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☆ Goldman Sachs cuts GDP forecast because of stress on small banks, which are key to U.S. economy
▼ + stars: | 2023-03-15 | by ( Pia Singh | ) www.cnbc.com time to read: +2 min

Photo illustration, the Silicon Valley Bank logo is visible on a smartphone, with the stock market index in the background on the personal computer on March 14, 2023, in Rome, Italy. Goldman Sachs on Wednesday lowered its 2023 economic growth forecast, citing a pullback in lending from small- and medium-sized banks amid turmoil in the broader financial system. "Small and medium-sized banks play an important role in the US economy," the analysts wrote. "Any lending impact is likely to be concentrated in a subset of small and medium-sized banks." The analysts assume that small banks with a low share of FDIC-covered deposits will reduce new lending by 40% and that other small banks will reduce new lending by 15%, leading to a 2.5% drag on total bank lending.

☆ How 'bailout' became a dirty word
▼ + stars: | 2023-03-15 | by ( Nathaniel Meyersohn | ) edition.cnn.com time to read: +5 min

New York CNN —“Bailout” became a curse word in American politics following the 2008 global financial crisis, fueling backlash among people who felt the risks and potential consequences of capitalism didn’t apply to big corporations or the wealthy. A financial bailout is generally considered to be providing compensation for losses when there was reckless, irresponsible or nefarious behavior at play, he added. “Bailout is a dirty word. The politics of bailoutsBailout politics have returned in response to the Silicon Valley and Signature meltdown. If those depositors are made whole, that would constitute a bailout, he said.

WASHINGTON/SINGAPORE, March 13 (Reuters) - U.S. authorities launched emergency measures on Sunday to shore up confidence in the banking system after the failure of Silicon Valley Bank (SIVB.O) threatened to trigger a broader financial crisis. Silicon Valley Bank (SVB), a mainstay for the startup economy, was a product of the decades-long era of cheap money, with unique risks that made it especially vulnerable. With the Fed poised to continue raising interest rates, investors said the financial system may not be fully out of the woods just yet. Goldman Sachs' analysts said they no longer expect it to raise rates at that meeting, amid the stress in the banking sector. A senior U.S. Treasury official said the actions taken would protect depositors, while providing additional support to the broader banking system, but officials and regulators were continuing to monitor financial system stability.

March 12 (Reuters) - State regulators closed New York-based Signature Bank (SBNY.O) on Sunday, the third largest failure in U.S. banking history, two days after authorities shuttered Silicon Valley Bank (SIVB.O) in a collapse that stranded billions in deposits. All of the depositors of Signature Bank and Silicon Valley Bank will be made whole, and "no losses will be borne by the taxpayer," the U.S. Treasury Department and other bank regulators said in a joint statement. Signature's failure followed Silicon Valley Bank's Friday shutdown, the second largest in U.S. history behind Washington Mutual, which collapsed during the 2008 financial crisis. Signature Bank's depositors and borrowers will automatically become customers of the bridge bank, the FDIC said. Signature Bank cut ties with Trump in 2021 following the deadly Jan. 6 riots on Capitol Hill, and urged Trump to resign.

The U.S. Treasury Department and other bank regulators said in a joint statement on Sunday that all depositors of Signature Bank will be made whole, and "no losses will be borne by the taxpayer." Signature Bank reported deposit balances totaling $89.17 billion as of March 8. Representatives for Signature Bank did not immediately respond to a request for comment. The FDIC on Sunday established a "bridge" successor bank to Signature Bank, which will enable customers to access their funds on Monday. Signature Bank's depositors and borrowers will automatically become customers of the bridge bank, the FDIC said.

☆ Wall Street — not taxpayers — will pay for the SVB and Signature deposit relief plans
▼ + stars: | 2023-03-13 | by ( Christina Wilkie | ) www.cnbc.com time to read: +3 min

WASHINGTON — Plans announced Sunday to fully reimburse deposits made in the collapsed Silicon Valley Bank and the shuttered Signature Bank will rely on Wall Street and large financial institutions — not taxpayers — to foot the bill, Treasury officials said. The DIF currently has over $100 billion in it, a sum the Treasury official said was "more than fully sufficient" to cover SVB and Signature depositors. To that end, federal officials strongly pushed back on the idea that the plans for SVB and Signature constituted a "bailout." Sen. Bernie Sanders, I-Vt., insisted that "If there is a bailout of Silicon Valley Bank, it must be 100 percent financed by Wall Street and large financial institutions." On Sunday afternoon, Treasury approved of plans that would unwind both SVB and Signature Bank, based in New York, "in a manner that fully protects all depositors."

☆ 'That's how capitalism works,' Biden says of SVB, Signature Bank investors who lost money in failed banks
▼ + stars: | 2023-03-13 | by ( Emma Kinery | ) www.cnbc.com time to read: +2 min

U.S. President Joe Biden delivers remarks on the banking crisis after the collapse of Silicon Valley Bank (SVB) and Signature Bank, in the Roosevelt Room at the White House in Washington, D.C., U.S. March 13, 2023. WASHINGTON — President Joe Biden sought to assure customers of Silicon Valley Bank and Signature Bank on Monday that their money was safe — insured by the Deposit Insurance Fund — but said investors in the failed banks' securities aren't going to get the same guarantee. "Investors in the banks will not be protected," Biden said Monday in a White House speech. Signature Bank in New York, which was shuttered Sunday over similar systemic contagion fears as SVB, had been a popular funding source for cryptocurrency companies. Instead the money will come from the fees that banks pay into the Deposit Insurance Fund."

