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☆ US Federal Reserve watchdog launches probe of SVB supervision
▼ + stars: | 2023-03-29 | by ( ) www.reuters.com time to read: +1 min

March 28 (Reuters) - The U.S. Federal Reserve's Office of Inspector General (OIG) has launched an independent review of the failure of Silicon Valley Bank (SVB), an OIG spokesperson said on Tuesday. The review, which was launched on March 14, will assess the board's and the Federal Reserve Bank of San Francisco's supervision of the failed lender, the spokesperson told Reuters in a statement. The independent oversight authority plans to complete its investigation within six months, the spokesperson added. The probe was reported earlier by Bloomberg News. Reporting by Rahat Sandhu in Bengaluru and Pete Schroeder; Editing by Leslie Adler and Jamie FreedOur Standards: The Thomson Reuters Trust Principles.

"I think that any time you have a bank failure like this, bank management clearly failed, supervisors failed and our regulatory system failed," Michael Barr, Fed Vice Chair for Supervision, told Congress. REPORTS DUE MAY 1Both the Fed and FDIC are is expected to produce reports on the failure of Silicon Valley Bank by May 1. Barr told the House Financial Services Committee that he first became aware of stress at Silicon Valley Bank on the afternoon of March 9, but that the bank reported to supervisors that morning that deposits were stable. Gruenberg of the FDIC told lawmakers he also became aware of SVB's stress that Thursday evening. "(Fed) staff were working with Silicon Valley Bank basically all afternoon and evening and through the morning the next day to pledge as much collateral as humanly possible to the discount (window) on Friday," Barr said.

WASHINGTON, March 28 (Reuters) - Lawmakers are expected to put top U.S. bank regulators on the defensive over the unexpected failures of regional lenders Silicon Valley Bank and Signature Bank when they testify before Congress on Tuesday. Regulators have vowed to review their rules and procedures after the twin failures while insisting the overall system remains sound. Tuesday's hearing at the Senate Banking Committee will give lawmakers the chance to press watchdogs on what went wrong on their watch, and push preferred policy prescriptions. They just didn't," said Sen. Tim Scott of South Carolina, the top Republican on the Senate Banking Committee, at a banking industry conference last week. Some Democrats, including major bank critic Senator Elizabeth Warren of Massachusetts, have also argued a 2018 bank deregulation law is to blame.

March 28 (Reuters) - Immediate investor concerns over the banking sector eased on Tuesday, lifting stock prices, with the European Central Bank's supervisory chief saying recent sector volatility underscored the need to step up regulatory scrutiny. Credit Suisse (CSGN.S) shares rose 1.7%. Top U.S. banking regulators said on Monday they planned to tell Congress that the overall financial system remains on a solid footing after recent bank failures, but will comprehensively review their policies in a bid to prevent future collapses. Regional U.S. lender First Citizens BancShares on Monday scooped up the assets of SVB, in a vote of confidence for the battered banking sector that prompted a rally in bank shares. Bailey said the stresses which led to a crisis in confidence in Credit Suisse were down to specific issues in Switzerland's second-largest bank.

WASHINGTON, March 27 (Reuters) - A U.S. banking regulator is investigating potential misconduct on the part of executives and others involved in the failures of Silicon Valley Bank and Signature Bank. Gruenberg did not offer further details into who or what may be the subject of probes, which could be one of several under way by the U.S. government. It is common for the government to open probes into such events, and such investigations do not necessarily result in charges of misconduct. But its sudden collapse has also raised questions about what executives knew about the bank's struggles and what they disclosed with investors, the sources said. Reporting by Pete Schroeder and Chris PrenticeOur Standards: The Thomson Reuters Trust Principles.

☆ Fed's Barr says regulators committed to ensuring 'all deposits' are safe
▼ + stars: | 2023-03-27 | by ( Pete Schroeder | ) www.reuters.com time to read: +2 min

In prepared testimony, Fed Vice Chair for Supervision Michael Barr added that the banking system is "strong and resilient." Barr said SVB's collapse was a "textbook case of mismanagement," citing the firm's concentrated business model, exceedingly fast growth, failure to manage its interest rate risk, and reliance on uninsured deposits. Supervisors told bank senior management in October 2022 of its concern with the bank's interest rate risk profile, Barr said. He added Fed leaders in Washington were briefed on the impact of rising interest rate on some banks' financials, and SVB was highlighted. The Fed is undertaking an internal review of its supervision of the bank, and Barr said he welcomes external reviews as well.

