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☆ The FDIC's $250,000 isn't enough to restore depositor confidence, says DCLA's Sarat Sethi
▼ + stars: | 2023-03-20 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailThe FDIC's $250,000 isn't enough to restore depositor confidence, says DCLA's Sarat SethiCNBC’s ‘Halftime Report’ investment committee, Jason Snipe, Joe Terranova, Kari Firestone and Sarat Sethi, weigh in on First Republic Bank, which some members have positions in.

☆ Demand for Fed help shows the banking industry is still under pressure
▼ + stars: | 2023-03-20 | by ( Jeff Cox | ) www.cnbc.com time to read: +6 min

The good news: Banks were willing to go to the Fed for help, and the central bank was willing and able to comply. Programs such as the BTFP can have that stigma, too, but in this case the Fed made its conditions a bit easier than the discount window. The BTFP also pays par value on securities offered in exchange for cash, while the discount window uses market value. "The discount window takes everything. "We have seen the largest uptake of the discount window in history.

☆ UBS to take over Credit Suisse, central banks act on liquidity
▼ + stars: | 2023-03-19 | by ( Reuters Staff | ) www.reuters.com time to read: +13 min

LONDON/NEW YORK (Reuters) -UBS sealed a deal to buy rival Swiss bank Credit Suisse in an effort to avoid further market-shaking turmoil in global banking, Swiss authorities said on Sunday. FILE PHOTO: The logo of Credit Suisse is pictured in front of the Swiss Parliament Building, in Bern, Switzerland, March 19, 2023. The reports that UBS is acquiring Credit Suisse will likely magnify Credit Suisse’s problems by moving them to UBS... The Credit Suisse issues are not new and needed to be resolved years ago. A legal challenge by Credit Suisse shareholders, who will claim that their property has been illegally confiscated, is guaranteed.

☆ 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."

New York CNN —Global banks just suffered their worst week since 2008. Credit Suisse and First Republic: Two more banks wobbled but remained upright through the week. Meanwhile, First Republic bank received a $30 billion lifeline on Thursday from some of the largest banks in the United States. US-traded shares of Credit Suisse were down nearly 7% and First Republic shares plunged by about 33% on Friday. That doesn’t mean that banks taking money from the FHLB and participating in the Federal Reserve’s emergency Bank Term Lending Program, which lent out $12 billion to banks this week, are in big trouble.

☆ 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."

Credit Suisse Chief Financial Officer Dixit Joshi and his teams will hold meetings over the weekend to assess strategic scenarios for the bank, people with knowledge of the matter said on Friday. Swiss regulators are encouraging UBS and Credit Suisse to merge but neither bank wanted to do so, one source said. The boards of UBS and Credit Suisse were expected to separately meet over the weekend, the Financial Times said,Credit Suisse shares jumped 9% in after-market trading following the FT report. Credit Suisse and UBS declined to comment. Efforts to shore up Credit Suisse come as policymakers including the European Central Bank and U.S. President Joe Biden sought to reassure investors and depositors the global banking system is safe.

☆ Confused about the bank meltdown? Here’s how to speak Wall Street
▼ + stars: | 2023-03-18 | by ( Ramishah Maruf | ) edition.cnn.com time to read: +4 min

New York CNN —Wall Street can seem bewildering, given its sheer amount of jargon, banking terms, and acronyms. When a bank fails, the standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. Deposits, withdrawals and bank runsDeposits are cash you put into your bank account, and withdrawals are money that’s taken out. Though it’s pretty rare to enact it, the FDIC used this exception to take over SVB and Signature Bank last week. Discount windowThis is the Fed’s main way to directly lend money to banks and provide them more liquidity and stability.

☆ Confused about the First Republic Bank mess? Here’s how to speak Wall Street
▼ + stars: | 2023-03-18 | by ( Ramishah Maruf | ) edition.cnn.com time to read: +4 min

But as concerns mount that the Federal Deposit Insurance Corporation will take receivership of troubled First Republic Bank, potentially the third US bank to fail after the collapse of Silicon Valley Bank and Signature Bank, the business of finance has become a national concern. When a bank fails, the standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. Deposits, withdrawals and bank runsDeposits are cash you put into your bank account, and withdrawals are money that’s taken out. Loan-to-deposit ratioIf a bank has a ratio above 100% (like First Republic), then it loans out more money than it has deposits. Though it’s pretty rare to enact it, the FDIC used this exception to take over SVB and Signature Bank.

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.

[1/2] A person walks past a First Republic Bank branch in Midtown Manhattan in New York City, New York, U.S., March 13, 2023. REUTERS/Mike SegarMarch 17 (Reuters) - Shares of First Republic Bank (FRC.N) lost almost 33% on Friday, totaling a loss of around 80% in the last 10 sessions, despite a rescue package with $30 billion in deposits injected by large U.S. banks. Founded in 1985, First Republic had $212 billion in assets and $176.4 billion in deposits as of the end of last year, according to its annual report. The rescue 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. The ratings agency had downgraded its outlook on the U.S. banking system to negative earlier this week.

