CNBC
"Wells Fargo tells customers it’s shuttering all personal lines of credit"
Hugh Son @HUGH_SON
PUBLISHED THU, JUL 8 2021
KEY POINTS
* The bank is shutting down all existing personal lines of credit in coming weeks and no longer offers the product, according to customer letters reviewed by CNBC.
* The product, which typically gave users $3,000 to $100,000 in revolving credit lines, was pitched as a way to consolidate higher-interest credit card debt, pay for home renovations or avoid overdraft fees on linked checking accounts.
* With its latest move, Wells Fargo warned customers that the account closures “may have an impact on your credit score,” according to a frequently asked questions segment of the letter.
Wells Fargo is ending a popular consumer lending product, angering some of its customers, CNBC has learned.
The bank is shutting down all existing personal lines of credit in coming weeks and no longer offers the product, according to customer letters reviewed by CNBC.
The revolving credit lines, which typically let users borrow $3,000 to $100,000, were pitched as a way to consolidate higher-interest credit card debt, pay for home renovations or avoid overdraft fees on linked checking accounts.
“Wells Fargo recently reviewed its product offerings and decided to discontinue offering new Personal and Portfolio line of credit accounts and close all existing accounts,” the bank said in the six-page letter.
The move would let the bank focus on credit cards and personal loans, it said.
Wells Fargo CEO Charles Scharf has been forced to make difficult decisions during the coronavirus pandemic, offloading assets and deposits and stepping back from some products because of limitations imposed by the Federal Reserve.
In 2018, the Fed barred Wells Fargo from growing its balance sheet until it fixes compliance shortcomings revealed by the bank’s fake accounts scandal.
The asset cap has ultimately cost the bank billions of dollars in lost earnings, based on the balance sheet growth of rivals including JPMorgan Chase and Bank of America over the past three years, analysts have said.
It has also affected Wells Fargo’s customers: Last year, the lender told staff it was halting all new home equity lines of credit, CNBC reported.
Months later, the bank also withdrew from a segment of the auto lending business.
With its latest move, Wells Fargo warned customers that the account closures “may have an impact on your credit score,” according to a frequently asked questions segment of the letter.
Another part of the FAQ asserted that the account closures couldn’t be reviewed or reversed: “We apologize for the inconvenience this Line of Credit closure will cause,” the bank said.
“The account closure is final.”
Simplify offerings
Wells Fargo didn’t directly answer questions as to what role, if any, the Fed asset cap played in its latest move.
The bank gave this statement: “In an effort to simplify our product offerings, we’ve made the decision to no longer offer personal lines of credit as we feel we can better meet the borrowing needs of our customers through credit card and personal loan products.”
After publication of this article, a Wells Fargo spokesman gave additional remarks: “We realize change can be inconvenient, especially when customer credit may be impacted,” the bank said, adding that it was “committed to helping each customer find a credit solution that fits their needs.”
Customers have been given a 60-day notice that their accounts will be shuttered, and remaining balances will require regular minimum payments at a fixed rate, according to the statement.
When it was offered, the credit lines had variable interest rates ranging from 9.5% to 21%.
The move is a strange one given the banking industry’s need to boost loan growth.
After a burst of commercial lending during the early days of the pandemic, loan growth has been hard to muster.
Corporations have used money raised in stock and debt issuance to retire bank credit lines, and consumers stuck at home had fewer reasons to use credit cards.
In fact, last year big banks experienced the first aggregate drop in loans in more than a decade, according to Barclays bank analyst Jason Goldberg.
Of the four largest U.S. banks, Wells Fargo saw the worst decline.
After banks saw that borrowers held up far better than they had initially feared, the industry recently began marketing new credit cards with large sign-on bonuses in an effort to boost lending.
Making the switch
Wells Fargo doesn’t disclose how many customers used the credit lines it is eliminating.
It had $24.9 billion in loans in a category called “other consumer” as of March, which was 26% lower than the year-earlier period.
One customer said the change is prompting him to switch banks after more than a decade with Wells Fargo.
Tim Tomassi, a Portland, Oregon, programmer, said he used a personal line of credit linked to his checking account to avoid expensive overdraft fees.
“It’s a bit upsetting,” Tomassi said in a phone interview.
“They’re a big bank, and I’m a small person, and it feels like they’re making decisions for their bottom line and not for customers."
"A lot of people are in my position, they need a cushion every once in a while from a line of credit.”
