Biden says Silicon Valley Bank managers will be fired
Wall Street opened higher on Tuesday as inflation data met expectations and regional bank shares bounced back after Monday’s sharp falls following the collapse of Silicon Valley Bank (SVB).
Six regional financial institutions remain under tight scrutiny but the response from regulators —protecting deposits — may have addressed market concerns for now.
Meanwhile, the US Securities and Exchange Commission and Department of Justice have reportedly opened probes into the failure of SVB and any share trades undertaken by management in the run-up to its shuttering on Friday. A class-action lawsuit has also been filed against the parent company, CEO and CFO, by investors.
In other news, 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 admitted “material weakness” in its internal controls over financial reporting and said it had not yet stemmed customer outflows. Shares in the bank fell after the 2022 annual report revealed an $8bn loss.
New Silicon Valley Bank CEO: ‘We are open for business’
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.
Oliver O’Connell14 March 2023 19:05
The first ‘Twitter fueled bank run’
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:
Oliver O’Connell14 March 2023 18:52
Demise of Silicon Valley Bank disrupts the tech disruptors
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
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
Oliver O’Connell14 March 2023 18:32
Lawmaker’s explanation of Silicon Valley Bank’s collapse goes viral
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.
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.
Oliver O’Connell14 March 2023 18:12
Six regional US banks under scrutiny
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.
Oliver O’Connell14 March 2023 17:52
Watch: UrbanStems CEO talks about having 100% of cash with SVB
Oliver O’Connell14 March 2023 17:32
BUT New York regulator says Signature Bank closure ‘nothing to do with crypto’
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
Oliver O’Connell14 March 2023 17:22
ICYMI: Barney Frank claims Signature Bank seized as warning to stay away from crypto
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.
Oliver O’Connell14 March 2023 17:12
Watch: No losses will be borne by taxpayers, Biden says
‘No losses’ will be borne by taxpayers after Silicon Valley Bank collapse, Biden says
Joe Biden has reassured Americans that the nation’s banking system is “safe” after the collapse of Silicon Valley Bank and Signature Bank. The US president also said that “no losses will be borne by the taxpayers” and “instead the money will come from the fees that banks pay into the deposit insurance fund.” “Americans can have confidence that the banking system is safe,” Mr Biden said, addressing the nation on Monday (13 March). He added that the management of the collapsed banks would be “fired”. Click here to sign up for our newsletters.
Oliver O’Connell14 March 2023 17:00
‘Rapid deterioration’ of operating environment sees Moody’s cut US banking outlook
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”.
Oliver O’Connell14 March 2023 16:56