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☆ SVB's collapse was fueled by 'people on iPhones' and won't spread across the US banking sector, Blackstone CEO says
▼ + stars: | 2023-03-30 | by ( George Glover | ) www.businessinsider.com time to read: +3 min

Silicon Valley Bank failed because of the "interim issue" of high interest rates, Steve Schwarzman said. Rapid withdrawals "by people on iPhones" also fueled SVB's collapse, he told Bloomberg Thursday. "The banking system is not in any type of conventional crisis," the billionaire businessman said. Silicon Valley Bank's collapse earlier this month sparked a selloff in stocks of regional US banks, fueling fears that its failure would develop into a broader crisis. Read more: Silicon Valley Bank's spectacular implosion shows how digital banking can decimate a lender in 24 hours

☆ Morning Bid: Bank calm, rates firm, Alibaba steals show
▼ + stars: | 2023-03-29 | by ( ) www.reuters.com time to read: +4 min

A semblance of calm has returned to world markets in the final week of the first quarter as the banking storm abates and the spotlight switched to a share-boosting six-way revamp of Chinese e-commerce giant Alibaba. Investors cheered the surprise move from Alibaba (9988.HK) as a sign Beijing's corporate crackdown may be nearing an end, sending shares of the Jack Ma-founded firm and peers soaring. The surprise move seeks to take advantage of Ermotti's experience rebuilding the bank after the global financial crisis 15 years ago. Broader stock markets were higher across the board, with Wall St futures up almost 1% ahead of the open. Futures markets now show a 50-50 chance of one more Fed rate hike in this cycle in May and half a point of easing by yearend.

☆ Fintech has a fraud problem, and the onus is on you to figure it out
▼ + stars: | 2023-03-29 | by ( Dan Defrancesco | ) www.businessinsider.com time to read: +5 min

Fintech's fraud misfortune. Which brings us to a story by Insider's Bianca Chan and Paige Hagy about concerns over the prevalence of fraud within consumer-facing fintechs in recent years. Click here to read more about fintech's fraud problem. We've also got the deck StellarFi, a fintech that helps users improve their credit score, used to raise $15 million. For more than 50 different decks used by fintechs to raise fresh funds, check out our library.

While money funds are not strictly gauranteed or insured, the 85% invested heavily in government securities put up some stark competition for bank deposits that have lagged central bank policy rate rises over the past 18 months - causing much political ire in countries such as Britain. But, in contrast to money funds, the average rate across all of them, according to the Federal Deposit Insurance Corporation, is still just 0.37%. That's now changing due to safety and insurance fears at smaller banks stateside - as well as the compelling alternative at money funds that appear safer against that backdrop. Of this trillion, half went to government money market funds and the other half to larger banks, they reckoned. Noting that some $7 trillion of U.S. bank deposits remained uninsured, the JPM team concluded: "A FDIC guarantee of all U.S. bank deposits would certainly help, but it might not be enough to completely stop this deposit shift."

☆ A large global sell-off last week was likely sparked by a single trade in Deutsche Bank's credit-default swaps
▼ + stars: | 2023-03-28 | by ( Matthew Fox | ) www.businessinsider.com time to read: +3 min

A single $5 million trade in credit-default swaps for Deutsche Bank likely sparked last week's stock market decline, Bloomberg reported. Credit-default swaps are an extreme form of insurance against the potential default of a company. The trading instruments are incredibly illiquid, which means one small trade can lead to an outsized move. Regulators are investigating a $5.4 million trade on credit-default swaps tied to the bank's junior debt, according to a Bloomberg report. The relatively small trade that could have sparked the big sell-off on Friday highlights the illiquidity of credit-default swaps markets.

☆ Markets are getting their Fed call wrong, and the central bank isn't poised to cut rates anytime soon, BlackRock says
▼ + stars: | 2023-03-28 | by ( Carla Mozée | ) www.businessinsider.com time to read: +4 min

Markets are wrong in thinking the Fed will cut interest rates this year, according to BlackRock. Rate cuts are unlikely while inflation is sticky and the Fed signals bank stress won't deter it from tightening. "The Fed and other central banks made clear banking troubles would not stop them from further tightening," said Li. This month, the European Central Bank, the Bank of England, and the Swiss National Bank all raised their respective rates by 0.5%. "That damage is now front and center – central banks are finally forced to confront it," said Li.