☆ GOP presidential contenders cast blame for Silicon Valley Bank collapse
▼ + stars: | 2023-03-13 | by ( Kevin Breuninger | ) www.cnbc.com time to read: +5 min

Employees stand outside of the shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California. Former President Donald Trump and other 2024 Republican presidential hopefuls spoke out over the weekend on the failure of Silicon Valley Bank , offering early hints of their varied approaches to the markets. Silicon Valley Bank, or SVB, was shuttered by financial regulators last week, marking the largest failure of a banking institution since the 2008 financial crisis. Nikki Haley on Saturday night declared, "taxpayers should absolutely not bail our Silicon Valley Bank." "Now depositors at healthy banks are forced to subsidize Silicon Valley Bank's mismanagement.

☆ Here's how 'duration risk' came back to bite Silicon Valley Bank and led to its rapid collapse
▼ + stars: | 2023-03-13 | by ( Zev Fima | ) www.cnbc.com time to read: +11 min

One key term is "duration risk" along the yield curve in the bond market. Duration risk in bonds Those Treasury purchases in and of themselves were not the issue at SVB. The problem occurred when depositors came calling for their money and the bank didn't have the cash on hand. This mismatch, which always exists to some extent, is where "duration risk" comes into play. The risk is that the duration of the investments made by the bank doesn't match up with its potential liquidity needs.

☆ Biden says taxpayers won't bail out Silicon Valley Bank and the people responsible for its collapse will be held accountable: 'No one is above the law'
▼ + stars: | 2023-03-13 | by ( Sindhu Sundar | ) www.businessinsider.com time to read: +2 min

Taxpayer funds will not bail out Silicon Valley Bank customers, President Joe Biden said Monday. "If the bank is taken over by FDIC, the people running the bank should not work there anymore," he said. Biden also called for a "full accounting" of the factors that led to SVB's collapse, saying, "in my administration, no one is above the law." A representative for Silicon Valley Bank did not immediately return Insider's emailed request for comment Monday morning. On Sunday, Treasury Secretary Janet Yellen and other federal officials said they moved to protect depositors of both, SVB and Signature Bank, saying that banks would foot the bill.

WASHINGTON (Reuters) - The U.S. administration stepped in on Sunday with a series of emergency measures to shore up confidence in the banking system after the failure of Silicon Valley Bank threatened to trigger a broader systemic crisis. “The American people and American businesses can have confidence that their bank deposits will be there when they need them,” Biden said in a statement. Silicon Valley Bank (SVB), a mainstay for the startup economy, was a product of the decades-long era of cheap money, with unique risks that made it especially vulnerable. With the Fed poised to continue raising interest rates, investors said the financial system may not be fully out of the woods just yet. “Going forward, we will work with Congress and the financial regulators to consider additional actions we could take in the future to strengthen the financial system,” the official said.

☆ US regulators bail out Silicon Valley Bank customers
▼ + stars: | 2023-03-12 | by ( Katherine Tangalakis-Lippert | ) www.businessinsider.com time to read: +6 min

Federal regulators announced that depositors of Silicon Valley Bank will be paid in fullIn a statement released Sunday, the Treasury, Federal Reserve and the FDIC said they would "fully protect" depositors with funds in the bank. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer." "Still to be determined is the fate of the assets of Silicon Valley Bank. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.

☆ Signature Bank shut down by regulators
▼ + stars: | 2023-03-12 | by ( Katherine Tangalakis-Lippert | ) www.businessinsider.com time to read: +4 min

The crypto-friendly Signature Bank was shut down by regulators on Sunday. Signature Bank's closure comes on the heels of Silicon Valley Bank being shuttered on Friday. Signature Bank's closure comes on the heels of the shuttering of Silicon Valley Bank on Friday. Signature Bank has assets of more than $110 billion as of December 31. We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority.

☆ Regulators close crypto-focused Signature Bank, citing systemic risk
▼ + stars: | 2023-03-12 | by ( Yun Li | ) www.cnbc.com time to read: +2 min

U.S. regulators on Sunday shut down New York-based Signature Bank , a big lender in the crypto industry, in a bid to prevent the spreading banking crisis. The banking regulators said depositors at Signature Bank will have full access to their deposits, a similar move to ensure depositors at the failed Silicon Valley Bank will get their money back. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer," the regulators said. The regulators shuttered Silicon Valley Bank on Friday and seized its deposits in the largest U.S. banking failure since the 2008 financial crisis — and the second-largest ever. The dramatic moves come just days after the tech-focused institution reported that it was struggling, triggering a run on the bank's deposits.

☆ U.S. government steps in and says people with funds deposited at SVB will be able to access their money
▼ + stars: | 2023-03-12 | by ( Jeff Cox | ) www.cnbc.com time to read: +5 min

Those with money at the bank will have full access starting Monday. The Treasury Department designated both SVB and Signature as systemic risks, giving it authority to unwind both institutions in a way that it said "fully protects all depositors." The Fed facility will offer loans of up to one year to banks, saving associations, credit unions and other institutions. The SVB failure was the nation's largest collapse of a financial institution since Washington Mutual went under in 2008. Authorities had spent the weekend looking for a larger institution to buy SVB, but came up short.

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