Tomassi said he is considering opening an account at Ally or Chime, banking players that don’t charge overdraft fees.
https://www.cnbc.com/2021/07/08/wells-f ... unts-.html
LEST WE FORGET THE LOOTERS
Re: LEST WE FORGET THE LOOTERS
REUTERS
"Analysis: Private equity struggles to get in on $1 trillion U.S. infrastructure bonanza"
Chibuike Oguh
August 5, 2021
Aug 5 (Reuters) - Private equity firms are fretting that a long-awaited $1 trillion infrastructure bill under negotiation by U.S. lawmakers will not create enough opportunities for them to invest in lucrative assets such as toll roads and airports.
The draft bill would force cities and states seeking major federal funding to show they have considered using public-private partnerships (P3s) to procure projects.
Yet it stops short of instructing local authorities to use P3s.
This is a blow to buyout firms such as Blackstone Group Inc, KKR & Co Inc and Brookfield Asset Management, which have raised hundreds of billions of dollars to invest in infrastructure.
They had lobbied through outfits such as the Global Infrastructure Investor Association for greater participation in bankrolling the projects.
Many U.S. cities and states have resisted the use of P3s because they do not want to share the revenue generated by projects with private investors, or give up control over how the projects are procured, like the number of jobs created and how much they will pay.
This is despite many government-run projects suffering from delays and cost overruns.
Several local authorities also enjoy access to the $4 trillion U.S. municipal bond market, which allows them to pay for these projects but has left them highly indebted.
With states and municipalities accounting for 87% of U.S. government-owned infrastructure, some private equity fund managers said the bill can do little in its current form to advance the use of private capital in infrastructure.
"If you want the private sector to participate, you need to really embrace public-private partnerships."
"But I did not see enthusiasm both on the part of President Joe Biden's administration or the Republicans to make it an essential element of the plan," said Sadek Wahba, managing partner at I Squared Capital, which has $30 billion in infrastructure assets under management.
Blackstone and KKR declined to comment.
Brookfield did not immediately respond to a request for comment.
The United States lags other major economies in utilizing private investments in infrastructure.
It announced less than half the number of so-called public-private partnerships that were launched in Europe between 2005 and 2014, according to data from the World Bank and the European Investment Bank.
The draft bill, which has yet to be approved by the U.S. Senate and House of Representatives, would require local authorities that are applying for federal funding to cover project costs of more than $750 million to conduct a "value for money analysis" on the use of P3s.
There is no obligation on the local authorities to use P3s after they conduct the analysis.
"The federal government is largely providing funding, but state and local governments have to then come up with the projects," said Emmett McCann, a co-portfolio manager of about $4 billion of infrastructure assets for Oaktree Capital Management LP.
Lawrence Slade, the chief executive officer of the Global Infrastructure Investors Association, said there was little a federal bill could do to compel local authorities given the decentralized procurement of U.S. infrastructure.
But he added that it at least "opened the door" for states to use more private capital in the financing of infrastructure.
NO INFRASTRUCTURE BANK
Mistrust of private capital runs deep in some cities.
Chicago, for example, canceled a deal to lease its Midway Airport in 2013 after bidders backed out over the city's insistence to add "taxpayer protection" in the contract, including a short lease term and revenue sharing.
An earlier version of the bill had provisions for a $20 billion infrastructure bank, which private equity fund managers said could have helped seed P3s.
Disagreements over whether the bank's funding should be tied to setting minimum thresholds for workers sank the idea, Reuters reported last month.
North America-focused infrastructure funds, which are dominated by the U.S.-based managers, raised $53 billion last year, down from $55.5 billion in 2019, according to data provider Preqin.
Opportunities for them to deploy that capital in the United States have been mainly in the private sector, with investments focused in the energy and telecommunications industries.
Karl Kuchel, chief executive of Macquarie Infrastructure Partners, which has about $10 billion in U.S. infrastructure assets under management, said he hoped the bill's requirement of P3s would over time result in some local authorities seeing their merits.
"It will take some time for this to work its way through into specific partnership opportunities," Kuchel said.
Reporting by Chibuike Oguh in New York; Editing by Greg Roumeliotis and Matthew Lewis
https://www.reuters.com/business/privat ... 021-08-05/
"Analysis: Private equity struggles to get in on $1 trillion U.S. infrastructure bonanza"
Chibuike Oguh
August 5, 2021
Aug 5 (Reuters) - Private equity firms are fretting that a long-awaited $1 trillion infrastructure bill under negotiation by U.S. lawmakers will not create enough opportunities for them to invest in lucrative assets such as toll roads and airports.
