with crypto’

Tuesday 14 March 2023 17:22 , Oliver O'Connell

New York’s financial regulator has pushed back on former Rep Barney Frank’s comments, saying its decision to close Signature Bank had “nothing to do with crypto,” citing what it called “a significant crisis of confidence in the bank’s leadership” that occurred over the weekend after regulators shuttered Silicon Valley Bank.

Mr Frank is a board member of Signature Bank and was one of the pioneers of the landmark Dodd-Frank Act, which was enacted after the 2008 financial crisis to better insulate the banking system from shocks.

“I think part of what happened was that regulators wanted to send a very strong anti-crypto message,” Mr Frank told CNBC on Monday. “We became the poster boy because there was no insolvency based on the fundamentals.”

But NYDFS denied his claims in a statement on Tuesday, saying that its decision to close Signature Bank on Sunday and appoint the Federal Deposit Insurance Corp as receiver “was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.”

“The decisions made over the weekend had nothing to do with crypto. Signature was a traditional commercial bank with a wide range of activities and customers,” an NYDFS spokesperson said.

“DFS has been facilitating well-regulated crypto activities for several years, and is a national model for regulating the space,” they said.

The spokesperson added that as withdrawal requests ballooned over the weekend, Signature Bank failed to provide reliable and consistent data.

Mr Frank said he was surprised the regulator said the decision to close the bank was not related to cryptocurrency.

“I think that was a factor,” he said in an interview. “I’m puzzled as to why it was closed.”

He added that to his knowledge, bank executives were working to provide data to regulators.

“What we heard from our executives is that the deposit situation had stabilised and they would be getting the capital from the discount window and I continue to be convinced that if we had opened on Monday given the announcements of those two policies, we would have been in a reasonably good shape and certainly functional,” he said.

Signature was a commercial bank with private client offices with nine national business lines including commercial real estate and digital asset banking.

With reporting from Reuters

ICYMI: Barney Frank claims Signature Bank seized as warning to stay away from crypto

Tuesday 14 March 2023 17:12 , Oliver O'Connell

A regulatory takeover of a New York-based bank was intended to send a message to U.S. banks to stay away from the cryptocurrency business, a former member of Congress who was on the bank’s board says.

Former U.S. Rep. Barney Frank said Monday that he believes the state officials behind the action were trying to make an example of Signature Bank.

“This was just a way to tell people, ‘We don’t want you dealing with crypto,’” Frank told The Associated Press in a telephone interview.

Signature Bank seized to send banks a message, director says

Watch: No losses will be borne by taxpayers, Biden says

Tuesday 14 March 2023 17:00 , Oliver O'Connell

‘No losses’ will be borne by taxpayers after Silicon Valley Bank collapse, Biden says

‘Rapid deterioration’ of operating environment sees Moody’s cut US banking outlook

Tuesday 14 March 2023 16:56 , Oliver O'Connell

Credit ratings agency Moody’s cut its outlook for the whole of the US banking system to negative from stable “to reflect the rapid deterioration in the operating environment”.

The move follows the failure of Silicon Valley Bank and Signature Bank in quick succession over the weekend.

The Tuesday morning report came as US regional banks — that saw dramatic plunges in value on Monday — bounced back from steep selloff after fears of a contagion effect eased following the intervention of the federal government and regulators to protect depositors.

Nevertheless, the Moody's report cited “the rapid and substantial decline in bank depositor and investor confidence” in recent days, which it claimed highlights “risks in US banks' asset-liability management”.

There have been no further bank runs since SVB failed, though there were concerns for other similar-sized institutions that often have a less diverse, more focused client base, either geographically or by sector, when compared to larger banks such as Citi, Bank of America, Wells Fargo, or JP Morgan Chase.

On Moody’s watchlist are First Republic Bank, Zions, Western Alliance, Comerica, UMB Financial, and Intrust Financial.

The firm cited the “extremely volatile funding conditions for some US banks exposed to the risk of uninsured deposit outflows”.

Class action suit filed against Silicon Valley Bank parent and chiefs

Tuesday 14 March 2023 16:32 , Oliver O'Connell

A class action lawsuit is being filed against the parent company of Silicon Valley Bank, its CEO and its chief financial officer, saying that company didn’t disclose the risks that future interest rate increases would have on its business.

Read on:

Class action suit filed against Silicon Valley Bank parent

Warren: Powell should recuse himself from SVB probe

Tuesday 14 March 2023 16:12 , Oliver O'Connell

Democratic Senator Elizabeth Warren on Tuesday called on Federal Reserve Chair Jerome Powell to recuse himself from an internal review of recent bank failures, saying his actions “directly contributed” to them.

