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☆ Treasury Secretary Janet Yellen said the SVB collapse is 'very different' from the 2008 crisis and that the financial system is 'significantly stronger than it was 15 years ago'
▼ + stars: | 2023-03-21 | by ( Juliana Kaplan | Ayelet Sheffey | ) www.businessinsider.com time to read: +4 min

In prepared remarks, Treasury Secretary Janet Yellen said the SVB situation is very different from 2008. "Our financial system is also significantly stronger than it was 15 years ago," she said. Dean Baker, a senior economist at the Center for Economic and Policy Research who predicted the 2008 housing bubble crash, told Insider that "this is not a 2008, 2009 story at all." "To this day I always argue with people, the problem was the housing bubble. "But the real problem was that the housing market was driving the economy — a housing bubble, and it collapsed, and there was no easy replacement for that.

☆ Op-ed: ESG investing and 2018 change in bank laws didn't cause Silicon Valley Bank to collapse, says former Sen. Heitkamp
▼ + stars: | 2023-03-21 | by ( Heidi Heitkamp | Former Democratic U.S. Senator North Dakota | ) www.cnbc.com time to read: +6 min

Within hours of the Silicon Valley Bank collapse, political spin machines on both the left and right got cranking. I was one of the Democrats on the Senate Banking Committee who negotiated that legislation, which granted regulatory relief to small community and mid-sized regional banks. Under the burden of increased regulation, smaller institutions and many regional banks were struggling to stay competitive. If all the bank depositors withdrew their deposits on the same day, any bank would fail regardless of liquidity or bank capitalization.) The Fed had the authority to enhance the current level of regional bank supervision, a step the central bank is considering in the wake of the SVB failure.

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.

☆ Obama wants companies to strip degree requirements from more six-figure jobs to address the labor shortage
▼ + stars: | 2023-03-20 | by ( Jason Lalljee | Ethan Dodd | ) www.businessinsider.com time to read: +5 min

Former President Barack Obama said more states should drop degree requirements for government jobs. It's an example of "a smart policy that gets rid of unnecessary college degree requirements and reduces barriers to good paying jobs," Obama said on Twitter. In recent years, states have eliminated four-year degree requirements to shore up their understaffed governments, and Republican governors have led the way. Arizona and Oregon have temporarily loosened degree requirements to address a teacher shortage. Georgia and Alaska are considering dropping degree requirements to fill government vacancies as well.

☆ U.S. lawmakers to examine merits of higher bank deposit insurance cap
▼ + stars: | 2023-03-19 | by ( David Lawder | ) www.reuters.com time to read: +4 min

[1/4] Signs explaining Federal Deposit Insurance Corporation (FDIC) and other banking policies are shown on the counter of a bank in Westminster, Colorado November 3, 2009. "I think that lifting the FDIC insurance cap is a good move," Senator Elizabeth Warren, a Democrat, said on CBS's "Face The Nation" program, referring to the Federal Deposit Insurance Corporation's current $250,000 limit per depositor. During the financial crisis that erupted in 2008, the FDIC temporarily backstopped all deposits to safeguard smaller banks. Pressure on midsized and smaller banks from deposit outflows continued on Friday despite a move by several large banks to deposit $30 billion into First Republic Bank (FRC.N), an institution rocked by the failure of Silicon Valley Bank (SIVB.O) and Signature Bank (SBNY.O). McHenry said he wanted to examine the trade-offs of higher deposit insurance limits, "the moral hazard of having more risk taking in the financial sector, and also the impact it would have on community banks."

☆ U.S. lawmakers to examine merits of higher FDIC bank deposit insurance cap
▼ + stars: | 2023-03-19 | by ( ) www.cnbc.com time to read: +3 min

"I think that lifting the FDIC insurance cap is a good move," Senator Elizabeth Warren, a Democrat, said on CBS's "Face The Nation" program, referring to the Federal Deposit Insurance Corporation's current $250,000 limit per depositor. "What I will do though, legislatively, and in an oversight function, is to determine whether or not we need to address the FDIC deposit level," McHenry told the same CBS program. During the financial crisis that erupted in 2008, the FDIC temporarily backstopped all deposits to safeguard smaller banks. Pressure on midsized and smaller banks from deposit outflows continued on Friday despite a move by several large banks to deposit $30 billion into First Republic Bank, an institution rocked by the failure of Silicon Valley Bank and Signature Bank. McHenry said he wanted to examine the trade-offs of higher deposit insurance limits, "the moral hazard of having more risk-taking in the financial sector, and also the impact it would have on community banks."