WASHINGTON/NEW YORK, March 25 (Reuters) - The banking crisis set off by the swift collapse of Silicon Valley Bank (SIVB.O) has exposed a sharp disconnect between Washington and Wall Street. Some critics are asking whether the Biden administration could have contained the crisis with aggressive actions at the start. FINDING A BUYER FOR SVBThe failure of the nation's 16th largest bank caught regulators off guard. The banking industry itself is not united on how to reassure depositors. The banking industry is searching for sweeping relief to calm markets, while Washington is discussing how to prevent the next crisis.

☆ U.S. regulators say banking system 'sound and resilient'
▼ + stars: | 2023-03-24 | by ( David Lawder | ) www.reuters.com time to read: +3 min

WASHINGTON, March 24 (Reuters) - The multi-regulator U.S. Financial Stability Oversight Council agreed on Friday that the U.S. banking system remains "sound and resilient" despite stress on some institutions, the U.S. Treasury said in its latest statement to calm jittery markets and bank depositors. "The Council discussed current conditions in the banking sector and noted that while some institutions have come under stress, the U.S. banking system remains sound and resilient," the Treasury said in a statement. They added that the basis of the Treasury, Fed and FDIC determinations in the SVB and Signature cases "are of particular importance." Those actions to invoke "systemic risk exceptions" were taken by Yellen, President Joe Biden, the FDIC, and the Fed, which supervised Silicon Valley and Signature. Reporting by David Lawder; additional reporting by Pete Schroeder; Editing by Diane Craft and Marguerita ChoyOur Standards: The Thomson Reuters Trust Principles.

Citizens, one of the largest U.S. regional banks, is preparing to submit an offer in the auction of the business, which is called SVB Private, the sources said. The FDIC, which now controls the Silicon Valley Bank assets, and Citizens Financial declined to comment. It has since asked for separate offers for SVB Private and Silicon Valley Bank by March 24. SVB Financial Group (SIVB.O), the former parent of Silicon Valley Bank which filed for bankruptcy protection last week, is not part of the process. A big part of it comprises Boston Private, a wealth manager acquired by Silicon Valley Bank in 2021.

Currently, the Federal Deposit Insurance Corp (FDIC)guarantees deposits of up to $250,000 per person, per bank. More than $9.2 trillion of U.S. bank deposits were uninsured at the end of last year, accounting for more than 40% of all deposits, according to U.S. central bank data. COULD THE GOVERNMENT RAISE THE DEPOSIT INSURANCE LIMIT? Some U.S. lawmakers have said Congress should consider whether a higher federal insurance limit on bank deposits was needed in the wake of the collapse of SVB and Signature Bank. Senator Elizabeth Warren, a Democrat, and Senator Mike Rounds, a Republican, have questioned whether the $250,000 deposit insurance limit is still appropriate.

While big banks have dominated headlines, the country's 4,258 community banks, which are more risk-averse, account for more than 90% of all chartered banks. Her comments marked a shift in emphasis to include community banks that were not mentioned in her earlier testimony. "The community banks in this country, we know, are strong and resilient. Yellen's shift to include community banks "was certainly better, it was an attempt for her to kind of restate what she was saying and acknowledging the importance of the community banks," Williams said. Community banks play an important political role.

With the collapse of Silicon Valley Bank (SIVB.O) and Signature Bank (SBNY.O) and the U.S. government backstopping all deposits at those firms, here is the state of play of deposit insurance in the United States:WHAT IS THE U.S DEPOSIT INSURANCE LIMIT? Currently, the Federal Deposit Insurance Corp (FDIC)guarantees deposits of up to $250,000 per person, per bank. Any losses to the FDIC's deposit insurance fund will be recovered by a special assessment on banks, the FDIC said. COULD THE GOVERNMENT RAISE THE DEPOSIT INSURANCE LIMIT? Senator Elizabeth Warren, a Democrat, and Senator Mike Rounds, a Republican, have questioned whether the $250,000 deposit insurance limit is still appropriate.

