REUTERS
"SF Fed bank's Daly not responsible for SVB failure - former SF Fed chair"
By Ann Saphir
March 24, 2023
March 24 (Reuters) - Responsibility for the Federal Reserve's oversight of large financial institutions like the failed Silicon Valley Bank rests with staff in Washington and not with any regional Fed bank chief, a former chair of the San Francisco Fed bank said on Friday.
"The regulatory regime at the Reserve Bank is that they (bank examiners) are housed in the district offices and report to the Board of Governors; they do not report to the (Reserve Bank) president," said Alex Mehran, who served on the San Francisco Fed's board of directors for six years including two as its chair.
"The responsibility for enforcing those regulations is not the purview of the president, it's the purview of the regulators in Washington," he said.
"I do not believe that (San Francisco Fed Bank President) Mary Daly is responsible for the regulatory mishaps in the SVB situation."
Democratic Senator Elizabeth Warren said she does not have faith in Daly after the collapse.
SVB's sudden demise two weeks ago is under intense scrutiny.
Lawmakers in both houses of the U.S. Congress will next week hold public hearings on the issue, and have called Fed Vice Chair of Supervision Michael Barr to testify.
Barr is heading up a Fed review of the situation, due to be published May 1.
Fed Chair Jerome Powell said this week he wants to identify "what went wrong here" even as bank examiners at San Francisco Fed had flagged escalating problems at the Santa Clara-based bank suggesting issues with the bank's ability to meet short-term cash needs like depositor withdrawals.
Federal regulators closed SVB on March 10 after it was unable to meet rapid and massive demands from depositors for their money.
That was soon followed by the closure of Signature Bank and emergency action by the Fed and the Treasury to shore up confidence in the banking sector, but the fallout has continued, with UBS buying rival Credit Suisse, big U.S. banks staging a rescue of smaller First Republic, and banking shares under continued pressure.
Republicans on the Senate Banking committee this week asked Daly and Fed Chair Jerome Powell for internal records on oversight of the bank, including Daly's own calendar.
As San Francisco Fed chair, Mehran headed the search committee that hired Daly for the top job at the bank in 2018.
Reporting by Ann Saphir; Editing by Sandra Maler
https://www.reuters.com/markets/us/sf-f ... 023-03-24/
LEST WE FORGET THE LOOTERS
Re: LEST WE FORGET THE LOOTERS
REUTERS
"Yellen chairs meeting of FSOC regulators amid banking turmoil"
By David Lawder
MARCH 24, 2023
WASHINGTON (Reuters) - U.S. Treasury Secretary Janet Yellen chaired a closed meeting of the Financial Stability Oversight Council on Friday, the Treasury said as markets continued to seesaw amid concerns that a two-week-old banking crisis could worsen.
The Treasury said in a media advisory that the meeting was scheduled for Friday morning, and thus far it has not provided any details or readout of its conclusions.
The meeting comes two weeks after regulators closed Silicon Valley Bank, whose failure kicked off a bank crisis of confidence marked by the threat of bank runs and uninsured deposits fleeing smaller and regional institutions for larger banks perceived as “too big to fail.”
The body of financial regulators, led by Yellen and including the heads of the Federal Reserve, the Federal Deposit Insurance Corp (FDIC), the Securities and Exchange Commission and other regulatory agencies, last met on March 12.
That was the same day that the FDIC, Fed and Treasury announced emergency actions to backstop all deposits in the two failed banks and create a new Fed lending facility to boost liquidity for all banks.
A Treasury readout at the time said the actions were described to the broader council, noting that the Fed facility “will bolster the capacity of the banking system to safeguard deposits.”
Two prominent House of Representatives Republicans on Friday demanded that Yellen provide them with additional information about the March 12 meeting, including unredacted minutes, votes, details on timing and bank stress test results.
“The events that have transpired over the last 12 days related to both Silicon Valley Bank and Signature Bank, the ensuing market instability, and your role raise a number of questions for policymakers,” wrote Representatives Bill Huizenga and Andy Barr who chair House Financial Services subcommittees, in a letter to Yellen.
They added that the basis of the Treasury, Fed and FDIC determinations in the SVB and Signature cases “are of particular importance.”
The Friday FSOC meeting came as global banking contagion fears again caused European bank stocks to fall sharply, with Deutsche Bank and UBS knocked by worries that regulators and central banks have not yet contained the worst shock to the sector since the 2008 global financial crisis.
But on Wall Street, shares recovered from an earlier sell-off as three Federal Reserve bank presidents said in separate remarks that there was no indication that financial stress was worsening this week, allowing them to raise interest rates by a quarter percentage point.
Yellen again sought to calm fears of further bank deposit runs on Thursday, telling U.S. lawmakers that she was prepared to repeat actions taken in the Silicon Valley and Signature Bank failures to safeguard uninsured bank deposits if failures threatened more deposit runs.
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 Chizu Nomiyama, Jonathan Oatis and Diane Craft
https://www.reuters.com/article/global- ... SL1N35W1AO
"Yellen chairs meeting of FSOC regulators amid banking turmoil"
By David Lawder
MARCH 24, 2023
WASHINGTON (Reuters) - U.S. Treasury Secretary Janet Yellen chaired a closed meeting of the Financial Stability Oversight Council on Friday, the Treasury said as markets continued to seesaw amid concerns that a two-week-old banking crisis could worsen.
The Treasury said in a media advisory that the meeting was scheduled for Friday morning, and thus far it has not provided any details or readout of its conclusions.
The meeting comes two weeks after regulators closed Silicon Valley Bank, whose failure kicked off a bank crisis of confidence marked by the threat of bank runs and uninsured deposits fleeing smaller and regional institutions for larger banks perceived as “too big to fail.”
The body of financial regulators, led by Yellen and including the heads of the Federal Reserve, the Federal Deposit Insurance Corp (FDIC), the Securities and Exchange Commission and other regulatory agencies, last met on March 12.