In a separate letter, Senator Warren pressed ex-Silicon Valley Bank CEO Greg Becker for details on the bank’s lobbying in favor of a 2018 law that eased regulations for large regional banks, which she and others have pointed to as contributing to the bank’s Friday collapse. She also asked for information regarding any stock sales by executives or bonuses paid out in the months leading up to its failure.

The Federal Reserve said on Monday it is reviewing its oversight of the bank in the wake of its abrupt failure Friday. Senator Warren argued that Mr Powell’s prior support for easing bank rules indicates he should not participate in the review. Fed Vice Chairman Michael Barr, who President Joe Biden nominated, is leading that review.

Fed Chair Powell’s actions directly contributed to these bank failures. For the Fed’s inquiry to have credibility, Powell must recuse himself from this internal review. It’s appropriate for Vice Chair for Supervision Barr to have the independence necessary to do his job.

— Elizabeth Warren (@SenWarren) March 14, 2023

“Fed Chair Powell’s actions directly contributed to these bank failures. For the Fed’s inquiry to have credibility, Powell must recuse himself from this internal review,” she said in a Twitter post.

“It’s appropriate for Vice Chair for Supervision Barr to have the independence necessary to do his job,” said Ms Warren, a Democrat, who has been a sharp critic of Mr Powell.

Reuters

Banks shake off immediate SVB contagion fears

Tuesday 14 March 2023 15:50 , Oliver O'Connell

US bank stocks made sharp gains on Tuesday, recovering ground from lows triggered by the collapses of Silicon Valley Bank and Signature Bank which had prompted assurances from President Joe Biden and other global policymakers.

Worries about contagion risks from the collapse of the two US banks had compounded investor concerns about the impact on lenders of rising interest rates, hitting bank shares in Asia and Europe as investors re-examined their risks.

An indicator of credit risk in the eurozone banking system hit its highest since mid-July, while ratings agency Moody’s cut its US banking system outlook to negative from stable “to reflect the rapid deterioration in the operating environment”.

Although the VIX volatility index, Wall Street’s “fear gauge”, neared six-month highs overnight, US regional bank shares bounced, with First Republic Bank up 52.7 per cent, a day after hitting an intraday record low of $17.53.

“If we do not see any high-profile failures in the near future, then the fears would subside,” said Jack Ablin, chief investment officer at Cresset Capital.

Banking giants Citi, Wells Fargo, and JP Morgan were also higher in the pre-market.

However, Moody’s said it was reviewing six lenders for a downgrade, including First Republic, Zions Bancorp, Western Alliance Bancorp and Comerica.

Reuters

Watch: Democrat congressman gives clearest explanation of SVB bank run

Tuesday 14 March 2023 15:35 , Oliver O'Connell

North Carolina Democrat Congressman Jeff Jackson has been widely praised for posting this two and half minute video to Twitter and TikTok clearly laying out the Silicon Valley Bank situation.

Watch below:

Last night we had an emergency Zoom call with most of Congress to stop a bank run.

Here’s the situation: pic.twitter.com/wiplqp9PsS

— Rep. Jeff Jackson (@JeffJacksonNC) March 13, 2023

Ah, yes, being ‘woke’ brought down Silicon Valley Bank... of course!

Tuesday 14 March 2023 15:25 , Oliver O'Connell

The historic failure of Silicon Valley Bank is likely the result of a host of compounded factors that have nothing to do with so-called “wokeness,” from Donald Trump-era cuts to regulations that were put in place during the last financial crisis to the bank’s untenable concentration in an explosion of venture capital firms and tech startups as it careened into reality, rising interest rates and panic.

Alex Woodward reports.

Republicans blame ‘wokeness’ for Silicon Valley Bank’s collapse

After fierce blowback against Trump administration, Pence blames Biden for SVB failure

Tuesday 14 March 2023 15:05 , Oliver O'Connell

Former Vice President Mike Pence has joined the choir of conservative voices trying to pin the Silicon Valley Bank collapse on Democrats while Democrats try to do the same to them.

In an editorial for The Daily Mail, Mr Pence takes aim at Joe Biden and the Democrats, claiming that “just like 2008,” the party has “increased spending by over $10 trillion” that “fueled record inflation, inevitably requiring the FED to raise interest rates.”

He laid some of the blame on the bank, which collapsed on Friday, and laced his criticisms with conservative media buzzwords.

Graig Graziosi reports on the former vice president’s commentary.