☆ Why the struggles of mid-sized US banks could be bad news for the Main Street economy
▼ + stars: | 2023-03-28 | by ( Carla Mozée | ) www.businessinsider.com time to read: +6 min

Households and businesses may find it harder to get loans from regional banks as people pull deposits from those lenders. "The greatest vulnerabilities with respect to credit creation going forward lie with non-mortgage bank lending to households and mortgage bank lending for non-financial non-corporate businesses," JPMorgan said. Regional banks are "very important" to the financial system, CFRA's Yokum said. Regional banks can potentially give better service, more customized products, potentially higher deposit rates," he said. Some hefty figures illustrate the "disproportionately large" role small banks hold in lending in the US.

☆ Here's why banking turmoil may not blow up into a financial crisis and stocks could still be set up for a bull market
▼ + stars: | 2023-03-28 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

Turmoil gripping the banking sector may not expand into a full-blown financial crisis, Fundstrat said. "A fuller blown financial crisis is not inevitable," Fundstrat's Tom Lee said. That's lowered panic among bank customers and investors, spurring a small rebound in regional bank stocks this week. "There are signs that the crisis is not set to morph into a broader crisis." Morgan Stanley's chief stock strategist said US stocks could see near-term downside as the end of the bear market approaches.

☆ First Citizens Bank jumps 50% after deal to acquire assets of collapsed Silicon Valley Bank
▼ + stars: | 2023-03-27 | by ( Morgan Chittum | ) www.businessinsider.com time to read: +2 min

First Citizens Bank stock jumped as much 50% in Monday's trading session. The surge follows news that First Citizens will acquire a large chunk of failed SVB's assets. The Federal Deposit Insurance Corporation (FDIC) said the Raleigh, North Carolina-based bank will acquire $72 billion worth of SVB assets at a $16.5 billion discount. SVB collapsed on March 10 after a bank run, sending shockwaves through global financial markets and steep sell-off in bank stocks on contagion concerns. "Financial conditions are likely to tighten, increasing the risk of an economic hard landing even if central banks ease off on interest rate hikes," Haefele said in a recent note.

☆ First Citizens just bought Silicon Valley Bank – here's everything you need to know about the latest twist in the banking turmoil
▼ + stars: | 2023-03-27 | by ( George Glover | ) www.businessinsider.com time to read: +6 min

First Citizens Bank agreed to buy most of Silicon Valley Bank on Sunday. The Raleigh, NC-based bank has taken over 17 branches of SVB, $119 billion of its deposits and $72 billion worth of loans. Here's everything you need to know about the latest twist in the US's regional banking turmoil. First Citizens Bank has agreed to buy SVB, according to a statement released on Sunday by the Federal Deposit Insurance Corporation. It'll also receive benefits tied to First Citizens' share price, which it estimated could be worth around $500 million.

☆ Silicon Valley Bank red flags: Why did almost everyone fail to predict its collapse?
▼ + stars: | 2023-03-26 | by ( Allison Morrow | ) edition.cnn.com time to read: +8 min

A bank run took down Silicon Valley Bank on March 10, as depositors withdrew $42 billion in a single day. To embrace a uniquely Silicon Valley ethos that champions boldness, growth and disruption. Silicon Valley Bank held 55% of its customers' deposits in long-dated bonds whose value eroded as interest rates went up. Silicon Valley Bank held an unusually large proportion (55%) of its customers’ deposits in long-dated Treasuries. And for most of that year, Silicon Valley Bank was operating with a massive vacancy in its corporate leadership team: a chief risk officer.

☆ Is your money safe? A financial planner explains whether you should be concerned about your deposits, and how to take advantage of risk-free returns on your cash
▼ + stars: | 2023-03-25 | by ( Laila Maidan | ) www.businessinsider.com time to read: +6 min

The recent lineup of bank failures has depositors suddenly asking the simple question: is my money safe? Jason J. Howell, a certified financial planner and the president of Jason Howell Company, says yes, your money is safe. This way, if you need cash quickly, you could get it. "You're going to have to go to the US TreasuryDirect to buy those bonds," Howell said. "Money markets nearly went bust in the 2008 financial crisis, so there's no need to put a wrapper around it," Howell said.

☆ Small US banks see record drop in deposits after SVB collapse
▼ + stars: | 2023-03-25 | by ( ) edition.cnn.com time to read: +1 min

Deposits at small US banks dropped by a record amount following the collapse of Silicon Valley Bank on March 10, data released on Friday by the Federal Reserve showed. Deposits at small banks fell $119 billion to $5.46 trillion in the week ended March 15, which was more than twice the previous record drop and the biggest decline as a percent of overall deposits since the week ended March 16, 2007. Borrowings at small banks, defined as all but the biggest 25 commercial US banks, increased by $253 billion to a record $669.6 billion, the Fed’s weekly data showed. The rise equates to about half as much as the deposit decline at small banks, suggesting some of the cash may have gone into money market funds or other instruments. It was unclear if the shift in deposits out of small banks will persist.