☆ The Biden administration is offering to pay Colorado River farmers to let fields go dry during a devastating drought. They're worried it's just the first step in losing their way of life.
▼ + stars: | 2023-03-19 | by ( Ethan Dodd | ) www.businessinsider.com time to read: +7 min

The Biden administration is paying Colorado River farmers and ranchers to let their fields run dry. Climate change has made the Colorado River the dryest it's been in more than a thousand years. Knowing they have to do something, Grand Valley farmers and ranchers want better compensation to make fallowing worth their while. At this better price they received enough applications from agricultural producers to cover the thousand acres Grand Valley offered, he said. Are you a farmer, rancher, or resident of the Colorado River basin concerned about water conservation?

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.

☆ Another Banking Crisis Was Predictable
▼ + stars: | 2023-03-18 | by ( Mary Anastasia O Grady | ) www.wsj.com time to read: 1 min

The economist Allan Meltzer liked to say that “capitalism without failure is like religion without sin. It doesn’t work.” After the 2008 financial crisis, Meltzer worried that bank bailouts were undermining public support for capitalism. He feared that politicians would steer the financial system toward more government regulation and away from the natural regulatory power of market competition. More Americans would begin to believe that only the state could protect them from the instability that comes with economic freedom. Sure enough, in 2010 Congress passed the Dodd-Frank Act, which promised “to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail,’ to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.”

☆ U.S. poised to tighten reporting rules on $20 tln private fund sector
▼ + stars: | 2023-03-17 | by ( Douglas Gillison | ) www.reuters.com time to read: +3 min

March 17 (Reuters) - Wall Street's top regulator is set to adopt new rules aimed at bolstering oversight of systemic risk in the burgeoning, multitrillion-dollar world of private equity and hedge-funds. As proposed in January 2022, the rule would require reporting of such events to the SEC within one business day. The agency billed the new rule in part as a means of supporting the Financial Stability Oversight Council, a multi-agency risk-monitoring body also created under Dodd-Frank. The proposal offered "scant evidence" that it would enhance FSOC's monitoring for systemic risk, she said in dissenting remarks against the proposal, adding that it would likely become a tool "for government to micromanage private fund risk management." Reporting by Douglas Gillison; Editing by David GregorioOur Standards: The Thomson Reuters Trust Principles.

"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.

☆ Chinese state media says US banking troubles are a result of poor regulation and domestic politics — but China's banks aren't having a great time either
▼ + stars: | 2023-03-17 | by ( Huileng Tan | ) www.businessinsider.com time to read: +4 min

China's state media says the banking crisis happened due to poor financial regulation and US domestic politics. But banks in China also have their own issues amid the country's property woes. China's heavy-handed criticism comes at a bleak time for its own banksBut this harsh criticism comes at a bleak time for China's own banks. Since its collapse, some of these start-ups have been looking for alternatives — such as bigger US banks or other Chinese lenders, Reuters reported. Despite these troubles, China touts its governance system as being superior to "Western democracy" and uses state media to push its messaging.

Employees have been working around the clock to onboard as many startups as possible in the wake of the implosion of Silicon Valley Bank. Silicon Valley Bank, which had more than $175 billion in deposits and served nearly half of US VC-backed startups, was taken over by US regulators on March 10. "That said, I am worried that this bias towards a Big Four bank is a double-edged sword," Shekar added. "SVB did not think like a big bank. They could understand your operating plan when a big bank would balk at it," Ashley Tyrner, CEO and founder of FarmBoxRX, told Insider.

☆ After SVB's collapse, Biden calls on Congress to hold bank executives accountable for failures: 'No one is above the law'
▼ + stars: | 2023-03-17 | by ( Juliana Kaplan | Ayelet Sheffey | ) www.businessinsider.com time to read: +4 min

After the collapse of Silicon Valley Bank, President Joe Biden wants harsher penalties for executives at failed banks. On Friday, Biden released a statement calling on Congress to "impose tougher penalties for senior bank executives whose mismanagement contributed to their institutions failing." The banking industry has fallen under intense scrutiny over the past week after federal regulators shut down Silicon Valley Bank (SVB) and crypto-friendly Signature Bank. Lawmakers — and now the president — want bank executives to be held accountable for actions that jeopardize taxpayer dollars. Warren, along with Sen. Richard Blumenthal, have also stressed the importance of holding bank executives accountable for failures.