Pence: Biden to blame for SVB collapse

DOJ and SEC to probe stock sales ahead of Silicon Valley Bank collapse, report says

Tuesday 14 March 2023 14:50 , Oliver O'Connell

The US Department of Justice and the Securities and Exchange Commission are investigating the collapse of Silicon Valley Bank, The Wall Street Journal reports, citing people familiar with the matter.

Read more:

SVB: Justice Department and SEC to probe stock sales ahead of collapse

Market rally continues

Tuesday 14 March 2023 14:47 , Oliver O'Connell

The market rally continues in New York with the Dow Jones Industrial average up 419 points (1.32 per cent) as of 10.45am ET.

The S&P 500 is up 1.9 per cent and the Nasdaq Composite has climbed 2.2 per cent.

After yesterday’s brutal pummeling of the share price of a number of regional banks, many have shown signs of recovery today with no signs of further bank runs since the federal government said it would effectively guarantee customer deposits.

White House statement on February inflation figures

Tuesday 14 March 2023 14:30 , Oliver O'Connell

Statement from President Joe Biden on February CPI Report

Today’s report shows annual inflation is down by a third from this summer at a time when the unemployment rate remains near a 50-year low. That is the slowest annual increase since September 2021. I will continue working to lower costs for hard-working Americans so they have a little more breathing room at the end of the month.

On that front, I am pleased at today’s announcement that, in line with my call, Novo Nordisk will be lowering their insulin prices by 75 percent, following Eli Lilley’s action. This builds on the important progress we made last year when I signed a law to cap insulin at $35 for seniors. I urge all other manufacturers to follow suit and Republicans in Congress to join us and cap insulin at $35 for all Americans.

As I’ve long said, and as challenges in the banking sector remind us, there will be setbacks along the way in our transition to steady and stable growth. But we face these challenges from a position of strength. More than 12 million jobs have been created since I took office and the share of working age adults in jobs or looking for work is the highest it has been in 15 years. We will continue to make progress in our fight to build an economy from the bottom up and middle out, not top down.

At the same time, I will do everything in my power to prevent us from going backwards on the progress we’ve made – including by standing up to Congressional Republicans who threaten economic catastrophe over the debt limit in order to secure tax cuts for the wealthy and large corporations and reckless cuts to critical programs that American seniors and families count on.

More problems for tech as Meta slashes another 10,000 jobs

Tuesday 14 March 2023 14:15 , Oliver O'Connell

Facebook parent Meta is slashing another 10,000 jobs and will not fill 5,000 open positions as the social media pioneer cuts costs.

The company said on Tuesday it will reduce the size of its recruiting team and make further cuts in its tech groups in late April, and then its business groups in late May.

“This will be tough and there’s no way around that,” said CEO Mark Zuckerberg. “It will mean saying goodbye to talented and passionate colleagues who have been part of our success.”

Andrew Griffin has the full details.

Meta to fire 10,000 more people, Mark Zuckerberg says

Full Story: Wall Street expert predicts next major bank to fold

Tuesday 14 March 2023 14:00 , Oliver O'Connell

A Wall Street expert has revealed which bank he believes will fail next, following the Silicon Valley Bank (SVB) collapse.

SVB folded on Friday after failing to raise new capital after it sold government bonds at heavy losses to reimburse customers withdrawing their cash.

Now Robert Kiyosaki, who accurately predicted the 2008 Lehman Brothers’ collapse, warned that Credit Suisse could be at risk as the volatile bond market crashes, with rising interest causing bonds to fall in price.

Kate Plummer reports.

Wall Street expert predicts next major bank to fold

Regulator response should address market concerns for now

Tuesday 14 March 2023 13:45 , Oliver O'Connell

Several experts said the tools already announced, including a deposit guarantee at the two failed banks and a new Federal Reserve facility that can provide banks with liquidity on attractive terms, should address market concerns for now.

Silicon Valley Bank failed days after announcing it had to raise capital to offset losses brought on by rapid interest rate increases, and its extremely high level of uninsured deposits were quick to flee.

The experts said the measures announced Sunday are squarely aimed at both issues, giving banks easy access to emergency funds and sending a message that bank deposits, even uninsured ones, are safe.

Some dramatic steps, such as raising the $250,000 ceiling for FDIC deposit insurance, would require new laws from Congress, an uncertain prospect in a divided government where policymakers are already feuding over next steps.

“The Fed and Treasury have kind of shot their bazooka for now,” said Mark Sobel, a former senior US Treasury official who is US chairman of the London-based OMFIF financial think tank. “I think it’s a question of the market steadying out.”

Reuters

US regional bank shares rebound after sell-off

Tuesday 14 March 2023 13:38 , Oliver O'Connell

Shares in US regional banks are rebounding after Monday’s sell-off, with First Republic up sharply in early Tuesday trading indicating concerns over the bank’s future may be easing.

