Democrat representative Jeff Jackson explains Silicon Valley Bank collapse
Wall Street rebounded 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 to protect depositors appears to have addressed market concerns.
Nevertheless, credit ratings firm Moody’s has cut its outlook for the whole of the US banking system to negative from stable “to reflect the rapid deterioration in the operating environment”.
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 by investors against the parent company, CEO and CFO.
Tim Mayopoulos, the newly appointed CEO of SVB, has declared the bank is back open for business, opening new accounts and making new loans. He served as CEO of Fannie Mae bringing it back to profitability after the 2008 financial crisis.
Elsewhere, 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.
Private equity firms interested in SVB loan book, reports say
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.
Oliver O’Connell15 March 2023 08:30
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’Connell15 March 2023 08:00
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’Connell15 March 2023 07:30
Are we in the clear yet? Not according to some experts
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.
Oliver O’Connell15 March 2023 07:15
Class action suit filed against Silicon Valley Bank parent
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
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
Oliver O’Connell15 March 2023 06:45
After blame laid on Trump administration, Pence deflects to Biden for Silicon Valley Bank collapse
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.
Oliver O’Connell15 March 2023 06:15
‘Woke banks’ become Republican scapegoat for SVB collapse
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.
Oliver O’Connell15 March 2023 05:45
Demise of SVB 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.
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’Connell15 March 2023 04:45
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’Connell15 March 2023 03:15
Barney Frank claims Signature Bank seized to send banks a message
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.
Oliver O’Connell15 March 2023 02:45
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