☆ Premarket Stocks: Who do we blame for the fall of SVB?
▼ + stars: | 2023-03-16 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +8 min

Blame the Fed: SVB’s downfall was largely caused by a record $42 billion bank run that left the bank in desperate need of cash. But the Fed’s rate hikes had undermined the value of bonds, a critical source of capital for SVB. “The Federal Reserve failed as a bank supervisor,” he wrote. On Capitol Hill, frequent Fed critic Sen. Elizabeth Warren has been quick to blame Federal Reserve Chair Jerome Powell for a lack of oversight. Blame SVB: Others say the blame should be placed on the banks themselves.

☆ Deposit insurance is addiction not medication
▼ + stars: | 2023-03-16 | by ( John Foley | ) www.reuters.com time to read: +7 min

NEW YORK, March 16 (Reuters Breakingviews) - Deposit insurance is as American as apple pie, and twice as unhealthy. Bank deposits in the United States are guaranteed up to $250,000, and over 90% of SVB’s accounts held more than that sum. Alternatively, regulators could invite the market to provide a solution – say, with privately funded insurance for deposits over the guaranteed limit. The trouble is that deposit insurance is like Novocaine – the higher the dose, the more the patient becomes numb. For that reason the best option is probably to do nothing – or better still, lower the deposit insurance limit.

☆ Senior U.S. envoy to travel to Honduras as it considers China ties
▼ + stars: | 2023-03-16 | by ( ) www.reuters.com time to read: +3 min

TEGUCIGALPA, March 16 (Reuters) - A high-ranking envoy of President Joe Biden will travel to Panama and Honduras this month, the U.S. Department of State said on Thursday, days after Taiwan ally Honduras said it would establish formal diplomatic ties with China. "China has been suppressing Taiwan's diplomacy, so it will invest funds related to specific countries in order to block Taiwan's diplomatic development," he said. "Therefore, we very much hope that Honduras can recognize the true nature of China and hope they maintain diplomatic relations and not be deceived." While the United States has no formal diplomatic ties with Taiwan, it is Taiwan's most important international backer and arms supplier. China says Taiwan is one of its provinces with no right to state-to-state ties, a view the democratically elected government in Taipei strongly rejects.

☆ Silicon Valley Bank ex-CEO backed Big Tech lobbying groups that targeted Dodd-Frank, sought corporate tax cuts
▼ + stars: | 2023-03-16 | by ( Brian Schwartz | ) www.cnbc.com time to read: +7 min

Greg Becker, President and CEO of Silicon Valley Bank (SVB), speaks during the Milken Institute Global Conference on May 3, 2022 in Beverly Hills, California. Both trade organizations included Silicon Valley Bank as a member before its failure, according to archived versions of their websites. The organization has spent more than $2 million since the start of 2020 on lobbying Congress, according to its lobbying disclosure reports. Federal records show that the Silicon Valley Leadership Group has not filed lobbying disclosure reports since 2009. Becker was chairman of the Silicon Valley Leadership Group from 2014 through 2017, according to an archived version of his SVB bio page.

☆ US FDIC may need temporary guarantee for all bank deposits -ex chief Bair
▼ + stars: | 2023-03-16 | by ( David Lawder | ) www.reuters.com time to read: +3 min

WASHINGTON, March 15 (Reuters) - The Federal Deposit Insurance Corp may need to seek temporary guarantees for all uninsured U.S. bank deposits to stem a drain of funds from small and regional U.S. lenders following deposit bailouts for failed banks SVB Financial and Signature Bank, former FDIC chair Sheila Bair said on Wednesday. "My biggest fear now is that that lack of trust in the banking system takes hold and uninsured deposits start fleeing banks of all sizes to the biggest banks, just making them bigger again," Bair said. If that continues, the FDIC and the U.S. Treasury should seek "streamlined" authority from Congress to guarantee all uninsured deposits and transaction accounts, which handle client company payroll and operations, she said. A Reuters review of company filings and FDIC data showed that San Francisco-based First Republic had uninsured deposits of $119.5 billion, or 68% of its total. Bair said she did not view Silicon Valley Bank or Signature Bank as systemically important institutions, adding that they could have been resolved through FDIC's normal takeover process, with a "haircut" for uninsured deposits.