The draft bill would force cities and states seeking major federal funding to show they have considered using public-private partnerships (P3s) to procure projects.
Yet it stops short of instructing local authorities to use P3s.
This is a blow to buyout firms such as Blackstone Group Inc, KKR & Co Inc and Brookfield Asset Management, which have raised hundreds of billions of dollars to invest in infrastructure.
They had lobbied through outfits such as the Global Infrastructure Investor Association for greater participation in bankrolling the projects.
Many U.S. cities and states have resisted the use of P3s because they do not want to share the revenue generated by projects with private investors, or give up control over how the projects are procured, like the number of jobs created and how much they will pay.
This is despite many government-run projects suffering from delays and cost overruns.
Several local authorities also enjoy access to the $4 trillion U.S. municipal bond market, which allows them to pay for these projects but has left them highly indebted.
With states and municipalities accounting for 87% of U.S. government-owned infrastructure, some private equity fund managers said the bill can do little in its current form to advance the use of private capital in infrastructure.
"If you want the private sector to participate, you need to really embrace public-private partnerships."
"But I did not see enthusiasm both on the part of President Joe Biden's administration or the Republicans to make it an essential element of the plan," said Sadek Wahba, managing partner at I Squared Capital, which has $30 billion in infrastructure assets under management.
Blackstone and KKR declined to comment.
Brookfield did not immediately respond to a request for comment.
The United States lags other major economies in utilizing private investments in infrastructure.
It announced less than half the number of so-called public-private partnerships that were launched in Europe between 2005 and 2014, according to data from the World Bank and the European Investment Bank.
The draft bill, which has yet to be approved by the U.S. Senate and House of Representatives, would require local authorities that are applying for federal funding to cover project costs of more than $750 million to conduct a "value for money analysis" on the use of P3s.
There is no obligation on the local authorities to use P3s after they conduct the analysis.
"The federal government is largely providing funding, but state and local governments have to then come up with the projects," said Emmett McCann, a co-portfolio manager of about $4 billion of infrastructure assets for Oaktree Capital Management LP.
Lawrence Slade, the chief executive officer of the Global Infrastructure Investors Association, said there was little a federal bill could do to compel local authorities given the decentralized procurement of U.S. infrastructure.
But he added that it at least "opened the door" for states to use more private capital in the financing of infrastructure.
NO INFRASTRUCTURE BANK
Mistrust of private capital runs deep in some cities.
Chicago, for example, canceled a deal to lease its Midway Airport in 2013 after bidders backed out over the city's insistence to add "taxpayer protection" in the contract, including a short lease term and revenue sharing.
An earlier version of the bill had provisions for a $20 billion infrastructure bank, which private equity fund managers said could have helped seed P3s.
Disagreements over whether the bank's funding should be tied to setting minimum thresholds for workers sank the idea, Reuters reported last month.
North America-focused infrastructure funds, which are dominated by the U.S.-based managers, raised $53 billion last year, down from $55.5 billion in 2019, according to data provider Preqin.
Opportunities for them to deploy that capital in the United States have been mainly in the private sector, with investments focused in the energy and telecommunications industries.
Karl Kuchel, chief executive of Macquarie Infrastructure Partners, which has about $10 billion in U.S. infrastructure assets under management, said he hoped the bill's requirement of P3s would over time result in some local authorities seeing their merits.
"It will take some time for this to work its way through into specific partnership opportunities," Kuchel said.
Reporting by Chibuike Oguh in New York; Editing by Greg Roumeliotis and Matthew Lewis
https://www.reuters.com/business/privat ... 021-08-05/
Re: LEST WE FORGET THE LOOTERS
THE HILL
"Democrats defend deregulation vote amid banking blame game"
Story by Mychael Schnell
18 MARCH 2023
Democrats on Capitol Hill are defending their vote for a 2018 banking deregulation bill that President Biden and other members of the party are blaming for last week’s stunning collapse of Silicon Valley Bank and Signature Bank.
Forty-nine Democrats — 33 in the House and 16 in the Senate — plus Sen. Angus King (I-Maine), who caucuses with Democrats, joined Republicans in 2018 to pass the deregulation bill.
Nineteen of them are still in the House, all of whom will have to face voters next year, and 12 are in the Senate, five of whom are up for reelection in 2024.
Sen. Kyrsten Sinema (I-Ariz.), who was in the House as a Democrat in 2018 and voted for the deregulation bill, is also up for reelection next year.
