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☆ Signature Bank failed because of ‘poor management,’ FDIC report finds
▼ + stars: | 2023-04-28 | by ( Elisabeth Buchwald | ) edition.cnn.com time to read: +2 min

New York CNN —The collapse of Signature Bank was due to “poor management,” according to a report from the Federal Deposit Insurance Corporation released Friday. Bank management “did not always heed FDIC examiner concerns, and was not always responsive or timely in addressing FDIC supervisory recommendations,” the report said. Contagion effects from Silicon Valley Bank’s failure and Silvergate Bank’s self-liquidation, which occurred just days before Signature Bank was forced to close, helped ignite the run on deposits, the FDIC report stated. In particular, bank management did not fully understand the risks associated with accepting crypto deposits, which comprised more than 20% of its total deposits, the FDIC report said. The FDIC led the investigation into Signature Bank, a New York state-charted bank, since it was the primary regulator.

☆ Fed’s SVB review finds there’s no “I” in “blame”
▼ + stars: | 2023-04-28 | by ( John Foley | ) www.reuters.com time to read: +4 min

So many, in fact, that the report makes it hard to point the blame anywhere in particular. The 114-page post-mortem of SVB, compiled in just over six weeks at the behest of supervisory chief Michael Barr, points out some obvious but undeniable truths. But this ailing dog of a bank also had a too-long leash, thanks to timid, consensus-seeking supervisors. Using pre-rollback rules, SVB would have fallen visibly short of its required liquidity levels by the end of 2022. But the report skirts over the extent to which the Fed’s top staff were aware of risks at SVB.

Signature Bank's failure took only marginally longer. "The number 36 has just been, you know, branded in my brain," Atlanta Fed President Raphael Bostic told Reuters earlier this month. "I think that any time you have a bank failure like this, bank management clearly failed, supervisors failed and our regulatory system failed," Barr told U.S. lawmakers in a hearing in March. "It's how do we allow a bank whose failure threatened the financial system to persist without being subject to more aggressive intervention?" "One thing for certain ... this was a very significant supervisory failure," Tarullo said at the Peterson Institute for International Economics event on Wednesday.

☆ Here’s what the SVB report will (and won’t) include, according to top former Fed official
▼ + stars: | 2023-04-27 | by ( Elisabeth Buchwald | ) edition.cnn.com time to read: +5 min

Randal Quarles, former vice chair of supervision at the Fed, told CNN in an exclusive interview that he doesn’t expect the report to uncover any smoking guns. For instance, SVB was able to opt out of holding capital against its unrealized investment losses. Cole Burston/Bloomberg/Getty ImagesIn Quarles’ view, returning to the pre-2019 requirements “would not have made any difference” in preventing SVB from failing. The real issue that the Fed’s report should address, he said, is why SVB’s uninsured depositors were so quick to flee. That’s why Quarles said he didn’t hear about the red flags Fed officials identified when he was vice chair for supervision.

☆ Factbox: Fed, FDIC reviews of US bank failures to spotlight problems, fixes
▼ + stars: | 2023-04-27 | by ( ) www.reuters.com time to read: +6 min

On Friday the banks' regulators - the Federal Reserve and the Federal Deposit Insurance Corporation - will publish their accounts of what happened at both institutions, and propose fixes to prevent a repeat. The FDIC will also publish a separate report on deposit insurance by Monday. Barr has said the Fed's report will include confidential supervisory information, including citations and exam material not typically disclosed. DEPOSIT INSURANCEThe second FDIC report could provide insight into how officials are thinking about the role of deposit insurance, currently capped at $250,000 per depositor, in financial stability. "The most interesting thing I expect to see is what the FDIC recommends about the deposit insurance cap," Phillips said.