[1/2] A person walks past a First Republic Bank branch in Midtown Manhattan in New York City, New York, U.S., March 13, 2023. REUTERS/Mike SegarMarch 17 (Reuters) - Shares of First Republic Bank (FRC.N) extended losses to 32% in afternoon trading on Friday after being briefly halted as $30 billion in deposits injected by large U.S. banks failed to quell investor worries about the beleaguered lender. First Republic suspended its dividend and disclosed it has $34 billion in cash excluding the new deposit injection. Founded in 1985, First Republic had $212 billion in assets and $176.4 billion in deposits as of the end of last year, according to its annual report. The ratings agency had downgraded its outlook on the U.S. banking system to negative earlier this week.

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.

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.

☆ First Republic tumbles as $30 billion rescue fails to reassure investors
▼ + stars: | 2023-03-17 | by ( Medha Singh | ) www.reuters.com time to read: +3 min

[1/2] A person walks past a First Republic Bank branch in Midtown Manhattan in New York City, New York, U.S., March 13, 2023. REUTERS/Mike SegarMarch 17 (Reuters) - Shares of First Republic Bank (FRC.N) tumbled 17% in early trading on Friday after being briefly halted as $30 billion in deposits injected by large U.S. banks failed to quell investor worries about the beleaguered lender. Founded in 1985, First Republic had $212 billion in assets and $176.4 billion in deposits as of the end of last year, according to its annual report. "Judging by the market's reaction, it appears that maybe the damage has been done to the brand reputation of First Republic. First Republic said it borrowed up to $109 billion from the U.S. Federal Reserve between March 10 and March 15.

☆ Wall Street analysts say $30 billion lifeline to First Republic should temper future bank runs, boost confidence in sector
▼ + stars: | 2023-03-17 | by ( Samantha Subin | ) www.cnbc.com time to read: +2 min

The move by major banks on Thursday to extend a much needed lifeline to First Republic should help reignite confidence in the sector after a difficult week, Wall Street says. "We view the move by the industry as a positive step to stem contagion amid the regional bank crisis," wrote Evercore ISI's John Pancari in a Thursday note. "We believe the move sends a message of broader stability for the sector and should help further temper depositor fears," and enables the "bank to fight another day." First Republic shares have plummeted 58% this week, after the failure of Silicon Valley Bank triggered a massive selloff among regional bank stocks and panic deposit flight from customers. "It is also a sly vote of confidence in the contributing banks," he said.

☆ Why our brains are hard-wired for bank runs like those that toppled SVB, Signature
▼ + stars: | 2023-03-17 | by ( Greg Iacurci | ) www.cnbc.com time to read: +5 min

Rebecca Noble | AFP | Getty ImagesCustomer fear became a self-fulfilling prophecyOur brains are hard-wired for a bank run. Last week, bank customers saw their peers run for the exits; sensing danger, that herd mentality meant they also rushed to withdraw their cash. More from Personal Finance:What small businesses should look for when choosing a bankWhat Signature Bank, Silicon Valley Bank failures mean for consumers and investorsWhat to know about FDIC insuranceWhy the bank run on SVB seemed 'rational' for someThere are firewalls against this kind of behavior. The Federal Deposit Insurance Corporation, or FDIC, backstops bank customers' savings up to $250,000. "If you don't rationally understand the way the market interprets signals, you can make a mistake like Silicon Valley Bank," Shefrin said.

☆ How First Republic became such a hot mess
▼ + stars: | 2023-03-17 | by ( Allison Morrow | ) edition.cnn.com time to read: +2 min

“It’s the biggest example of a bank that could go down and shouldn’t go down — a first-class bank,” said a source close to the 48-hour deal to infuse First Republic with $30 billion in cash. San Francisco-based First Republic, the 14th-largest bank in the country, received the cash infusion from 11 rivals, including America’s largest lenders. When JPMorgan Chase CEO Jamie Dimon on Thursday reached out to Treasury Secretary Janet Yellen and Federal Reserve Board Chair Jerome Powell, “Very quickly the conversation turned to First Republic,” the source told CNN. Its rescuers are also struggling, with JPMorgan Chase (JPM) down 3% and Bank of America (BAC) falling 4%. Investors saw similarities between First Republic and the failed Silicon Valley Bank — another midsize Bay Area-based lender with a deep-pocketed client base.

☆ What caused the global banking crisis this week and will it lead to a recession?
▼ + stars: | 2023-03-17 | by ( Mark Thompson | ) edition.cnn.com time to read: +7 min

Silicon Valley Bank’s customers were frantically pulling their money from the California-based lender before US regulators intervened to take control. Thursday, March 16 — First Republic Bank was teetering on the brink as customers withdrew their deposits. In guaranteeing all deposits at Silicon Valley Bank and Republic Bank, the US Federal Reserve is on the hook for $140 billion. Then there’s the $54 billion the Swiss National Bank offered Credit Suisse in the form of an emergency loan. The $318 billion the Fed has loaned in total to the financial system is about half what was extended during the global financial crisis.