The stock traded 52 per cent higher in premarket trading. Shares of other regional banks also surged before the opening bell, with PacWest jumping 44 per cent, KeyCorp up 16 per cent, and Zions Bancorp up 21 per cent.

After the opening bell in New York, the Dow Jones Industrial Average jumped more than 250 points and by 9.40am was up 328 points of more than 1.03 per cent.

US market holds steady as inflation eases slightly

Tuesday 14 March 2023 13:32 , Oliver O'Connell

US futures held steady following a report that inflation eased slightly last month but remains elevated, posing a challenge for the Federal Reserve at a delicate moment for the financial system.

Even though prices are rising faster than the Fed wants, some economists expect the central bank to suspend its yearlong streak of interest rate hikes when it meets next week. With the collapse of two large banks since Friday fueling anxiety about other regional banks, the Fed may, at least in the short term, focus more on boosting confidence in the financial system than on its long-term drive to tame inflation.

Futures for the Dow were up 0.8% before the bell Tuesday, while futures for the S&P rose 1%.

The government said Tuesday that prices increased 0.4% last month, less than January’s 0.5% rise. But excluding volatile food and energy costs, core prices rose 0.5% last month, slightly higher than January’s 0.4% gain. The Fed is particularly focused on the core measure as a gauge of underlying inflation pressures.

AP

Six regional US banks under scrutiny

Tuesday 14 March 2023 13:29 , Oliver O'Connell

Moody’s Investors Service placed six other US banks on review for potential downgrades late on Monday, following the collapse of Silicon Valley Bank. The credit ratings firm also downgraded Signature Bank deep into junk territory.

On the firm’s watchlist are First Republic Bank, Zions, Western Alliance, Comerica, UMB Financial, and Intrust Financial. Moody’s cited the “extremely volatile funding conditions for some US banks exposed to the risk of uninsured deposit outflows.”

Shares of regional banks plummeted on Monday despite the federal government stepping in to prevent further bank runs.

As markets open on Tuesday, regional bank shares are rebounding strongly.

Watch: UrbanStems CEO talks about having 100% of cash with SVB

Tuesday 14 March 2023 13:23 , Oliver O'Connell

"We have a tough decision with whether we stay with them. We are not sure if there are any risks to leaving. We are not supposed to take our money out."

CEO of UrbanStems— which banks 100% of its cash assets with Silicon Valley Bank— joins to discuss SVB collapse: pic.twitter.com/o30rpVBMIr

— CNN This Morning (@CNNThisMorning) March 14, 2023

US regulators may take wait-and-see approach before further intervention

Tuesday 14 March 2023 13:15 , Oliver O'Connell

US regulators are likely to let emergency measures announced Sunday to shore up investor confidence in the banking sector sink in and increase scrutiny of the industry before intervening with any further steps, regulatory experts said.

Fears remained on Wall Street on Monday despite the measures announced over the weekend following the collapse of California-based Silicon Valley Bank and New York-based Signature Bank. Regional bank shares tumbled, and the S&P 500 Banking Index ended the day down 7%, its largest one-day fall since 11 June 2020.

Some investors have called for further action by banking regulators to reassure markets. But banking experts said regulators would likely want to see the extent of any further contagion before deciding on fresh measures.

“It all depends on what the situation will look like,” said Saule Omarova, a law professor at Cornell Law School who President Joe Biden once nominated to lead the Office of the Comptroller of the Currency, a top banking regulator. “Whatever else they can do will depend on how creative they are.”

Some experts also argued there were some signs for optimism that the intervention was helping.

“It’s noteworthy that we haven’t seen any bank failures yet throughout the day,” said Young Kim, a banking lawyer with Clifford Chance. “At least some of their objectives were achieved as it concerns calming fears.”

Reuters

Wall Street Journal under fire for column blaming SVB collapse on diversity

Tuesday 14 March 2023 13:15 , Megan Sheets

The Wall Street Journal is facing fierce backlash for publishing a column that appeared to blame the Silicon Valley Bank collapse on diversity efforts.

Opinion writer Andy Kessler, whose column focuses on technology and markets, reacted to the stunning bank failure in a piece entitled “Who Killed Silicon Valley Bank?”

“In its proxy statement, [Silicon Valley Bank] notes that besides 91 percent of their board being independent and 45 percent women, they also have ‘1 Black,’ ‘1 LGBTQ+,’ and ‘2 Veterans,’” he wrote.

“I’m not saying 12 white men would have avoided this mess, but the company may have been distracted by diversity demands.”

The comments drew immense criticism on social media.