☆ UniCredit to repay AT1 bond, says no need to issue more near term
▼ + stars: | 2023-04-27 | by ( Valentina Za | ) www.reuters.com time to read: +2 min

Investors' confidence in AT1 bonds has been rocked by a Swiss authorities' decision to wipe out $17 billion of Credit Suisse's CSGN.S AT1 debt under its takeover by UBS (UBSG.S), in a move that hit AT1 holders harder than shareholders. To do so, banks need approval from supervisors because such bonds, which are designed to help lenders withstand possible losses, count towards their capital buffers and banks would normally need to refinance them. A supervisory source told Reuters at the time that banks with strong capital ratios such as UniCredit did well to call AT1 bonds and prop up investor confidence. AT1 bonds were introduced in the wake of the global financial crisis to provide lenders with tools that could allow them to pass on losses to investors, shielding taxpayers. "UniCredit has limited need for TLAC/MREL fundingfor the remainder of this year and no need to issue AT1 instruments in the foreseeable future.

☆ Dollar, yen boosted as US banking sector fears put safe-havens back in vogue
▼ + stars: | 2023-04-26 | by ( Ankur Banerjee | ) www.reuters.com time to read: +4 min

The dollar index , which measures the currency against six major rivals, nudged 0.01% higher to 101.80 after a 0.5% increase overnight. The Japanese yen strengthened 0.13% to 133.53 per dollar, after gaining about 0.4% on Tuesday. The traditional safe-haven gained 2.6% in March amid fears of a widespread banking crisis but has lost 0.6% in April as the worries eased. The U.S. Richmond Fed manufacturing index slid as well, down to -10 in April, the fourth straight month of contraction. The Australian dollar slid to a six-week low of $0.6604 before settling down 0.3% at $0.6605 after data showed inflation eased from 33-year highs in the first quarter, while core inflation dipped below forecasts.

☆ Dollar, yen buoyed as US banking sector fears put safe-havens back in vogue
▼ + stars: | 2023-04-26 | by ( Ankur Banerjee | ) www.reuters.com time to read: +3 min

The dollar index , which measures the currency against six major rivals, nudged 0.01% higher to 101.80 following a 0.5% increase overnight. The traditional safe-haven gained 2.6% in March amid fears of a widespread banking crisis but has lost 0.6% for the month of April. U.S. consumer confidence dropped to a nine-month low in April, data overnight showed, heightening the risk that the economy could fall into recession this year. The U.S. Richmond Fed manufacturing index slid as well, down at -10 in April, the fourth straight month of contraction. The Australian dollar was swinging between losses and gains after data showed inflation eased from 33-year highs in the first quarter, while core inflation dipped below forecasts.

☆ Dollar, yen buoyed as U.S. banking sector fears put safe-havens back in vogue
▼ + stars: | 2023-04-26 | by ( ) www.cnbc.com time to read: +3 min

The U.S. dollar and the yen, both safe haven assets, were mostly steady after spiking higher overnight as renewed concerns over the U.S. banking sector and economy dented risk sentiment. The dollar index , which measures the currency against six major rivals, nudged 0.01% higher to 101.80 following a 0.5% increase overnight. The traditional safe-haven gained 2.6% in March amid fears of a widespread banking crisis but has lost 0.6% for the month of April. U.S. consumer confidence dropped to a nine-month low in April, data overnight showed, heightening the risk that the economy could fall into recession this year. The Australian dollar was swinging between losses and gains after data showed inflation eased from 33-year highs in the first quarter, while core inflation dipped below forecasts.

☆ South Korea to join global stress test on banks
▼ + stars: | 2023-04-24 | by ( ) www.reuters.com time to read: +1 min

SEOUL, April 24 (Reuters) - South Korea will voluntarily join a global stress test on banks, hoping to gain from a thorough analysis of risks they face on an international level, the country's central bank and its financial regulator said on Monday. The Bank of Korea and the Financial Supervisory Service said in a joint statement that the country has decided to join the test led by the Financial Stability Board and the Basel Committee on Banking Supervision. The test involves countries submitting data on their banks so that it can be analysed and compared on a global context. "It will allow (the participating countries) to conduct an elaborate assessment of financial stability on a global level such as contagion effects due to the global interconnection," the South Korean agencies said. South Korea is not required to join the test as none of its banks are classified as globally systemically important banks, but is keen on monitoring global contagion risks.

