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☆ 'Big Short' investor Michael Burry predicted a cash crunch. A top JPMorgan banker says that painful problem is fueling a banking crisis
▼ + stars: | 2023-04-27 | by ( Theron Mohamed | ) www.businessinsider.com time to read: +3 min

JPMorgan banker Bob Michele said businesses and consumers are "burning cash in a big way." Americans are weathering a painful mix of historic inflation and much higher borrowing costs. "They occurred because businesses and consumers are burning cash in a big way," he said. Consumers depleted their deposits in part because they had to cover the higher costs of groceries and other essentials, he said. Similarly, businesses withdrew cash as the interest rates on their debts have doubled or tripled from a year ago, he continued.

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.

☆ E. Jean Carroll said she can still feel Trump's 'curved finger' in rape trial testimony
▼ + stars: | 2023-04-26 | by ( Ashley Collman | ) www.businessinsider.com time to read: +4 min

E. Jean Carroll testified in her rape and defamation lawsuit against Trump on Wednesday. She said she didn't report the rape because she was afraid he's retaliate, but told two friends. Once inside Carroll said Trump closed the door and "shoved me so hard my head banged" against the wall. E. Jean Carroll outside of US Federal Court in Manhattan Getty Images"I didn't want to make scene. He'll bury you," Carroll said Martin told her.

☆ Trump's rape trial brought by E. Jean Carroll starts Tuesday in Manhattan. The case centers around accusations from the 1990s
▼ + stars: | 2023-04-24 | by ( Ashley Collman | ) www.businessinsider.com time to read: +7 min

Carroll has accused Trump of raping her in a Bergdorf Goodman changing room in the mid-1990s. Carroll is asking for Trump to retract his statements and for a jury to award her unspecified compensatory and punitive damages. Carroll says their encounter started off playful, with Trump asking Carroll to help him pick out a gift for a female friend. Eva Deitch for The Washington Post via Getty ImagesTrump's lawyers are likely to try and paint Carroll's lawsuit as a political witch hunt. Trump's lawyers asked to delay the trial a month so that they could probe Hoffman's involvement more, but that request was denied, though Kaplan allowed Trump's legal team to conduct another deposition with Carroll before the trial starts.

☆ ‘South Park’ showdown animates streaming dilemma
▼ + stars: | 2023-04-21 | by ( ) www.reuters.com time to read: +2 min

NEW YORK, April 21 (Reuters Breakingviews) - Paramount Global (PARA.O) and Warner Bros Discovery (WBD.O) bosses are fighting over “South Park” like the foul-mouthed cartoon fourth graders featured in the hit adult-oriented series. Paramount has countersued its rival to stream the program whose library Warner Bros Discovery bought for $500 million, along with the rights to new episodes, for its newly rebranded Max service. Not long ago, producers were keeping movies and shows to beef up their own streaming audiences. Paramount boss Bob Bakish and Warner Bros Discovery CEO David Zaslav both champion the idea of letting others carry the content for which their companies are paying so dearly to develop. These sorts of complicated dealings will only get tougher as the streaming wars get more cutthroat.

☆ Crypto stablecoins might need limits to avoid disruptions to financial stability, warns Bank of England
▼ + stars: | 2023-04-17 | by ( Ryan Browne | ) www.cnbc.com time to read: +3 min

Regulators may need to introduce limits on the use of stablecoins in payments to prevent potential threats to financial stability, an official at the Bank of England warned Monday. Stablecoins are cryptocurrency tokens that aim to mirror the value of traditional assets such as fiat currencies. Such assets could include deposits at the Bank of England "or very highly liquid securities," he added. The Bank of England said in February that it was "likely" Britain would need a central bank digital currency if current trends around the decline in cash use continue. The Bank of England, Treasury and industry are still debating concerns over how such currencies would be implemented, such as the privacy of people transacting with them and implications for financial stability.

☆ Shaq is finally served in FTX investor suit, lawyers say
▼ + stars: | 2023-04-17 | by ( Allison Morrow | ) edition.cnn.com time to read: +2 min

New York CNN —After months of attempting to serve Shaquille O’Neal in a lawsuit against celebrities who endorsed the now-bankrupt FTX crypto platform, lawyers for a group of FTX investors said they finally succeeded on Sunday. “Plaintiffs in the billion $ FTX class action case just served @SHAQ outside his house,” the Moskowitz Law Firm tweeted. O’Neal was the last of the celebrities in the class-action suit to be served a legal notice, according to court documents. FTX collapsed into bankruptcy on November 11 after depositors and investors yanked their money amid concerns about the platform’s balance sheet. Bankman-Fried, who was arrested in December and is out on house arrest, has pleaded not guilty to 13 counts of fraud and conspiracy.