That was the same day that the FDIC, Fed and Treasury announced emergency actions to backstop all deposits in the two failed banks and create a new Fed lending facility to boost liquidity for all banks.
A Treasury readout at the time said the actions were described to the broader council, noting that the Fed facility “will bolster the capacity of the banking system to safeguard deposits.”
Two prominent House of Representatives Republicans on Friday demanded that Yellen provide them with additional information about the March 12 meeting, including unredacted minutes, votes, details on timing and bank stress test results.
“The events that have transpired over the last 12 days related to both Silicon Valley Bank and Signature Bank, the ensuing market instability, and your role raise a number of questions for policymakers,” wrote Representatives Bill Huizenga and Andy Barr who chair House Financial Services subcommittees, in a letter to Yellen.
They added that the basis of the Treasury, Fed and FDIC determinations in the SVB and Signature cases “are of particular importance.”
The Friday FSOC meeting came as global banking contagion fears again caused European bank stocks to fall sharply, with Deutsche Bank and UBS knocked by worries that regulators and central banks have not yet contained the worst shock to the sector since the 2008 global financial crisis.
But on Wall Street, shares recovered from an earlier sell-off as three Federal Reserve bank presidents said in separate remarks that there was no indication that financial stress was worsening this week, allowing them to raise interest rates by a quarter percentage point.
Yellen again sought to calm fears of further bank deposit runs on Thursday, telling U.S. lawmakers that she was prepared to repeat actions taken in the Silicon Valley and Signature Bank failures to safeguard uninsured bank deposits if failures threatened more deposit runs.
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 Chizu Nomiyama, Jonathan Oatis and Diane Craft
https://www.reuters.com/article/global- ... SL1N35W1AO
Re: LEST WE FORGET THE LOOTERS
REUTERS
"Fed says rising income costs cut payments to US Treasury in 2022"
By Michael S. Derby
March 24, 2023
NEW YORK, March 24 (Reuters) - Rising interest costs cut into the amount of money the Federal Reserve handed back to the U.S. Treasury last year compared to 2021, the U.S. central bank said in an audited financial statement released on Friday.
The Fed returned $76 billion to the Treasury last year, down from $109 billion in the prior year, according to the document, which updated figures first released in January.
The central bank said it earned $58.8 billion last year versus $107.9 billion in 2021.
Higher costs related to interest ate into the bottom line and left the Fed at the end of 2022 with what it calls a $16.6 billion deferred asset, which describes what is essentially a loss for the central bank.
The Fed has said that even when it operates in a net negative environment, its losses do not impact its ability to operate or conduct monetary policy.
A deferred asset will be paid back when the Fed moves back to profitability, but that could take some time, given that analysts expect it to run large losses for an extended period.
As of March 22, that deferred asset had risen to $42.2 billion.
By law the Fed returns profits after covering its operating expenses to the Treasury.
Over the last year the central bank has lifted its benchmark overnight interest rate aggressively, which has sharply increased the interest it pays banks, money funds and others to keep cash at the central bank.
The largest source of Fed income is the interest income it gets from bonds it owns.
The Fed aggressively bought Treasury bonds and mortgage-backed securities to support the economy and financial system during the coronavirus pandemic, and the income it earned from those securities at a time when its policy rate was near zero allowed Fed profits to swell.
But in March of last year, the central bank began to hike interest rates to tame high inflation.
Soon after, it started to shrink the size of its holdings, in turn creating a pincer movement to erode its earnings.
In its statement on Friday, the Fed said that interest it paid to deposit-taking banks via its interest on reserve balances tool hit $60.4 billion last year, up $55.1 billion from 2021, while interest paid via the reverse repo facility stood at $42.0 billion, rising $41.6 billion from 2021.
The Fed uses the rates paid on these two facilities to control its benchmark overnight interest rate.
The Fed also said that in 2022 it earned $170 billion in interest income from the bonds it owned, versus $122.4 billion in 2021.
Reporting by Michael S. Derby; Editing by Andrea Ricci and Paul Simao
https://www.reuters.com/business/financ ... 023-03-24/
"Fed says rising income costs cut payments to US Treasury in 2022"
By Michael S. Derby
March 24, 2023
NEW YORK, March 24 (Reuters) - Rising interest costs cut into the amount of money the Federal Reserve handed back to the U.S. Treasury last year compared to 2021, the U.S. central bank said in an audited financial statement released on Friday.
The Fed returned $76 billion to the Treasury last year, down from $109 billion in the prior year, according to the document, which updated figures first released in January.
The central bank said it earned $58.8 billion last year versus $107.9 billion in 2021.
Higher costs related to interest ate into the bottom line and left the Fed at the end of 2022 with what it calls a $16.6 billion deferred asset, which describes what is essentially a loss for the central bank.
The Fed has said that even when it operates in a net negative environment, its losses do not impact its ability to operate or conduct monetary policy.
A deferred asset will be paid back when the Fed moves back to profitability, but that could take some time, given that analysts expect it to run large losses for an extended period.
As of March 22, that deferred asset had risen to $42.2 billion.
By law the Fed returns profits after covering its operating expenses to the Treasury.
Over the last year the central bank has lifted its benchmark overnight interest rate aggressively, which has sharply increased the interest it pays banks, money funds and others to keep cash at the central bank.
The largest source of Fed income is the interest income it gets from bonds it owns.
The Fed aggressively bought Treasury bonds and mortgage-backed securities to support the economy and financial system during the coronavirus pandemic, and the income it earned from those securities at a time when its policy rate was near zero allowed Fed profits to swell.
But in March of last year, the central bank began to hike interest rates to tame high inflation.
Soon after, it started to shrink the size of its holdings, in turn creating a pincer movement to erode its earnings.