☆ European bank stocks: UBS, Deutsche sink as fear returns
▼ + stars: | 2023-03-24 | by ( Anna Cooban | ) edition.cnn.com time to read: +1 min

Europe’s Stoxx Europe 600 Banks index, which tracks 42 big EU and UK banks, fell 5% in morning trade. Last week, Switzerland’s biggest bank UBS bought its embattled Swiss rival for 3 billion Swiss francs ($3.25 billion) in an emergency takeover brokered by the Swiss government. The DOJ had sent subpoenas to those employees before UBS took over Credit Suisse, according to the report. “Contagion fears are not yet going away — bank shares are lower again this morning and weighing on broader sentiment. Yesterday we witnessed Deutsche Bank credit default swaps blow out,” Neil Wilson, chief markets analyst at trading platform Markets.com, said in a note Friday.

☆ Elon Musk jokes ChatGPT 'couldn't do worse' than Jerome Powell as he slams the Fed's latest rate hike
▼ + stars: | 2023-03-23 | by ( George Glover | ) www.businessinsider.com time to read: +3 min

Elon Musk has slammed the Federal Reserve again after it decided to keep hiking interest rates. Musk warned the Fed's latest decision could make the US regional banking crisis worse. "A major driver of depositor flight is people moving money from low interest savings accounts to high interest money market (Treasury Bill) accounts," Musk said. Bond yields tend to rise when the Fed lifts interest rates, making money market accounts more attractive. He's noted that higher interest rates bump up monthly car-loan payments, effectively making it more expensice to buy vehicles.

☆ The Fed hiked rates further but Wall Street is already pointing to tighter conditions on the ground
▼ + stars: | 2023-03-23 | by ( Jason Ma | ) www.businessinsider.com time to read: +6 min

Between fighting inflation or the bank crisis, the Federal Reserve leaned toward the former. Wednesday's move comes despite the bank crisis, which previously led investors to price in a series of Fed rate cuts starting this summer. Indeed, Wall Street has started pointing to the facts on the ground when it comes to financial conditions. The banks are still tightening credit conditions and … non-bank lenders are as well," he told Bloomberg TV hours before the Fed meeting. Billionaire investor Mark Mobius says he is "very, very skeptical" of investing in bank stocks.

☆ Bill Ackman warns the US economy is heading for a 'train wreck' as the Fed hikes interest rates again
▼ + stars: | 2023-03-23 | by ( Zahra Tayeb | ) www.businessinsider.com time to read: +3 min

Bill Ackman highlighted risks to the economy and smaller banks as interest rates keep rising even with a banking crisis. The billionaire investor warned the US economy is heading for a "train wreck" as the Fed raises rates again. Ackman also slammed Treasury Secretary Janet Yellen for walking back on plans to support depositors. I fear we are heading for another a train wreck. "The longer the uncertainty continues, the more permanent the damage is to the smaller banks, and the more difficult it will be to bring their customers back," Ackman said.

☆ The Fed has outsourced monetary policy and lost control of the economy, former White House advisor says
▼ + stars: | 2023-03-23 | by ( Filip De Mott | ) www.businessinsider.com time to read: +3 min

The Federal Reserve is outsourcing monetary policy, former White House adviser Gary Cohn said. It's betting that tighter lending in the banking sector will act as a brake on the economy, he told CNBC. "We're almost getting to a point right now where he's outsourcing monetary policy," Cohn told CNBC. When the Fed was slowing the economy by raising rates, a soft landing seemed more achievable, he said. Even with the possibility of a recession, Cohn did not think that the Fed was incentivized to cut rates later this year, citing the Fed's dot plot.

☆ Former Treasury Secretary Larry Summers says more rate hikes may be needed to kill inflation despite a banking crisis
▼ + stars: | 2023-03-23 | by ( Zahra Tayeb | ) www.businessinsider.com time to read: +2 min

Former Treasury Secretary Larry Summers suggested more interest-rate hikes may be needed to cool inflation. "I probably would have allowed more room for concern about inflation and left the door a bit more open to multiple rate hikes," he said. The Fed made a decision Wednesday to hike interest rates by 25 basis points amid an ongoing banking crisis in the US. "I probably would have allowed more room for concern about inflation and left the door a bit more open to multiple rate hikes, given the strength of the recent inflation data" Summers told CNN on Wednesday. Nevertheless, Summers voiced support for the Federal Reserve's latest interest-rate decision.