☆ JPMorgan profit surges 52% on robust consumer business
▼ + stars: | 2023-04-14 | by ( ) www.reuters.com time to read: +1 min

April 14 (Reuters) - JPMorgan Chase & Co's (JPM.N) profit climbed in the first quarter as higher interest rates boosted its consumer business in a period that saw two of the biggest banking failures in U.S. history. The bank's profit increased 52% to $12.62 billion, or $4.10 per share, in the three months ended Mar. Revenue at the lender's consumer and community banking unit rose 80% to $5.2 billion. Its Wall Street investment banking business was weighed down by tepid markets for mergers, acquisitions and stock sales. Reporting by Niket Nishant in Bengaluru and Nupur Anand in New York; Editing by Lananh NguyenOur Standards: The Thomson Reuters Trust Principles.

☆ Amazon Union President Chris Smalls Seen Fighting Worker in Video
▼ + stars: | 2023-04-12 | by ( Katherine Long | Jack Newsham | ) www.businessinsider.com time to read: +27 min

On the night of December 5, the president of the Amazon Labor Union pummeled another union member. Some longtime Amazon Labor Union organizers decided to begin organizing on their own, without Smalls. All three said they believe in Smalls' mission and support the goals of the Amazon Labor Union, but worry about Smalls' ability to lead. Amazon Labor Union members consoled each other after the union lost the vote at its second warehouse, LDJ5, last April. One purpose of the organization appears to be to raise funds for the Amazon Labor Union, according to its certificate of incorporation.

☆ Lawmakers seek details on ‘unusually cozy’ ties between tech executives and SVB
▼ + stars: | 2023-04-10 | by ( Allison Morrow | ) edition.cnn.com time to read: +2 min

New York CNN —Democratic lawmakers sent letters to 14 of the largest depositors at Silicon Valley Bank, seeking details about the lender’s “unusually cozy” relationships with its well-heeled clients. Silicon Valley Bank was known to cater to the tech startup world. But Warren and Ocasio-Cortez, citing media reports, raised concerns about whether the bank’s relationships went beyond industry standards and potentially hastened its collapse last month. SVB reportedly provided lower-interest-rate mortgages for tech start-up founders whom other banks wouldn’t lend to, according to the New York Times, while sponsoring industry ski trips, conferences, and fancy dinners, the lawmakers wrote. “Silicon Valley Bank’s unusually cozy relationship with its clients increased the threat of contagion when the bank went under,” said Senator Warren in a statement.

Paying more for deposits is an effective way for banks to keep customers loyal, analysts said. Smaller banks, which were most strained by the recent crisis, have been able to stem the exodus of deposits for now, according to weekly from the Federal Reserve. That said, the Fed’s data showed deposits at smaller banks were still down some $216 billion during the week ending March 22 from a December high. Meanwhile, large U.S. banks lost out on $96.2 billion in deposits in the week ending March 22, the Fed data showed. Deposits at large banks dropped some $519 billion from as high as $11.2 trillion in February last year.

☆ Why so many banks seem to fail on Fridays
▼ + stars: | 2023-03-31 | by ( Allison Morrow | ) edition.cnn.com time to read: +7 min

That’s because when banks fail, they have a tendency to do so on Friday. Friday, March 10, 2023: Silicon Valley Bank seized by regulators, the second biggest bank failure in US history. “That was very unusual.”Similarly, Silicon Valley Bank’s unraveling happened at a head-spinning pace nearly three weeks ago. Skinny cansAnyone else notice how skinny cans are these days? My colleague Nathaniel Meyersohn, a reporter with an eagle eye for retail trends, explains that skinny cans are, in fact, in.

☆ What to expect from the Senate hearings on recent bank failures
▼ + stars: | 2023-03-28 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +4 min

New York CNN —Silicon Valley Bank’s liquidity crisis and subsequent downfall sent waves of panic through the financial system in early March, setting off a chain reaction of chaos with which regional banks are still grappling. On Wednesday, the House Financial Services Committee will continue with their own line of questioning. Sen. Brown has called for the executives of Silicon Valley Bank to be held accountable for the bank’s failure. “Our banking system is sound and resilient, with strong capital and liquidity,” Barr said. The failures of SVB and Signature Bank, he wrote, “demonstrate the implications that banks with assets over $100 billion can have for financial stability.