In its statement on Friday, the Fed said that interest it paid to deposit-taking banks via its interest on reserve balances tool hit $60.4 billion last year, up $55.1 billion from 2021, while interest paid via the reverse repo facility stood at $42.0 billion, rising $41.6 billion from 2021.
The Fed uses the rates paid on these two facilities to control its benchmark overnight interest rate.
The Fed also said that in 2022 it earned $170 billion in interest income from the bonds it owned, versus $122.4 billion in 2021.
Reporting by Michael S. Derby; Editing by Andrea Ricci and Paul Simao
https://www.reuters.com/business/financ ... 023-03-24/
Re: LEST WE FORGET THE LOOTERS
REUTERS
"U.S. backstops Silicon Valley Bank sale to First Citizens"
By Scott Murdoch and Mehnaz Yasmin
March 27, 2023
Summary
* First Citizens scoops up SVB for up to $500 mln in stock
* SVB was the largest bank collapse since 2008
* First Citizens shares jump 50%
March 27 (Reuters) - U.S. regulators said on Monday they would backstop a deal for regional lender First Citizens BancShares to acquire failed Silicon Valley Bank, triggering an estimated $20 billion hit to a government-run insurance fund.
The deal comes after the Federal Deposit Insurance Corporation (FDIC) took over Silicon Valley Bank on March 10 after depositors rushed to pull out their money in a bank run that also brought down Signature Bank and wiped out more than half the market value of several other U.S. regional lenders.
The deal was "momentous" for First Citizens, CEO Frank Holding told investors on a conference call Monday.
"We believe this transaction is a great outcome for depositors."
The Raleigh, North Carolina-based lender has completed 21 such government-assisted deals, including 14 since 2009 when CEO Holding was made chairman, according to a Piper Sandler note on Monday.
The FDIC fund does not take U.S. taxpayer money and is instead replenished by a levy on member banks.
"The FDIC’s sale of SVB helps show business can go on as usual for the banking industry," a team of Wells Fargo analysts led by Mike Mayo said in a note on Monday.
First Citizens will not pay cash upfront for the deal.
Instead, it said it granted equity appreciation rights in its stock to the FDIC that could be worth up to $500 million -- a fraction of what Silicon Valley Bank was worth before it failed.
The FDIC will be able to exercise these rights between March 27 and April 14.
How much cash it receives will depend on the value of First Citizens' stock.
First Citizens shares jumped 50%.
First Citizens will assume Silicon Valley Bank's assets of $110 billion, deposits of $56 billion and loans of $72 billion as part of the deal.
The FDIC said the $72-billion purchase of SVB's assets came at a discount of $16.5 billion.
SVB Private, which the FDIC was trying last week to sell separately and that Citizens Financial Corp had expressed interest in, was acquired by First Citizens as well.
First Citizens said SVB's Private wealth business "is a natural fit for our high-touch and sophisticated level of high-net-worth customer service and approach."
LINE OF CREDIT
First Citizens will also receive a line of credit from the FDIC for contingent liquidity purposes and will have an agreement with the regulator to share some losses on commercial loans to protect it against potential credit losses.
"First Citizens Bank’s acquisition of the SVB loan book and deposits does not add much to solve the number one issue that the U.S. banking system is now facing: deposits leaving smaller banks for larger banks or money market funds," said Redmond Wong, greater China market strategist at Saxo Markets.
Based in Santa Clara, Silicon Valley Bank was the 16th biggest lender in the U.S. at the end of last year, with about $209 billion in assets.
SVB's collapse triggered the worst banking crisis since 2008, pummelling banking stocks globally.
Shares in European lenders fell sharply on Friday, led by Germany's Deutsche Bank, raising concern among authorities about a potential credit crunch.
Shares of U.S. banks - both large and mid-sized - climbed on Monday.
VENTURE CAPITAL BUSINESS
SVB customers will continue to be able to access their accounts through websites, mobile apps and branches, First Citizens said.
Employees in the acquired businesses will be retained, it added.
The deal will accelerate First Citizens' expansion in California and give it wealth management capabilities in the northeast U.S., First Citizens said.
"We are committed to building on and preserving the strong relationships that legacy SVB's global fund banking business has with private equity and venture capital firms," Holding said in a statement.
First Citizens has around $109 billion in assets and total deposits of $89.4 billion.
The combined company will have total assets of $219 billion and $145 billion of deposits, according to a First Citizens presentation.
"The FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund (DIF) to be approximately $20 billion."
"The exact cost will be determined when the FDIC terminates the receivership," it said.
That is on top of the $2.5 billion loss to the fund the FDIC incurred when it sold Signature Bank to New York Community Bancorp one week ago.
The loss will be "handled solely by the banking industry," bringing the fund to around a third below its statutory minimum, Wells Fargo analysts said.
Approximately $90 billion in securities and other assets from SVB will remain in receivership for disposal, the regulator added.
Major regional banks, including First Republic, Western Alliance and Zions Bancorp have seen their shares hit hard due to fears of inflation and deposit flight.
(Reporting by Scott Murdoch in Sydney and Mehnaz Yasmin in Bengaluru; Additional reporting by Xie Yu and Selena Li in Hong Kong, Jahnavi Nidumolu, Tommy Reggiori Wilkes in London and Lananh Nguyen in New York; Editing by Edwina Gibbs, Lananh Nguyen and Nick Zieminski)
https://www.reuters.com/markets/deals/f ... 023-03-26/
"U.S. backstops Silicon Valley Bank sale to First Citizens"
By Scott Murdoch and Mehnaz Yasmin
March 27, 2023
Summary
* First Citizens scoops up SVB for up to $500 mln in stock
* SVB was the largest bank collapse since 2008
* First Citizens shares jump 50%
March 27 (Reuters) - U.S. regulators said on Monday they would backstop a deal for regional lender First Citizens BancShares to acquire failed Silicon Valley Bank, triggering an estimated $20 billion hit to a government-run insurance fund.