The Fed's relentless rate hikes to rein in inflation have been partly blamed for sparking the biggest meltdown in the banking sector since the 2008 financial crisis. For now, Credit Suisse's rescue appears to have assuaged the worst fears of systemic contagion, boosting shares of European banks (.SX7P) and U.S. regional lenders. The S&P 500 banks index (.SPXBK) rallied 3.6%, its largest one-day gain since November. Still, Australia's prudential regulator has started asking the country's banks to declare their exposure to startups and crypto-focused ventures following the collapse of Silicon Valley Bank, according to the Australian Financial Review. Market cap of US regional banks included in the S&P 500 regional bank indexDeputy Treasury Secretary Wally Adeyemo said a review of the failures of Silicon Valley Bank and rival Signature Bank was in order.

☆ What would a federal expansion of deposit insurance look like?
▼ + stars: | 2023-03-22 | by ( Ramishah Maruf | ) edition.cnn.com time to read: +7 min

That’s the Federal Deposit Insurance Corporation’s standard limit, meaning any bank deposits up to that amount are protected by the independent government agency. But now there’s growing support for raising that insurance cap. A higher insurance cap doesn’t automatically mean banks will be subject to tighter regulations, Dollar noted, but there could be some call for it. The FDIC insurance limit has been raised seven times since 1950 — and $250,000 also isn’t a calculated number, Collins said. In 2008, the FDIC used the same system for temporary unlimited deposit insurance guarantee on certain accounts.

☆ Yellen says US banks shoring up liquidity to guard against runs
▼ + stars: | 2023-03-22 | by ( ) www.reuters.com time to read: +1 min

REUTERS/Evelyn HocksteinWASHINGTON, March 22 (Reuters) - U.S. Treasury Secretary Janet Yellen said that banks across the United States are worried about contagion and have been shoring up liquidity to protect themselves from runs prompted by the failures of Silicon Valley Bank and Signature Bank. Yellen told a Senate Appropriations subcommittee hearing that over the past two weeks, many mid-sized banks expressed "great concern" to the Treasury about their uninsured deposits. "Many of these banks felt very skittish about their potential to suffer runs as well," Yellen said. "We can see that banks across the country are shoring up their liquidity, they are very worried about contagion from the troubles of Silicon Valley Bank and Signature Bank. And the steps we took were designed to improve the confidence of all depositors that they're safe in banks."

☆ Here are 3 important reasons why stocks shouldn't be rallying in the wake of bank bailouts, and why bond investors are right to be bearish, according to Morgan Stanley
▼ + stars: | 2023-03-22 | by ( Marley Jay | ) www.businessinsider.com time to read: +5 min

Stocks have risen as investors conclude that authorities will prevent a bank crisis from spreading. He says that tighter credit conditions and the economy will weaken, and stocks look expensive. While bank stocks are still down, the rest of the market is collectively higher since the crisis started. But even if that's true, Morgan Stanley says investors are far too optimistic right now. In short, Wilson wrote that investors who see conditions in markets right now as positive for stocks, especially for tech, are making a mistake.

☆ The Fed is about to deliver a momentous policy decision. It'll be a choice between keeping the focus on inflation or stemming the banking chaos.
▼ + stars: | 2023-03-22 | by ( Max Adams | ) www.businessinsider.com time to read: +6 min

Powell and the Fed may acknowledge that monetary policy has caused some pain, and even add that more may be coming. What's your prediction for today's Fed decision and what Powell might say about the recent banking tumult? A market analyst says investors need to have some key questions answered by the Fed today. Market watchers should pay attention over whether the central bank sees the SVB collapse and resulting crisis as deflationary. The governor of Florida has proposed legislation to ban a central bank digital currency and has called on like-minded states to do the same.

☆ Interest rate decision: What to expect from the Fed meeting
▼ + stars: | 2023-03-22 | by ( Christine Romans | ) edition.cnn.com time to read: +5 min

Among the choices, the Fed could continue its aggressive rate-hike campaign to cool inflation that is running at triple the central bank’s target of 2%. Warren — already a critic of the Fed’s inflation fight — leveled further blistering criticism of the Republican Fed chief. In addition to achieving price stability and financial stability, the Fed’s broader mandate includes supervision of individual financial institutions, Leer says, and “that’s where the failure lies. “The Fed needs to secure both price stability and financial stability, something that it has failed to so recently,” he told CNN. And this Fed chief inherited an unprecedented economy.

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