☆ Martina Merz seeking to step down as Thyssenkrupp CEO, shares tank
▼ + stars: | 2023-04-24 | by ( ) www.reuters.com time to read: +1 min

April 24 (Reuters) - Thyssenkrupp (TKAG.DE) Chief Executive Martina Merz, who launched the conglomerate's largest structural overhaul, is seeking to step down, the German industrial group said on Monday, without providing a reason for the move. Shares in the submarines-to-car parts firm plunged after the announcement and were down 9.2% at 1250 GMT. This is challenging, but necessary," Thyssenkrupp Chairman Siegfried Russwurm said. "Martina Merz has taken over a very difficult task at a challenging time and since then has initiated a fundamental change process at Thyssenkrupp with great commitment and expertise," Russwurm said. Reporting by Tristan Veyet in Gdansk, Editing by Friederike HeineOur Standards: The Thomson Reuters Trust Principles.

☆ U.S. financial regulators to tighten rules on non-bank firms, risk assessment
▼ + stars: | 2023-04-21 | by ( David Lawder | ) www.reuters.com time to read: +3 min

WASHINGTON, April 21 (Reuters) - The Financial Stability Oversight Council on Friday proposed guidance to make it easier to designate non-bank financial institutions for regulatory supervision and new procedures to better identify and respond to financial system risks. U.S. Treasury Secretary Janet Yellen has raised concerns about non-bank financial institutions, including hedge funds, private equity firms and pension funds as a potential source of financial instability because of a lack of supervision and. The new guidance removes some "inappropriate hurdles" to designating non-bank firms and replaces them with a process that allows for firms under review to have significant engagement with regulators. RISKS, VULNERABILITIESFSOC's proposed new risk assessment framework aims to enhance the council's ability to address financial stability risks by reviewing a broad range of asset classes, institutions and activities, according to a Treasury fact sheet. The new framework also specifies vulnerabilities that FSOC and member regulators would consider when evaluating potential stability risks.

It is the first major lawsuit in the public domain to be filed over the Swiss decision to wipe out around $18 billion of Credit Suisse's Additional Tier 1 (AT1) debt during the 3 billion Swiss franc all-share rescue deal last month, which stunned markets and alerted litigators. The appeal against FINMA, the Swiss Financial Market Supervisory Authority that ordered the writedown, was filed on April 18 in the Federal Administrative Court in St Gallen, north east Switzerland. "FINMA's decision undermines international confidence in the legal certainty and reliability of the Swiss financial center," said Thomas Werlen, Quinn Emanuel's Swiss managing partner. FINMA declined to comment and Credit Suisse did not immediately respond to a Reuters request for comment. ($1 = 0.8941 Swiss francs)Reporting by Jahnavi Nidumolu in Bengaluru; Editing by Savio D'SouzaOur Standards: The Thomson Reuters Trust Principles.

[1/4] A view of the Park Avenue location of the First Republic Bank, in New York City, U.S., March 10, 2023. FDIC regulators had raised the specter of systemic risk from the failure of large regional banks months before the SVB and Signature Bank collapses, records reviewed by Reuters show. SECRETS REVEALEDThe Fed will release its report on SVB at 11 a.m. EDT (1500 GMT) on Friday. FDIC Chair Martin Gruenberg has not provided much detail about the supervision of Signature, which like SVB had grown rapidly in recent years. The Fed's inspector general will have a report on each bank in the third quarter.

☆ Credit Suisse bondholders sue Swiss authorities
▼ + stars: | 2023-04-21 | by ( ) edition.cnn.com time to read: +2 min

Investors representing more than 4.5 billion Swiss francs ($5 billion) of Credit Suisse bonds have sued the Swiss financial regulator over its decision to wipe out their investments during last month’s emergency government-orchestrated takeover. Law firm Quinn Emanuel Urquhart & Sullivan, which is representing the bondholders, said Friday the move was the first in a series of steps to seek redress for clients it said had been unlawfully deprived of their property rights during the takeover of Credit Suisse (CS) by bigger rival UBS (UBS). The appeal against FINMA, the Swiss Financial Market Supervisory Authority, which ordered the writedown, was filed on April 18 in the Federal Administrative Court in St Gallen, north-east Switzerland. “FINMA’s decision undermines international confidence in the legal certainty and reliability of the Swiss financial center,” said Thomas Werlen, Quinn Emanuel’s Swiss managing partner. The Federal Administrative Court said it was still receiving complaints but declined to name claimants or comment on how many had been lodged by bondholders or their lawyers.