The deal comes after the Federal Deposit Insurance Corporation (FDIC) took over Silicon Valley Bank on March 10 after depositors rushed to pull out their money in a bank run that also brought down Signature Bank and wiped out more than half the market value of several other U.S. regional lenders.
The deal was "momentous" for First Citizens, CEO Frank Holding told investors on a conference call Monday.
"We believe this transaction is a great outcome for depositors."
The Raleigh, North Carolina-based lender has completed 21 such government-assisted deals, including 14 since 2009 when CEO Holding was made chairman, according to a Piper Sandler note on Monday.
The FDIC fund does not take U.S. taxpayer money and is instead replenished by a levy on member banks.
"The FDIC’s sale of SVB helps show business can go on as usual for the banking industry," a team of Wells Fargo analysts led by Mike Mayo said in a note on Monday.
First Citizens will not pay cash upfront for the deal.
Instead, it said it granted equity appreciation rights in its stock to the FDIC that could be worth up to $500 million -- a fraction of what Silicon Valley Bank was worth before it failed.
The FDIC will be able to exercise these rights between March 27 and April 14.
How much cash it receives will depend on the value of First Citizens' stock.
First Citizens shares jumped 50%.
First Citizens will assume Silicon Valley Bank's assets of $110 billion, deposits of $56 billion and loans of $72 billion as part of the deal.
The FDIC said the $72-billion purchase of SVB's assets came at a discount of $16.5 billion.
SVB Private, which the FDIC was trying last week to sell separately and that Citizens Financial Corp had expressed interest in, was acquired by First Citizens as well.
First Citizens said SVB's Private wealth business "is a natural fit for our high-touch and sophisticated level of high-net-worth customer service and approach."
LINE OF CREDIT
First Citizens will also receive a line of credit from the FDIC for contingent liquidity purposes and will have an agreement with the regulator to share some losses on commercial loans to protect it against potential credit losses.
"First Citizens Bank’s acquisition of the SVB loan book and deposits does not add much to solve the number one issue that the U.S. banking system is now facing: deposits leaving smaller banks for larger banks or money market funds," said Redmond Wong, greater China market strategist at Saxo Markets.
Based in Santa Clara, Silicon Valley Bank was the 16th biggest lender in the U.S. at the end of last year, with about $209 billion in assets.
SVB's collapse triggered the worst banking crisis since 2008, pummelling banking stocks globally.
Shares in European lenders fell sharply on Friday, led by Germany's Deutsche Bank, raising concern among authorities about a potential credit crunch.
Shares of U.S. banks - both large and mid-sized - climbed on Monday.
VENTURE CAPITAL BUSINESS
SVB customers will continue to be able to access their accounts through websites, mobile apps and branches, First Citizens said.
Employees in the acquired businesses will be retained, it added.
The deal will accelerate First Citizens' expansion in California and give it wealth management capabilities in the northeast U.S., First Citizens said.
"We are committed to building on and preserving the strong relationships that legacy SVB's global fund banking business has with private equity and venture capital firms," Holding said in a statement.
First Citizens has around $109 billion in assets and total deposits of $89.4 billion.
The combined company will have total assets of $219 billion and $145 billion of deposits, according to a First Citizens presentation.
"The FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund (DIF) to be approximately $20 billion."
"The exact cost will be determined when the FDIC terminates the receivership," it said.
That is on top of the $2.5 billion loss to the fund the FDIC incurred when it sold Signature Bank to New York Community Bancorp one week ago.
The loss will be "handled solely by the banking industry," bringing the fund to around a third below its statutory minimum, Wells Fargo analysts said.
Approximately $90 billion in securities and other assets from SVB will remain in receivership for disposal, the regulator added.
Major regional banks, including First Republic, Western Alliance and Zions Bancorp have seen their shares hit hard due to fears of inflation and deposit flight.
(Reporting by Scott Murdoch in Sydney and Mehnaz Yasmin in Bengaluru; Additional reporting by Xie Yu and Selena Li in Hong Kong, Jahnavi Nidumolu, Tommy Reggiori Wilkes in London and Lananh Nguyen in New York; Editing by Edwina Gibbs, Lananh Nguyen and Nick Zieminski)
https://www.reuters.com/markets/deals/f ... 023-03-26/
Re: LEST WE FORGET THE LOOTERS
REUTERS
"Biden says banking crisis 'not over yet'"
Reuters
March 28, 2023
WASHINGTON, March 28 (Reuters) - U.S. President Joe Biden said on Tuesday he has done what is possible to address the banking crisis with available authorities but that it is "not over yet."
Asked if the administration would not take any more executive action to address the matter, Biden said "Oh no, It's not over yet."
"We're watching very closely."
The failures of Silicon Valley Bank and, days later, Signature Bank, set off a broader loss of investor confidence in the banking sector that pummeled stocks and stoked fears of a full-blown financial crisis.
A deal to rescue Swiss bank Credit Suisse last week and a sale of SVB's assets to First Citizens Bancshares this week has helped restore some calm to markets, but investors remain wary of more troubles lurking in the financial system.
Earlier in the day, a top U.S. regulator told a Senate panel that SVB did a "terrible" job of managing risk before its collapse, fending off criticism from lawmakers who blamed bank watchdogs for missing warning signs.
Reporting by Andrea Shalal and Nandita Bose in Washington; Editing by Chris Reese and Jonathan Oatis
https://www.reuters.com/markets/us/bide ... 023-03-28/
"Biden says banking crisis 'not over yet'"
Reuters
March 28, 2023
WASHINGTON, March 28 (Reuters) - U.S. President Joe Biden said on Tuesday he has done what is possible to address the banking crisis with available authorities but that it is "not over yet."
Asked if the administration would not take any more executive action to address the matter, Biden said "Oh no, It's not over yet."