For @wsj to say flat out that SVB could have failed because they added non-white men to their board shows how far behind the times (and certifiably stupid) this publication really is. It makes me so angry and very sad. WSJ readers and staff deserve better. pic.twitter.com/ppbcugJNhW

— Jessica Lessin (@Jessicalessin) March 13, 2023

Credit Suisse shares fall after Kiyosaki prediction

Tuesday 14 March 2023 12:46 , Megan Sheets

Shares in Credit Suisse shares fell by 5 per cent to an all-time low in early trading on Tuesday as Wall Street continues to reel from the Silicon Valley Bank (SVB) collapse.

The share drop came just after Credit Suisse - the world’s eighth largest investment bank - published an annual report revealing an $8bn loss for 2022.

The bank blamed “weaknesses” in the report on “failure to design and maintain an effective risk assessment process to identify and analyze the risk of material misstatements”.

The report was especially alarming given a prediction the night before from Robert Kiyosaki, an expert who foresaw the collapse of Lehman Brothers in 2008.

Speaking to Fox Business, Mr Kiyosaki said Credit Suisse was “most vulnerable” to following SVB into failure due to a struggling bond market.

“My prediction, I called Lehman Brothers years ago, and I think the next bank to go is Credit Suisse because the bond market is crashing,” he said.

“The bond market is much bigger than the stock market. The Fed is up and they’re the firemen and the arson.”

Republicans have a scapegoat for Silicon Valley Bank’s collapse: ‘Woke banks’

Tuesday 14 March 2023 12:15 , Alex Woodward

For months, right-wing media figures and Republican elected officials have blamed a “woke” agenda for what they perceive is the collapse of American institutions, from its schools and workplaces to the banks that facilitate their businesses.

The historic failure of Silicon Valley Bank is likely the result of a host of compounded factors that have nothing to do with so-called “wokeness,” from Donald Trump-era cuts to regulations that were put in place during the last financial crisis to the bank’s untenable concentration in an explosion of venture capital firms and tech startups as it careened into reality, rising interest rates and panic.

Yet Republican lawmakers have continued to return to their catch-all scapegoat – using “woke” as an umbrella term for anything related to diversity, progressive political platforms, LGBT+ inclusivity, antiracism initiatives or environmental activism – while advancing a nationwide legislative agenda singularly devoted to its destruction.

The Independent’s Alex Woodward has more:

Republican blame ‘wokeness’ for Silicon Valley Bank’s collapse

Voices: The ghosts of the 2008 financial crisis loom over Biden’s response to Silicon Valley Bank

Tuesday 14 March 2023 11:45 , Megan Sheets

Eric Garcia writes:

When President Joe Biden announced on Monday that people who had deposited their money in the now-unraveled Silicon Valley Bank would have their money available, he emphasised that American taxpayers would not be left on the hook.

Similarly, he added that the people responsible at the bank would need to be fired and that investors in Silicon Valley Bank would not be made whole, arguing that they took a risk and now have to suffer the losses.

On the surface, the Silicon Valley Bank collapse, as well as the closing of Signature Bank in New York, appears quite similar to the 2008 financial crisis that took banks like AIG to the brink and led to the collapse of Lehman Brothers. At the time, Mr Biden was a sitting senator running for vice president alongside Barack Obama. Both of them, as well as their White House opponent at the time, voted for the Troubled Assets Relief Program, or TARP, which became known as the “bailout” in the popular imagination.

But there are important distinctions between 2008 and today.

Read on:

Ghosts of the 2008 financial crisis loom over Biden’s response to Silicon Valley Bank

ICYMI: Biden speaks on US financial system

Tuesday 14 March 2023 11:15 , Emily Atkinson

Watch: Biden speaks on US financial system following collapse of Silicon Valley Bank

Wall Street expert ‘predicts’ next bank failure after Silicon Valley

Tuesday 14 March 2023 10:46 , Emily Atkinson

A Wall Street expert famed for predicting the 2008 Lehman Brothers’ failure has pegged Credit Suisse as the next major bank set for collapse.

Robert Kiyosaki divined his latest forecast just hours before the Switzerland-based bank confessed to having a “material weakness” in its internal controls over financial reporting and said it had not yet stemmed customer outflows.

Speaking on Cavuto: Coast to Coast, Mr Kiyosaki said: “The problem is the bond market, and my prediction, I called Lehman Brothers years ago, and I think the next bank to go is Credit Suisse, because the bond market is crashing.”

He explained, while holding up a bank note: “The US dollar is losing its hegemony in the world right now. So they’re going to print more and more and more of this...trying to keep this thing from sinking.”