☆ After back-to-back train disasters, regulators approve the largest rail merger in decades creating a line that would stretch from Canada to Mexico
▼ + stars: | 2023-03-16 | by ( Ethan Dodd | ) www.businessinsider.com time to read: +7 min

Regulators approved a railroad merger that would create a single route stretching from Canada to Mexico. The rail industry has seen train accidents and labor disputes in recent months. "30-40% of the United States economy depends on a well-functioning railroad," Oberman said in the Wednesday press conference. That's why the STB has been "railing about some of the rail service problems and issues affecting the rail industry," he said. Oberman also argued shippers would not lose any existing rail competition from the merger.

☆ Regulators need to report SVB executives' potential 'outrageous and indefensible' behavior to Congress to avoid mistakes made after the 2008 financial crisis, 2 top Democrats say
▼ + stars: | 2023-03-15 | by ( Juliana Kaplan | Ayelet Sheffey | ) www.businessinsider.com time to read: +5 min

Elizabeth Warren and Richard Blumenthal are calling on the SEC and DOJ to look into the collapse. "The nation's bank regulators cannot make the same mistake twice," they continued. Warren and Blumenthal wrote in their letter that "SVB officials showed a pattern of risky and questionable decision making" that may have contributed to the bank's collapse. They also noted the lack of stress tests that would have helped regulators determine whether the bank could respond to rising interest rates. But Warren has been persistent in her message, already introducing legislation alongside Rep. Katie Porter to roll back the 2018 changes.

☆ Top Senate Democrats press DOJ, SEC to investigate whether Silicon Valley Bank executives broke any laws
▼ + stars: | 2023-03-15 | by ( Chelsey Cox | ) www.cnbc.com time to read: +4 min

California bank regulators shuttered SVB on Friday and the FDIC set up an intermediary bank to take over the bank's insured deposits. By Sunday, New York state bank regulators and the FDIC did the same to Signature Bank, which was a major source of lending for the cryptocurrency industry. The letter came on the heels of a joint announcement by the Justice Department and the SEC about the pending investigation into the SVB failure. Bank officials also lobbied Congress for exemptions to federal oversight regulations. "I am not prejudging this matter, and am not in position to do so," the lawmakers wrote to Gensler and Garland.

☆ Europe didn't roll back post-2008 banking rules. That was smart
▼ + stars: | 2023-03-15 | by ( Anna Cooban | ) edition.cnn.com time to read: +6 min

London CNN —Shares in European banks slumped Wednesday as speculation about the health of Credit Suisse (CSGKF) reignited the market turmoil sparked by the collapse of Silicon Valley Bank. Europe’s benchmark Stoxx Europe 600 Banks index, which tracks 42 big EU and UK banks, has fallen 13% since last Wednesday’s close. In 2018, former President Donald Trump watered down key parts of the Dodd-Frank Act, which set stricter rules for the banking sector. But European banks are required to hold capital to cover the risk of a large and sudden change in borrowing costs. “This means that European banks have less exposure to market risk on bonds, despite a similar rise in yields,” Moody’s said in its note.

☆ Elizabeth Warren scoffs at the idea that banks like SVB can be trusted to do their own stress testing: 'I taught school for many, many years. And I did not let my students do their own testing'
▼ + stars: | 2023-03-15 | by ( Jason Lalljee | ) www.businessinsider.com time to read: +4 min

She's criticized Trump-era rollbacks on banking oversight for making the SVB failure possible. "Those are much smaller than the bigger banks," CNBC host Sara Eisen said to Warren, referring to banks like SVB. "We've had a number of those CEOs on the shows in the last few days" such as Charles Schwab, she said, who "do their own stress testing." The whole point of stress testing is for someone on the outside of the bank to say, 'what could go wrong here?' What happened to SVB, Warren wrote, is "the direct result of leaders in Washington weakening the financial rules."

☆ This banking crisis is different from the 2008-2009 financial crisis in 4 ways, Moody's chief economist Zandi says
▼ + stars: | 2023-03-15 | by ( Huileng Tan | ) www.businessinsider.com time to read: +4 min

There are four differences between the current banking crisis and the GFC, Moody's chief economist says. Zandi's comments adds to views that the current banking crisis is different from the situation in 2008. In a series of tweets on Monday, Mark Zandi, the chief economist at Moody's Analytics, said the current banking crisis is different from the Global Financial Crisis, or GFC, in four key ways. The financial crisis, which sparked the Great Recession, was one of the worst economic downturns in US history. The economic backdrop is different this time aroundZandi also said the economic backdrop right now is very different from that of the Great Financial Crisis.

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