"We're watching very closely."
The failures of Silicon Valley Bank and, days later, Signature Bank, set off a broader loss of investor confidence in the banking sector that pummeled stocks and stoked fears of a full-blown financial crisis.
A deal to rescue Swiss bank Credit Suisse last week and a sale of SVB's assets to First Citizens Bancshares this week has helped restore some calm to markets, but investors remain wary of more troubles lurking in the financial system.
Earlier in the day, a top U.S. regulator told a Senate panel that SVB did a "terrible" job of managing risk before its collapse, fending off criticism from lawmakers who blamed bank watchdogs for missing warning signs.
Reporting by Andrea Shalal and Nandita Bose in Washington; Editing by Chris Reese and Jonathan Oatis
https://www.reuters.com/markets/us/bide ... 023-03-28/
Re: LEST WE FORGET THE LOOTERS
REUTERS
"Fed's Barr says first learned of risks at SVB weeks before it failed"
Reuters
March 28, 2023
March 28 (Reuters) - The U.S. Federal Reserve's head of banking supervision said Tuesday he was first made aware of the interest rate risk-related issues at Silicon Valley Bank in mid-February, just weeks before its failure.
Fed Vice Chairman for Supervision Michael Barr told the Senate Banking Committee that Fed staff made a presentation to the central bank's board in mid-February in which staff indicated they were following up with SVB on risk related to rising interest rates.
"The staff highlighted the interest-rate risk that was present at Silicon Valley Bank and indicated that they were in the middle of a further review," Barr said.
"I believe that is the first time that I was told about interest-rate risk at Silicon Valley Bank."
Supervisory staff at the Fed had previously raised serious concerns over SVB's interest-rate risk and liquidity management and demanded fixes from the bank in November 2021, Barr said.
In mid-2022, Fed staff deemed the bank's management to be deficient and barred the bank from growing through mergers or acquisitions, Barr said.
Fed supervisors brought those issues to SVB's chief financial officer in October 2022, he said, and raised additional concerns to SVB management in November.
But Barr said the issues weren't brought to his attention until a staff presentation last month.
"To the best of my knowledge I first learned about the issues at Silicon Valley Bank with respect to interest rate risk in mid-February of 2023," Barr said.
Reporting by Hannah Lang in Washington; editing by Deepa Babington
https://www.reuters.com/markets/us/feds ... 023-03-28/
"Fed's Barr says first learned of risks at SVB weeks before it failed"
Reuters
March 28, 2023
March 28 (Reuters) - The U.S. Federal Reserve's head of banking supervision said Tuesday he was first made aware of the interest rate risk-related issues at Silicon Valley Bank in mid-February, just weeks before its failure.
Fed Vice Chairman for Supervision Michael Barr told the Senate Banking Committee that Fed staff made a presentation to the central bank's board in mid-February in which staff indicated they were following up with SVB on risk related to rising interest rates.
"The staff highlighted the interest-rate risk that was present at Silicon Valley Bank and indicated that they were in the middle of a further review," Barr said.
"I believe that is the first time that I was told about interest-rate risk at Silicon Valley Bank."
Supervisory staff at the Fed had previously raised serious concerns over SVB's interest-rate risk and liquidity management and demanded fixes from the bank in November 2021, Barr said.
In mid-2022, Fed staff deemed the bank's management to be deficient and barred the bank from growing through mergers or acquisitions, Barr said.
Fed supervisors brought those issues to SVB's chief financial officer in October 2022, he said, and raised additional concerns to SVB management in November.
But Barr said the issues weren't brought to his attention until a staff presentation last month.
"To the best of my knowledge I first learned about the issues at Silicon Valley Bank with respect to interest rate risk in mid-February of 2023," Barr said.
Reporting by Hannah Lang in Washington; editing by Deepa Babington
https://www.reuters.com/markets/us/feds ... 023-03-28/
Re: LEST WE FORGET THE LOOTERS
REUTERS
"US regulator cites 'terrible' risk management for Silicon Valley Bank failure"
By Pete Schroeder and Hannah Lang
March 28, 2023
WASHINGTON, March 28 (Reuters) - A top U.S. regulator told a Senate panel on Tuesday that Silicon Valley Bank did a "terrible" job of managing risk before its collapse, fending off criticism from lawmakers who blamed bank watchdogs for missing warning signs.
In the first congressional hearing into the sudden collapse of two U.S. regional lenders and the ensuing chaos in markets, both Democratic and Republican lawmakers pressed the Federal Reserve's top banking regulator on whether the central bank should have been more aggressive in its oversight of SVB.
"It looks like regulators knew the problem, but no one dropped the hammer," said Senator Jon Tester, a Democrat.
Michael Barr, the Fed's vice chairman for supervision, criticized SVB for going months without a chief risk officer and how it modeled interest rate risk, which he said "was not at all aligned with reality."
Fed supervisors had flagged such issues with bank management, but they went unaddressed, he added.
"The risks were there, the regulators were pointing them out and the bank didn’t take action," he said.
The failures of SVB, and days later, Signature Bank, set off a broader loss of investor confidence in the banking sector that pummeled stocks and stoked fears of a full-blown financial crisis.
A deal to rescue Swiss giant Credit Suisse last week and a sale of SVB's assets to First Citizens Bancshares this week has helped restore some calm to markets, but investors remain wary of more troubles lurking in the financial system.
Senior members of the Senate Banking Committee agreed with Barr that the banks had been mismanaged and former executives should be held responsible, but also questioned how the banks could collapse so quickly with regulators on the case.
Barr told the committee he first became aware of the interest rate risk issues at SVB in mid-February, while Fed supervisors had been raising issues with the bank directly in months prior to that.
"The failure of Silicon Valley Bank, Signature Bank and the general turmoil in the banking sector are the direct result of the failure of regulators, including the agencies we have before us today," said Senator Steve Daines, a Republican.