☆ Government watchdogs propose tougher scrutiny of nonbank financial companies
▼ + stars: | 2023-04-21 | by ( Bryan Mena | ) edition.cnn.com time to read: +2 min

Washington, DC CNN —In response to last month’s turbulence in the banking industry, financial regulators on Friday proposed a more comprehensive approach in identifying and addressing threats to financial stability, including closer scrutiny of nonbank financial companies. US Treasury Secretary Janet Yellen announced a new framework proposed by the Financial Stability Oversight Council that outlines the vulnerabilities in the financial system and the tools regulators can use to address those risks. The proposal also reverses guidance issued in 2019 that made it more difficult for nonbank financial companies, such as hedge funds and insurers, to be designated as systemically important institutions. “It is an important preventative tool to address systemic risks that may arise from a nonbank financial firm whose activities or distress could threaten the financial system.”FSOC has the power to designate nonbank financial firms as systemically important institutions if their failures pose a threat to financial stability, which would place those firms under the supervision of the Federal Reserve. Firms would be able to request a hearing if FSOC makes a proposed designation.

☆ I.R.S. Official Is Said to Assert Political Meddling in Hunter Biden Inquiry
▼ + stars: | 2023-04-20 | by ( Michael S. Schmidt | Luke Broadwater | ) www.nytimes.com time to read: +1 min

As Justice Department officials weigh whether to indict Hunter Biden, the investigator overseeing the Internal Revenue Service’s portion of the case has come forward with allegations of political favoritism in the inquiry that stand to add to the already fraught circumstances facing the department. Congressional leaders learned of the investigator’s allegations on Wednesday when a lawyer sent them a letter asking for whistle-blower protections for his client. The letter stated that the unnamed client, identified as an “I.R.S. While the letter from the lawyer, Mark D. Lytle, did not name Hunter Biden, Senate and House Republicans put out statements specifying that it was referring to him. The disclosure fed claims by congressional Republicans that a Justice Department run by the president’s political appointees could not be trusted to make a decision about his son based on the facts and law.

Hunter Biden denies wrongdoing in a criminal investigation related to his taxes. Photo: Patrick Semansky/Associated PressWASHINGTON—An IRS supervisor has told lawmakers he has information that suggests the Biden administration is improperly handling the criminal investigation into President Biden ’s son, Hunter Biden , and is seeking whistleblower protections, according to people familiar with the matter. A letter sent to Congress on Tuesday says a career Internal Revenue Service criminal supervisory special agent has information that would contradict sworn testimony by a “senior political appointee.” The supervisor also has information about a “failure to mitigate clear conflicts of interest in the ultimate disposition of the case,” according to the letter.

☆ CFPB Says Staffer Sent 250,000 Consumers’ Data to Personal Account
▼ + stars: | 2023-04-19 | by ( Andrew Ackerman | ) www.wsj.com time to read: 1 min

The Consumer Financial Protection Bureau hasn’t publicly identified firms involved in the breach. Photo: ANDREW KELLY/REUTERSWASHINGTON—A Consumer Financial Protection Bureau employee forwarded to a personal email account confidential information on thousands of consumers and dozens of financial firms, in what the agency has described to U.S. lawmakers as a major incident. The employee, who no longer works at the CFPB, made an unauthorized transfer of records containing personal information on approximately 256,000 consumers at one institution, as well as confidential supervisory information on 45 institutions, a CFPB spokesman said. There is no evidence the records were shared beyond the former employee’s personal email account, the spokesman said.

Hunter Biden, pictured in February in Syracuse, N.Y., denies wrongdoing in a criminal investigation related to his taxes. Photo: Patrick Semansky/Associated PressWASHINGTON—An IRS supervisor has told lawmakers he has information that suggests the Biden administration is improperly handling the criminal investigation into President Biden’s son, Hunter Biden , and is seeking whistleblower protections, according to people familiar with the matter. A letter sent to Congress on Tuesday says a career Internal Revenue Service criminal supervisory special agent has information that would contradict sworn testimony by a “senior political appointee.” The supervisor also has information about a “failure to mitigate clear conflicts of interest in the ultimate disposition of the case,” according to the letter.