☆ New York Community Bancorp unit to buy Signature Bank assets, FDIC says
▼ + stars: | 2023-03-20 | by ( Pete Schroeder | ) www.reuters.com time to read: +1 min

WASHINGTON, March 19 (Reuters) - A subsidiary of New York Community Bancorp (NYCB.N) has entered into an agreement with U.S. regulators to buy deposits and loans from New York-based Signature Bank (SBNY.O), which was closed a week ago. Roughly $60 billion of Signature Bank's loans and $4 billion of its deposits would remain with it in receivership, the agency said. The statement did not refer to the other, Silicon Valley Bank (SVB) , a much larger bank that regulators took over two days before Signature. Signature had $110.36 billion in assets, whereas SVB had $209 billion. Under the arrangement for Signature Bank assets, Flagstar will buy $12.9 billion of loans at a discount of $2.7 billion.

☆ FDIC announces agreement to sell Signature Bank assets to New York Community Bancorp
▼ + stars: | 2023-03-19 | by ( ) www.reuters.com time to read: 1 min

WASHINGTON, March 19 (Reuters) - A subsidiary of New York Community Bancorp (NYCB.N) has entered into an agreement with U.S. regulators to purchase deposits and loans from New York-based Signature Bank (SBNY.O), which was closed earlier this month. The Federal Deposit Insurance Corporation said the deal would see Flagstar Bank, the subsidiary, assume substantially all deposits and certain loan portfolios, and all 40 of Signature Bank's former branches. The FDIC said roughly $60 billion of the bank's loans and $4 billion of its deposits will remain in receivership. Reporting by Pete Schroeder; Editing by Christopher CushingOur Standards: The Thomson Reuters Trust Principles.

☆ FDIC to relaunch sale of SVB, moves toward break-up plan
▼ + stars: | 2023-03-19 | by ( David French | ) www.reuters.com time to read: +2 min

March 19 (Reuters) - The U.S. Federal Deposit Insurance Corp (FDIC) is planning to relaunch the sale process for Silicon Valley Bank (SIVB.O) after failing to attract buyers in its latest auction, with the regulator seeking a potential break-up of the failed lender, according to people familiar with the matter. One of the options under consideration by the regulator is a sale process for the private bank of SVB for which bids are due on Wednesday, according to one of the sources, who requested anonymity as these discussions are confidential. The private bank, which is housed within SVB's retail operations, caters to high net-worth individuals. Bids for the whole of SVB were due on Sunday. Bloomberg News reported on the FDIC's plans to break up SVB earlier on Sunday.

☆ Analysis: Asset concerns weigh on U.S. regional bank deal talks
▼ + stars: | 2023-03-19 | by ( David French | ) www.reuters.com time to read: +5 min

The investment portfolios where the regional banks have parked the deposits of their clients comprise mainly Treasuries and other securities, such as mortgage bonds. Some of the loan books of these banks are also underwater, due to high rates and concerns about an economic slowdown. Another complication in cutting a deal with regional banks is the uncertainty over the interest rate outlook, said a lawyer who works on transactions involving banks. Those studying deals and trying to assess the future value of regional banks are hoping for clarity on how aggressively the central bank will move to raise rates further, the lawyer said. MUDDLING THROUGHIt is unclear how long some regional banks can muddle through without a deal.

He now faces renewed criticism over his agenda at the Fed, where he oversaw efforts to reduce regulations on regional banks. U.S. regional banks are expected to pay higher rates to depositors to keep them from switching to larger lenders, leaving them with higher funding costs. In 2008, regulators had to contend with billions of dollars in toxic mortgages and complex derivatives sitting on bank books. Currently, regional banks below $250 billion in assets have simpler capital, liquidity and stress testing requirements. "SVB is not a very complicated bank," said Dan Awrey, a Cornell Law professor and bank regulation expert.

A source with knowledge of the matter said that Swiss regulators are encouraging UBS and Credit Suisse to merge, but that both banks do not want to do so. Credit Suisse shares jumped 9% in after-market trading following the FT report. Credit Suisse and UBS declined to comment on the report. "Credit Suisse is a very special case," said Frédérique Carrier, head of investment strategy at RBC Wealth Management. The supervisors were told deposits were stable across the euro zone and exposure to Credit Suisse was immaterial, a source familiar with the meeting's content told Reuters.