Barr was challenged on whether the Fed's annual "stress test" of large banks would have identified risks at SVB, given that recent tests have not explored how banks could weather rapidly rising interest rates, even as the Fed aggressively hiked borrowing costs in a bid to stem inflation.
"It was like somebody going in for a test for COVID and getting a test for cholera," said Sen. John Kennedy, a Louisiana Republican.
Barr agreed it would be "useful" to test for higher rates as well, and said he was looking to expand the breadth of the test in the future.
Regulators have vowed to review their rules and procedures after the twin failures while insisting the overall system remains sound.
Barr added he welcomed external reviews of regulators' work and expects the Fed to be "accountable" for any shortcomings that are unearthed.
Barr and FDIC Chairman Martin Gruenberg both stressed in their remarks that depositor funds are safe and sound.
Both indicated they are looking into tightening rules for banks and applying stricter oversight for firms similar to SVB.
Some Democrats, including major bank critic Senator Elizabeth Warren of Massachusetts, have also argued a 2018 bank deregulation law is to blame.
That law, mostly backed by Republicans but also some moderate Democrats, relaxed the strictest oversight for firms holding between $100 billion and $250 billion in assets, which included SVB and Signature.
Barr said he anticipated the Fed would need to strengthen capital and liquidity standards for firms with more than $100 billion in assets.
The hearing is the first of what is expected to be several examining the banking tumult.
The House Financial Services Committee will hear from the same regulators Wednesday, and congressional leaders have already said they want to question the former CEOs of the two banks on what went wrong.
Reporting by Pete Schroeder and Hannah Lang; editing by Deepa Babington and Anna Driver
https://www.reuters.com/markets/us/us-r ... 023-03-28/
"US regulator cites 'terrible' risk management for Silicon Valley Bank failure"
By Pete Schroeder and Hannah Lang
March 28, 2023
WASHINGTON, March 28 (Reuters) - A top U.S. regulator told a Senate panel on Tuesday that Silicon Valley Bank did a "terrible" job of managing risk before its collapse, fending off criticism from lawmakers who blamed bank watchdogs for missing warning signs.
In the first congressional hearing into the sudden collapse of two U.S. regional lenders and the ensuing chaos in markets, both Democratic and Republican lawmakers pressed the Federal Reserve's top banking regulator on whether the central bank should have been more aggressive in its oversight of SVB.
"It looks like regulators knew the problem, but no one dropped the hammer," said Senator Jon Tester, a Democrat.
Michael Barr, the Fed's vice chairman for supervision, criticized SVB for going months without a chief risk officer and how it modeled interest rate risk, which he said "was not at all aligned with reality."
Fed supervisors had flagged such issues with bank management, but they went unaddressed, he added.
"The risks were there, the regulators were pointing them out and the bank didn’t take action," he said.
The failures of SVB, and days later, Signature Bank, set off a broader loss of investor confidence in the banking sector that pummeled stocks and stoked fears of a full-blown financial crisis.
A deal to rescue Swiss giant Credit Suisse last week and a sale of SVB's assets to First Citizens Bancshares this week has helped restore some calm to markets, but investors remain wary of more troubles lurking in the financial system.
Senior members of the Senate Banking Committee agreed with Barr that the banks had been mismanaged and former executives should be held responsible, but also questioned how the banks could collapse so quickly with regulators on the case.
Barr told the committee he first became aware of the interest rate risk issues at SVB in mid-February, while Fed supervisors had been raising issues with the bank directly in months prior to that.
"The failure of Silicon Valley Bank, Signature Bank and the general turmoil in the banking sector are the direct result of the failure of regulators, including the agencies we have before us today," said Senator Steve Daines, a Republican.
Barr was challenged on whether the Fed's annual "stress test" of large banks would have identified risks at SVB, given that recent tests have not explored how banks could weather rapidly rising interest rates, even as the Fed aggressively hiked borrowing costs in a bid to stem inflation.
"It was like somebody going in for a test for COVID and getting a test for cholera," said Sen. John Kennedy, a Louisiana Republican.
Barr agreed it would be "useful" to test for higher rates as well, and said he was looking to expand the breadth of the test in the future.
Regulators have vowed to review their rules and procedures after the twin failures while insisting the overall system remains sound.
Barr added he welcomed external reviews of regulators' work and expects the Fed to be "accountable" for any shortcomings that are unearthed.
Barr and FDIC Chairman Martin Gruenberg both stressed in their remarks that depositor funds are safe and sound.
Both indicated they are looking into tightening rules for banks and applying stricter oversight for firms similar to SVB.
Some Democrats, including major bank critic Senator Elizabeth Warren of Massachusetts, have also argued a 2018 bank deregulation law is to blame.
That law, mostly backed by Republicans but also some moderate Democrats, relaxed the strictest oversight for firms holding between $100 billion and $250 billion in assets, which included SVB and Signature.
Barr said he anticipated the Fed would need to strengthen capital and liquidity standards for firms with more than $100 billion in assets.
The hearing is the first of what is expected to be several examining the banking tumult.
The House Financial Services Committee will hear from the same regulators Wednesday, and congressional leaders have already said they want to question the former CEOs of the two banks on what went wrong.
Reporting by Pete Schroeder and Hannah Lang; editing by Deepa Babington and Anna Driver
https://www.reuters.com/markets/us/us-r ... 023-03-28/
Re: LEST WE FORGET THE LOOTERS
REUTERS
"White House prepares new bank rule proposal after failures - source"
Reuters
March 29, 2023
WASHINGTON, March 29 (Reuters) - The White House is preparing to release more of its promised plans to strengthen U.S. bank oversight as soon as this week after Silicon Valley Bank's collapse of earlier this month, according to a person familiar with the preparations.