☆ Germany's Buch seen as favorite to be new ECB top supervisor, sources say
▼ + stars: | 2023-04-15 | by ( Balazs Koranyi | ) www.reuters.com time to read: +3 min

WASHINGTON, April 15 (Reuters) - Three women are seen as the top contenders to become the European Central Bank's new supervisory chief, with Germany's Claudia Buch considered the clear favorite, conversations with a dozen sources with direct knowledge indicate. The ECB oversees just over a hundred of the euro zone's biggest banks and needs to pick a new top supervisor to replace Andrea Enria. His five-year term expires at the end of this year, just as sharply rising interest rates challenge banks' business models. Donnery, a deputy governor at Ireland's central bank, is seen as more of a long shot, the sources said. The sources added that the selection process has yet to start, so all discussions about the candidates are still informal.

☆ Bank of England deepens supervisory cooperation with US CFTC
▼ + stars: | 2023-04-14 | by ( ) www.reuters.com time to read: 1 min

LONDON, April 14 (Reuters) - The Bank of England said on Friday that it was deepening its cooperation with the United States' Commodities Futures Trading Commission regarding the supervision of cross-border central counterparties (CCPs), a key part of financial infrastructure. "The CFTC and the Bank reaffirm the primacy of the UK and US home authorities in their respective jurisdictions," the BoE said in a statement. The BoE said that it would recognise CFTC assessments of U.S.-based CCPs which operate in Britain. "This assessment enables the Bank to place reliance on the CFTC's supervision and oversight of incoming CCPs based in the US," it said. Reporting by David Milliken, editing by Andy BruceOur Standards: The Thomson Reuters Trust Principles.

☆ Analysis: 21-year-old's arrest exposes larger classified documents problem
▼ + stars: | 2023-04-14 | by ( Zachary B. Wolf | ) edition.cnn.com time to read: +9 min

If the many earlier and ongoing scandals regarding classified information aren’t a wakeup call that the US government has a problem, maybe the arrest of Jack Teixeira will do the trick. Classified material scandals aplentyOne thing that should be abundantly clear from the string of leaks and improperly handled pieces of classified information beyond this story is that the system has problems. The New York Times reported Wednesday that witnesses questioned as part of the Trump investigation have been asked if he was showing off a map with sensitive intelligence information. There are additional people who have security clearance but don’t currently have access to information. Gen. Pat Ryder, compared the method by which classified information is stored to a locked house where people with clearance can get a key.

☆ Elon Musk says Twitter takeover has been 'painful' but the company is now 'roughly breakeven'
▼ + stars: | 2023-04-12 | by ( Ryan Browne | ) www.cnbc.com time to read: +3 min

Elon Musk Twitter account seen on Mobile with Elon Musk in the background on screen, seen in this photo illustration. Elon Musk says that Twitter is close to becoming cash-flow positive after making sharp layoffs and working to lure advertisers back to the platform. "I'd say we're roughly breakeven at this point," Musk said Wednesday, during a live interview with the BBC recorded on Twitter Spaces. Musk said that Twitter will start removing blue checks from accounts without a subscription to the company's paid Twitter Blue service next week. Musk purchased Twitter for $44 billion in late October after a drawn-out legal battle with the company.

☆ Sweden's Alecta axes CEO after US bank losses
▼ + stars: | 2023-04-11 | by ( ) www.reuters.com time to read: +2 min

OSLO/STOCKHOLM, April 11 (Reuters) - Swedish pension fund Alecta on Tuesday fired its CEO Magnus Billing with immediate effect following the recent announcement of large losses from investments in several U.S. banks. Alecta, Sweden's largest pension fund provider, last month said it had lost 19.6 billion Swedish crowns ($1.87 billion) from its shareholdings in First Republic Bank (FRC.N), Silicon Valley Bank and Signature Bank. "The losses have severely damaged the trust in Alecta's asset management," the company said in a statement. "The board has concluded that Alecta needs new leadership in order to implement the necessary changes within the asset management and re-establish trust." The pension provider last week announced the replacement of its head of stock market asset management.

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