☆ Fed, FDIC officials to testify on recent bank failures before House committee March 29
▼ + stars: | 2023-03-17 | by ( ) www.reuters.com time to read: 1 min

[1/2] Silicon Valley Bank (SVB) logo is seen through broken glass in this picture illustration taken March 16, 2023. REUTERS/Dado Ruvic/Illustration/File PhotoWASHINGTON, March 17 (Reuters) - The top regulatory officials for the Federal Reserve and Federal Deposit Insurance Corporation will testify before a House panel on March 29 to discuss the recent failures of Silicon Valley Bank (SIVB.O) and Signature Bank (SBNY.O). The House Financial Services Committee announced the hearing on Friday, and said future witnesses may be added. Fed Vice Chair for Supervision Michael Barr and FDIC Chairman Martin Gruenberg are scheduled to testify. Reporting by Pete Schroeder Editing by Chris ReeseOur Standards: The Thomson Reuters Trust Principles.

Credit Suisse declined to comment on the banks' actions. MARKET TROUBLES LINGERBanking stocks globally have been battered since Silicon Valley Bank collapsed, raising questions about other weaknesses in the wider financial system. A view of the Park Avenue location of the First Republic Bank, in New York City, U.S., March 10, 2023. The supervisors were told deposits were stable across the euro zone and exposure to Credit Suisse was immaterial, a source familiar with the meeting's content told Reuters. "Japan's financial system remains stable as a whole," Kishida told a news briefing.

"No one is above the law," Biden said in the statement, "and strengthening accountability is an important deterrent to prevent mismanagement in the future." The current law "limits the administration’s authority to hold executives responsible," he said. Specifically, Biden is asking Congress to give the Federal Depository Insurance Corp greater authority to claw back compensation, "including gains from stock sales – from executives at failed banks like Silicon Valley Bank and Signature Bank," the White House said in a second statement. "The President urges Congress to expand the FDIC’s authorities to expressly cover cases like this" the White House statement said, citing Becker's stock sales. The president is also asking Congress to give the FDIC more authority to ban bank executives from the industry when their banks go into receivership, and to fine bank managers whose banks fail.

March 17 (Reuters) - Credit Suisse and First Republic Bank shares came under renewed pressure on Friday despite multibillion-dollar support deals, while a source said European Central Bank supervisors see no contagion for euro zone banks from the turmoil. With investor confidence far from restored, analysts, investors and bankers think the loan facility has only bought Credit Suisse some time to work out what to do next. Meanwhile, U.S. regional bank shares, including PacWest Bancorp (PACW.O), also opened sharply lower, with First Republic down around 25%. But the supervisors were told deposits were stable across the euro zone and exposure to Credit Suisse was immaterial, a source familiar with the meeting's content told Reuters. The ECB pressed forward with a 50 basis-point rate hike, arguing that euro zone banks were in good shape and that if anything, higher rates should bolster their margins.

The rescue package came shortly after embattled Credit Suisse (CSGN.S) tapped an emergency central bank loan of up to $54 billion to shore up its liquidity. The ECB supervisors saw no contagion to euro zone banks from the market turmoil, a source familiar with the content of the meeting told Reuters, adding that supervisors were told deposits remained stable across euro zone banks and exposure to Credit Suisse was immaterial. "I don't think we are in the crux of a global financial crisis. The ECB pressed forward with its 50 basis point rate hike, arguing that euro zone banks were in good shape and that if anything, higher rates should bolster their margins. Japan's finance ministry, financial regulator and central bank said they would meet on Friday to discuss developments.

March 17 (Reuters) - European Central Bank supervisors met to tackle growing cracks in the banking system on Friday after a $30 billion lifeline for U.S. lender First Republic Bank (FRC.N) eased fears of its imminent collapse. The rescue package came less than a day after Credit Suisse (CSGN.S) clinched an emergency central bank loan of up to $54 billion to shore up its liquidity. The two deals helped restore some calm to global markets, after a torrid week for banking stocks. "French and European banks are very solid," ECB policymaker and French central bank governor Francois Villeroy de Galhau, told BFM business radio. Japan's finance ministry, financial regulator and central bank said they would meet on Friday to discuss developments.

The package came less than a day after Swiss bank Credit Suisse (CSGN.S) clinched an emergency central bank loan of up to $54 billion to shore up its liquidity. Analysts say authorities appear eager to quickly deal with systemic risks, but worry the potential for a banking crisis is far from over. "Yellen was clear overnight that all bank deposits were protected, but the bank might not be there," he said. Within days, the market turmoil had ensnared Credit Suisse, forcing it to borrow from Switzerland's central bank. Credit Suisse shares closed 19% higher on Thursday, recovering some of their 25% fall on Wednesday.

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