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.
Top GOP Senate Finance member: No new banking rules needed
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.”
Oliver O’Connell14 March 2023 21:25
Watering down financial regulations sees Trump blamed for Silicon Valley Bank collapse
Oliver O’Connell14 March 2023 21:15
Watch: UK arm of Silicon Valley Bank sold to HSBC for £1
UK arm of Silicon Valley Bank sold to HSBC for £1
The UK arm of collapsed US lender Silicon Valley Bank has been bought by HSBC after the government and Bank of England stepped in to “facilitate” a private sale. Chancellor Jeremy Hunt confirmed that all customer deposits have been protected under the deal, with no taxpayer cash involved. “It’s the result of a lot of hard work and I also think it shows that the UK has great resilience in its financial system, that we’re able to step in with one of our biggest UK banks in a situation like this and protect a very important sector,” he said of the deal. Click here to sign up for our newsletters.
Oliver O’Connell14 March 2023 20:45
Tough decisions ahead as Fed criticised for missing red flags before bank failure
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.
Oliver O’Connell14 March 2023 20:32
Dow Jones closes up 330 points as bank shares bounce back
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
Oliver O’Connell14 March 2023 20:12
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’Connell14 March 2023 20:00
New Silicon Valley Bank CEO brings experience and ‘humility’
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.”
Oliver O’Connell14 March 2023 19:40
Premium: Has enough been done to calm Wall Street over the banking crisis?
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.
Oliver O’Connell14 March 2023 19:20
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
Leave a Reply