President Joe Biden, a Democrat, is expected to push for rules to be reinstated for banks with between $100 billion and $250 billion that were deregulated by Congress and the Federal Reserve during then-Republican President Donald Trump's administration, according to people familiar with the matter.
The White House declined to comment.
Officials had previously said their reforms would be announced in the coming days.
The measures, which are still being hatched, are likely to fall short of broad changes to existing law.
The White House is skeptical that such measures can win passage in a closely divided Congress.
Instead, they would require implementing by the Fed, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency.
A variety of other steps could include raising bank capital requirements, as well as strengthening those banks' stress tests and plans for how they could be safely wound down, analysts said.
Reporting by Trevor Hunnicutt and Nandita Bose in Washington; Additional reporting by Susan Heavey and Pete Schroeder in Washington and Shivani Tanna in Bengaluru; Editing by Jan Harvey and Louise Heavens
https://www.reuters.com/business/financ ... 023-03-29/
"White House prepares new bank rule proposal after failures - source"
Reuters
March 29, 2023
WASHINGTON, March 29 (Reuters) - The White House is preparing to release more of its promised plans to strengthen U.S. bank oversight as soon as this week after Silicon Valley Bank's collapse of earlier this month, according to a person familiar with the preparations.
President Joe Biden, a Democrat, is expected to push for rules to be reinstated for banks with between $100 billion and $250 billion that were deregulated by Congress and the Federal Reserve during then-Republican President Donald Trump's administration, according to people familiar with the matter.
The White House declined to comment.
Officials had previously said their reforms would be announced in the coming days.
The measures, which are still being hatched, are likely to fall short of broad changes to existing law.
The White House is skeptical that such measures can win passage in a closely divided Congress.
Instead, they would require implementing by the Fed, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency.
A variety of other steps could include raising bank capital requirements, as well as strengthening those banks' stress tests and plans for how they could be safely wound down, analysts said.
Reporting by Trevor Hunnicutt and Nandita Bose in Washington; Additional reporting by Susan Heavey and Pete Schroeder in Washington and Shivani Tanna in Bengaluru; Editing by Jan Harvey and Louise Heavens
https://www.reuters.com/business/financ ... 023-03-29/
Re: LEST WE FORGET THE LOOTERS
REUTERS
"Fed official tells Congress many to blame for Silicon Valley Bank failure"
By Hannah Lang
March 29, 2023
March 29 (Reuters) - The scope of blame for Silicon Valley Bank's failure stretches across bank executives, Federal Reserve supervisors and other regulators, the banking system's top cop on Wednesday told U.S. lawmakers demanding answers for the lender's swift collapse.
"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.
"So we're looking at all of that."
The failures of SVB, and days later, Signature Bank, set off a broader loss of investor confidence in the banking sector that pummeled stocks and stoked fears of a full-blown financial crisis.
Depositors tried to pull more than $42 billion in a single day at SVB in early March, surprising regulators and kicking off deposit flight across other regional banks.
"That's just an extraordinary scale and speed of a run that I had not ever seen," Barr said.
"I think all of us were caught incredibly off-guard by the massive bank run that occurred when it did."
Representatives from both political parties pressed Barr, Martin Gruenberg, head of the Federal Deposit Insurance Corp, and Treasury undersecretary for domestic finance Nellie Liang on why regulators did not act more forcefully, given Fed supervisors had been raising issues with the bank for months.
"There is still much we need to understand of what you knew when and how you responded," said Republican Patrick McHenry, chair of the committee.
"The bottom line for you as the panel, there's bipartisan frustration with many of your answers."
"There's a question of accountability and appearance of lack of accountability."
Barr on Tuesday criticized SVB for going months without a chief risk officer and for how it modeled interest rate risk, but lawmakers said the response wasn't aggressive enough, with Democrat Juan Vargas saying, "it seems like they blew you guys off and you didn’t do anything."
REPORTS DUE MAY 1
Both the Fed and FDIC are expected to produce reports on the failure of Silicon Valley Bank by May 1.
The Fed's report will concentrate on supervision and regulation while the FDIC report will center around deposit insurance.
Several lawmakers asked Barr to make available the Fed's confidential communications around supervision.
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.
All three testifying said that regulators had sufficient tools to deal with the crisis once it happened, but Barr said the Fed could have done better on supervision.
SVB and Signature became the second- and third-largest bank failures in U.S. history.
Investors fled to safe havens like bonds while depositors moved funds to bigger institutions and money market funds.
Markets have calmed since Swiss regulators engineered the sale of troubled Swiss giant Credit Suisse to rival UBS, and after SVB's assets were sold to First Citizens Bancshares.
However, investors remain wary of more troubles lurking in the financial system.
The Fed was in discussions with Silicon Valley Bank the day before its collapse to move pledgable collateral to the discount window, a key facility long associated with providing emergency loans to banks, Barr said on Wednesday.
"(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.
Some Democrats have also argued a 2018 bank deregulation law is to blame.
That law, mostly backed by Republicans but also some moderate Democrats, relaxed the strictest oversight for firms holding between $100 billion and $250 billion in assets, which included SVB and Signature.
The White House is readying plans for legislation that would reinstate those regulations on midsize banks, the Washington Post reported on Wednesday, citing two sources familiar with the matter.
Reporting by Hannah Lang in Washington; additional reporting by Pete Schroeder and Ann Saphir; editing by David Gaffen, Deepa Babington and Nick Zieminski
https://www.reuters.com/business/financ ... 023-03-29/
"Fed official tells Congress many to blame for Silicon Valley Bank failure"
By Hannah Lang
March 29, 2023
March 29 (Reuters) - The scope of blame for Silicon Valley Bank's failure stretches across bank executives, Federal Reserve supervisors and other regulators, the banking system's top cop on Wednesday told U.S. lawmakers demanding answers for the lender's swift collapse.
"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.
"So we're looking at all of that."