☆ 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.

☆ SVB failure is a ‘textbook case of mismanagement,’ top Fed regulator tells Congress
▼ + stars: | 2023-03-27 | by ( Matt Egan | ) edition.cnn.com time to read: +3 min

“SVB’s failure is a textbook case of mismanagement,” Barr says in testimony to be delivered before the Senate Banking Committee. “Our banking system is sound and resilient, with strong capital and liquidity,” Barr said. In his testimony, Barr discloses that near the end of 2021, bank supervisors found “deficiencies” in the bank’s liquidity risk management. That resulted in six supervisory findings linked to SVB’s liquidity stress testing, contingency funding and liquidity risk management. Barr said the Fed will weigh whether the applying those tougher rules to SVB would have helped the bank manage the risks that led to its failure.

London CNN —Europe’s banks are not yet in the clear, a top EU regulator said Monday, two weeks after the collapse of Silicon Valley Bank in the United States unleashed turmoil in the global banking sector. José Manuel Campa, the head of the European Banking Authority (EBA), told a German newspaper that European lenders remained vulnerable following the demise of SVB and the subsequent emergency rescue of Credit Suisse by UBS. The regulator is currently finalizing a study of the effects of interest rate risks on European banks, which it started working on in the fall. “The investigation is not yet concluded, but I can say already today that we don’t expect to find major institutions with significant solvency risks arising from unrealized losses,” Campa said. Meanwhile, years of mismanagement and scandal at Credit Suisse left it particularly exposed to a broad sense of unease about banks.

☆ Here’s why the U.S. had to sweeten terms to get the SVB sale done
▼ + stars: | 2023-03-27 | by ( Hugh Son | ) www.cnbc.com time to read: +3 min

First Citizens BancShares is acquiring $72 billion in SVB assets at a discount of $16.5 billion, or 23%, according to a Sunday release from the Federal Deposit Insurance Corporation. But even after the deal closes, the FDIC remains on the hook to dispose of the majority of remaining SVB assets, about $90 billion, which are being kept in receivership. All told, the SVB failure will cost the FDIC's Deposit Insurance Fund about $20 billion, the agency said. The deal terms may be explained by tepid interest in SVB assets, according to Mark Williams, a former Federal Reserve examiner who lectures on finance at Boston University. The ongoing sales process for First Republic may have cooled interest in SVB assets, according to a person with knowledge of the process.

☆ Spooked dealmakers scurry back into their foxholes
▼ + stars: | 2023-03-23 | by ( Jeffrey Goldfarb | ) www.reuters.com time to read: +8 min

NEW YORK, March 23 (Reuters Breakingviews) - Jonathan Kanter, a lawyer by training, has become something of a magician. Pay closer attention, however, and Kanter is methodically rewriting a decades-old regulatory playbook. Last year, these breakup charges reached their highest level in a decade, at an average 4.5% of deal prices. The Department of Agriculture partnered with the DOJ on the case, another feature of Kanter’s plan of attack. As legal weaknesses emerge, dealmakers should be in position to better structure transactions and defend themselves at trial.

☆ US stocks slip ahead of Fed's decision on interest rates following bank crisis
▼ + stars: | 2023-03-22 | by ( Carla Mozée | ) www.businessinsider.com time to read: +3 min

US stocks slipped Wednesday before the Federal Reserve's March rate decision. The Fed's decision is the first since SVB's collapse set off distress in regional banks. The policy decision is due at 2:00 p.m. Eastern and Fed Chairman Jerome Powell will speak at 2:30 p.m. Eastern. Cathie Wood says the Fed's rate hikes hit Ark's strategy like an 'earthquake' as the fund logs a $2 billion loss. Top economist David Rosenberg said the Fed should put bigger rate hikes back on the table after bouts of 'speculative lunacy'.