☆ Yellen says uninsured deposits may be at risk in future bank failures. Here’s how FDIC coverage works
▼ + stars: | 2023-03-17 | by ( Lorie Konish | ) www.cnbc.com time to read: +3 min

How FDIC coverage worksThe limit for FDIC coverage is $250,000 per depositor, per bank, in each account ownership category. The majority of Americans are going to be covered by FDIC insurance. For example, a married couple with a business may have up to $250,000 insured in an account in one spouse's name, up to $250,000 insured in an account in the other spouse's name and up to $250,000 insured in a business account. How to check, boost FDIC protectionIf you want to know whether your deposits are FDIC-insured, check your bank statement, Jenkin said. Not all accounts provide FDIC coverage, Jenkin noted.

☆ Janet Yellen Says Banking System Is Healthy After SVB Collapse
▼ + stars: | 2023-03-16 | by ( Andrew Duehren | ) www.wsj.com time to read: 1 min

WASHINGTON—Treasury Secretary Janet Yellen told lawmakers that the U.S. banking system remained in good health after the collapse of two midsize banks, saying that bank regulators’ depositor-rescue plan had stemmed fallout from the panic. Ms. Yellen appeared Thursday before the Senate Finance Committee to take lawmakers’ questions about the steps the federal government took over the weekend to guarantee all deposits at Silicon Valley Bank and Signature Bank. She was also expected to discuss President Biden’s $6.9 trillion budget proposal.

☆ Savers find a silver lining during banks’ tumult — Rates on CDs are going up, Morgan Stanley says
▼ + stars: | 2023-03-16 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +2 min

That's because banks are boosting the rates they're paying on CDs, according to a Thursday report from Morgan Stanley. The average highest rate banks paid on a CD rose by eight basis points to 4.08% over the first two weeks of March, according to Morgan Stanley analyst Betsy Graseck. "This should push deposit rates higher even after the Fed pauses." Ally Bank and Synchrony Financial, for instance, are offering 5% on CDs going beyond 36 months, according to Morgan Stanley. See below for Morgan Stanley's list of top short-term CD rates as of March 15.

WASHINGTON, March 16 (Reuters) - The U.S. banking system remains sound and Americans can feel confident that their deposits are safe, Treasury Secretary Janet Yellen said on Thursday, but she denied that emergency actions after two large bank failures mean that a blanket government guarantee now existed for all deposits. "I can reassure the members of the committee that our banking system is sound, and that Americans can feel confident that their deposits will be there when they need them," Yellen said. 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. Those uninsured deposits are not distributed evenly across the country, FDIC data shows. She also noted the high level of uninsured deposits at Silicon Valley as an aggravating factor.

☆ S&P says SVB fallout won't lead to rating actions on APAC banks
▼ + stars: | 2023-03-16 | by ( ) www.reuters.com time to read: +1 min

March 16 (Reuters) - Ratings agency S&P on Thursday said the fallout from Silicon Valley Bank's (SIVB.O) collapse may not lead to any rating actions on Asia-Pacific banks as they are well placed to absorb potential contagion effects. The direct exposure of APAC banks to SVB is negligible and secondary impacts are manageable, the agency said, adding that some Japanese banks that have large holdings of U.S. government bonds are the most exposed to weakened market sentiment, but not to the extent of initiating rating actions. "A key rating factor across the region is continuing depositor and stakeholder confidence," S&P said. The collapse of Silicon Valley Bank has sparked a crisis of confidence in the banking sector, leading to a run on deposits at a host of regional banks despite U.S. authorities launching emergency measures to shore up confidence. read more read moreReporting by Juby Babu in Bengaluru; Editing by Savio D'Souza and Dhanya Ann ThoppilOur Standards: The Thomson Reuters Trust Principles.

☆ ETFs show that investors are confused about where the markets are going
▼ + stars: | 2023-03-16 | by ( Bob Pisani | ) www.cnbc.com time to read: +3 min

A common tool to gauge the market's intent is following inflows and outflows in large ETFs. There have been outflows from corporate bond ETFs like Vanguard Short-Term Corporate Bond (VCSH), high yield funds like SPDR High Yield ETF (JNK), bank loan ETFs like SPDR Senior Loan ETF (SRLN) and bank stock ETFs like Invesco KBW Bank ETF (KBWB). The Credit Suisse issue was somewhat different. Europeans at the conference were surprised that there was a focus on Credit Suisse. The common thread of the commentary was that Credit Suisse had never recovered from the financial crisis, that it had been in decline for nearly 20 years.

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