The failures of SVB, and days later, Signature Bank, set off a broader loss of investor confidence in the banking sector that pummeled stocks and stoked fears of a full-blown financial crisis.
Depositors tried to pull more than $42 billion in a single day at SVB in early March, surprising regulators and kicking off deposit flight across other regional banks.
"That's just an extraordinary scale and speed of a run that I had not ever seen," Barr said.
"I think all of us were caught incredibly off-guard by the massive bank run that occurred when it did."
Representatives from both political parties pressed Barr, Martin Gruenberg, head of the Federal Deposit Insurance Corp, and Treasury undersecretary for domestic finance Nellie Liang on why regulators did not act more forcefully, given Fed supervisors had been raising issues with the bank for months.
"There is still much we need to understand of what you knew when and how you responded," said Republican Patrick McHenry, chair of the committee.
"The bottom line for you as the panel, there's bipartisan frustration with many of your answers."
"There's a question of accountability and appearance of lack of accountability."
Barr on Tuesday criticized SVB for going months without a chief risk officer and for how it modeled interest rate risk, but lawmakers said the response wasn't aggressive enough, with Democrat Juan Vargas saying, "it seems like they blew you guys off and you didn’t do anything."
REPORTS DUE MAY 1
Both the Fed and FDIC are expected to produce reports on the failure of Silicon Valley Bank by May 1.
The Fed's report will concentrate on supervision and regulation while the FDIC report will center around deposit insurance.
Several lawmakers asked Barr to make available the Fed's confidential communications around supervision.
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.
All three testifying said that regulators had sufficient tools to deal with the crisis once it happened, but Barr said the Fed could have done better on supervision.
SVB and Signature became the second- and third-largest bank failures in U.S. history.
Investors fled to safe havens like bonds while depositors moved funds to bigger institutions and money market funds.
Markets have calmed since Swiss regulators engineered the sale of troubled Swiss giant Credit Suisse to rival UBS, and after SVB's assets were sold to First Citizens Bancshares.
However, investors remain wary of more troubles lurking in the financial system.
The Fed was in discussions with Silicon Valley Bank the day before its collapse to move pledgable collateral to the discount window, a key facility long associated with providing emergency loans to banks, Barr said on Wednesday.
"(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.
Some Democrats have also argued a 2018 bank deregulation law is to blame.
That law, mostly backed by Republicans but also some moderate Democrats, relaxed the strictest oversight for firms holding between $100 billion and $250 billion in assets, which included SVB and Signature.
The White House is readying plans for legislation that would reinstate those regulations on midsize banks, the Washington Post reported on Wednesday, citing two sources familiar with the matter.
Reporting by Hannah Lang in Washington; additional reporting by Pete Schroeder and Ann Saphir; editing by David Gaffen, Deepa Babington and Nick Zieminski
https://www.reuters.com/business/financ ... 023-03-29/
Re: LEST WE FORGET THE LOOTERS
REUTERS
"Fed's Powell discussed FDIC limits with House Republicans -lawmaker"
By Richard Cowan
March 29, 2023
WASHINGTON, March 29 (Reuters) - U.S. Federal Reserve Chair Jerome Powell told Republican lawmakers that Congress should re-evaluate limits on the size of federally insured bank deposits, U.S. Representative Kevin Hern said on Wednesday.
"We talked about that but he said it was the role for Congress to really evaluate."
"Thought it was a great topic to bring up," Hern said after Powell spoke to a closed-door meeting of the Republican Study Committee.
The Federal Deposit Insurance Corp currently insures up to $250,000 per depositor, but the Silicon Valley Bank and Signature Bank collapses this month have raised questions over whether insurance limits needed to be raised.
On another topic, Hern said Powell told Republicans that he believed supply chain inflation had mostly been mitigated.
The Republican Study Committee, the largest caucus in Congress, invited Powell at a time when Republicans and Democrats are battling over raising Washington's $31.4 trillion debt ceiling and crafting a budget for the fiscal year that begins on Oct. 1.
The health of the banking industry has also weighed heavily on the minds of lawmakers and regulators lately.
Hern said Powell acknowledged during the meeting that the flurry of deposits moving from smaller banks to the industry's giants had been a problem "early on" following the two banks' collapse, but "that has slowed to stopped."
Reporting by Richard Cowan; Editing by Scott Malone and Josie Kao
https://www.reuters.com/markets/us/feds ... 023-03-29/
"Fed's Powell discussed FDIC limits with House Republicans -lawmaker"
By Richard Cowan
March 29, 2023
WASHINGTON, March 29 (Reuters) - U.S. Federal Reserve Chair Jerome Powell told Republican lawmakers that Congress should re-evaluate limits on the size of federally insured bank deposits, U.S. Representative Kevin Hern said on Wednesday.
"We talked about that but he said it was the role for Congress to really evaluate."
"Thought it was a great topic to bring up," Hern said after Powell spoke to a closed-door meeting of the Republican Study Committee.
The Federal Deposit Insurance Corp currently insures up to $250,000 per depositor, but the Silicon Valley Bank and Signature Bank collapses this month have raised questions over whether insurance limits needed to be raised.
On another topic, Hern said Powell told Republicans that he believed supply chain inflation had mostly been mitigated.
The Republican Study Committee, the largest caucus in Congress, invited Powell at a time when Republicans and Democrats are battling over raising Washington's $31.4 trillion debt ceiling and crafting a budget for the fiscal year that begins on Oct. 1.
The health of the banking industry has also weighed heavily on the minds of lawmakers and regulators lately.
Hern said Powell acknowledged during the meeting that the flurry of deposits moving from smaller banks to the industry's giants had been a problem "early on" following the two banks' collapse, but "that has slowed to stopped."
Reporting by Richard Cowan; Editing by Scott Malone and Josie Kao
https://www.reuters.com/markets/us/feds ... 023-03-29/