☆ Banks borrowed a record $153 billion from the Fed as SVB's collapse rocked Wall Street
▼ + stars: | 2023-03-17 | by ( Zahra Tayeb | ) www.businessinsider.com time to read: +2 min

Banks rushed to borrow unprecedented amounts from the Federal Reserve's traditional backstop following SVB's collapse, new data shows. Lenders took up $153 billion from the Fed's discount window in the week to March 15, topping a previous high of $111 billion. Banks also borrowed $11.9 billion from the Fed's new emergency loan tool launched following SVB's downfall. The global banking system has come under pressure in the wake of Silicon Valley Bank's demise. The move followed a turbulent few days for the regional lender as fears of depositors pulling funds sparked a selloff in its share price following SVB's implosion.

☆ Big banks experience deposit spike after Silicon Valley Bank collapse
▼ + stars: | 2023-03-15 | by ( Matt Egan | ) edition.cnn.com time to read: +2 min

Bank of America (BAC), Wells Fargo (WFC) and Citigroup (C) have all experienced a significant increase in deposits since Silicon Valley Bank ran into trouble last week, people familiar with the matter tell CNN. Last Thursday alone customers yanked $42 billion from Silicon Valley Bank, draining the California lender of all of its cash. Bank of America, Wells Fargo and Citi declined to comment. But the FDIC insures deposits up to $250,000 per bank per borrower, regardless of if the accounts are at small, medium or large banks. Analysts say the FDIC’s decision to rescue uninsured depositors at Silicon Valley Bank and Signature Bank suggests regulators would be forced to do the same if another bank collapsed.

☆ Why Silicon Valley Bank collapsed and what it could mean
▼ + stars: | 2023-03-13 | by ( Hanna Ziady | ) edition.cnn.com time to read: +7 min

London CNN —Silicon Valley Bank collapsed with astounding speed on Friday. A Brinks armored truck sits parked in front of the shuttered Silicon Valley Bank headquarters on March 10, 2023 in Santa Clara, California, United States. Established in 1983, Silicon Valley Bank was, just before collapsing, America’s 16th largest commercial bank. Like many other banks, SVB ploughed billions into US government bonds during the era of near-zero interest rates. By Friday morning, trading in SVB shares was halted and it had abandoned efforts to raise capital or find a buyer.

☆ US regulators are working to bail out SVB customers
▼ + stars: | 2023-03-12 | by ( David Goldman | ) edition.cnn.com time to read: +4 min

New York CNN —American regulators are working through the weekend on an extraordinary plan to make Silicon Valley Bank customers whole after the financial institutions’ stunning and rapid collapse late last week. Treasury, Federal Reserve and Federal Deposit Insurance Corp. officials over the past two days have worked with the Biden administration to develop facilities that would guarantee all uninsured deposits held by SVB customers. If a sale fails, customers could collect some of their uninsured deposits as the government unwinds and liquidates the bank’s assets to repay them. As of the end of last year, Silicon Valley Bank said it had $151.5 billion in uninsured deposits, $137.6 billion of which was held by American customers. Customers yanked $42 billion from Silicon Valley Bank on Thursday, leaving the bank with $1 billion in negative cash balance, the company said in a regulatory filing.

☆ What’s the next Silicon Valley Bank — and how can the US prevent more chaos?
▼ + stars: | 2023-03-12 | by ( David Goldman | ) edition.cnn.com time to read: +5 min

New York CNN —Silicon Valley Bank failed in rapid, stunning fashion Friday. What took place Friday was an old-fashioned bank run: Customers yanked $42 billion from Silicon Valley Bank on Thursday, leaving the bank with $1 billion in negative cash balance, the company said in a regulatory filing. As of the end of last year, Silicon Valley Bank said it had $151.5 billion in uninsured deposits, $137.6 billion of which was held by American customers. Wall Street is also concerned the tech companies that kept their cash with Silicon Valley Bank could collapse. What a bailout might look likeCalls for a bailout have grown over the weekend from Silicon Valley to Wall Street.

☆ Where Were the Regulators as SVB Crashed?
▼ + stars: | 2023-03-11 | by ( Ben Eisen | Andrew Ackerman | ) www.wsj.com time to read: 1 min

Silicon Valley Bank’s failure boils down to a simple misstep: It grew too fast using borrowed short-term money from depositors who could ask to be repaid at any time, and invested it in long-term assets that it was unable, or unwilling, to sell. When interest rates rose quickly, it was saddled with losses that ultimately forced it to try to raise fresh capital, spooking depositors who yanked their funds in two days. The question following the bank’s takeover Friday: How could regulators have allowed it to grow so quickly and take on so much interest-rate risk?

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