Proponents of the legislation, which former President Trump signed into law, saw it as a way to provide relief to small and midsize banks that were struggling with rigorous regulations put in place under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which was enacted after the 2008 financial crisis.
But a number of Democrats are now blaming that rollback for the failure of Silicon Valley Bank and Signature Bank — which were exempted from the regulations in 2018 — putting the measure’s Democratic supporters on the defensive as the banking blame game heats up on Capitol Hill.
Asked if she regretted her vote for the bill, Sen. Debbie Stabenow (Mich.), a member of Democratic leadership who is retiring next year, told The Hill, “Not at all.”
“It was very important to me to make sure that our small banks, community banks and credit unions, who did not cause the financial crisis in 2008, were given some flexibility,” she said.
Rep. Josh Gottheimer (D-N.J.) also said he does not regret his vote for the rollback, calling the Dodd-Frank regulations “impossible” for small, medium-sized and regional banks.
“You had a set of rules that literally applied to the largest few institutions in the country and also to our small and medium-size and regional banks."
"It was impossible, and they were all actually merging and selling to the larger banks and you had no community banks left in this country,” he said during an interview with CNN on Tuesday.
The 2018 bill — formally known as the Economic Growth, Regulatory Relief and Consumer Protection Act — exempted some banks from stricter Federal Reserve oversight and stress tests mandated under the Dodd-Frank Act by raising the asset threshold for those regulations from $50 billion to $250 billion.
Silicon Valley Bank and Signature Bank both fell within that range.
“Let’s be clear."
"The failure of Silicon Valley Bank is a direct result of an absurd 2018 bank deregulation bill signed by Donald Trump that I strongly opposed,” Sen. Bernie Sanders (I-Vt.) wrote in a statement.
Sen. Elizabeth Warren (D-Mass.), who voted against the 2018 bill and is now leading an effort to undo the legislation, said Silicon Valley Bank (SVB) and Signature Bank “would have been subject to stronger liquidity and capital requirements to withstand financial shocks” if Congress and the Federal Reserve had not rolled back stricter oversight.
“They would have been required to conduct regular stress tests to expose their vulnerabilities and shore up their businesses,” she wrote in a New York Times op-ed.
“But because those requirements were repealed, when an old-fashioned bank run hit S.V.B., the bank couldn’t withstand the pressure — and Signature’s collapse was close behind.
Silicon Valley Bank, a California-based institution that mainly catered to startups, was taken over by federal regulators last Friday after a massive run on the bank amid liquidity issues.
Days later, state regulations seized Signature Bank, a New York-based establishment that largely did business with real estate companies and law firms, following another rush by customers to withdraw deposits.
The Signature Valley Bank collapse is now the second-largest bank failure in American history, and the Signature Bank break down is the third-largest.
Sen. Tim Kaine (D-Va.), who stood by his vote for the 2018 deregulation bill, told The Hill that the Old Dominion lost a chunk of its banks between 2010 and 2018 because small banks, faced with having to hire compliance departments, decided to sell to larger institutions, which led to branches closing and employees being laid off.
“My community banks, as you get a few years into implementation, kind of laid this issue down."
"They said, hey look, a law that was designed to stop too big to fail is also accelerating too small to succeed,” Kaine, who is up for reelection in 2024, said.
“Community banks, when the [2018] banking bill was put together, they’re like, we strongly support this."
"They were strongly supportive and they still are, and they’ve done well in Virginia in the last few years,” he added.
Sen. Gary Peters (D-Mich.) also said he does not regret his 2018 vote in support of the deregulation bill, and cautioned against jumping to conclusions about the cause of the collapses.
“I don’t know all the facts,” Peters said.
“Right now we got an investigation going on; the feds are gonna look at exactly what happened."
"I don’t think we should jump to any conclusions, so we actually investigate and look at the facts.”
The Justice Department and Securities and Exchange Commission are both investigating Silicon Valley Bank’s collapse, and the Federal Reserve has launched its own probe.
The central bank said a review of the probe, which is being led by Vice Chair for Supervision Michael Barr, will be released publicly on May 1.
Sen. Chris Coons (D-Del.), who voted for the 2018 bill, said it is “premature” to connect the five-year-old bill to last week’s collapse.
“I think it’s premature to say we know that this action by regulators under the previous administration — or this action legislatively under the previous administration — made the difference,” he told The Hill.
“We don’t know that.”
The senator cited other factors that may have led to the bank’s crumbling, including management failure, a failure to plan for inflation risk and regulatory oversight failure.
Warren and Rep. Katie Porter (D-Calif.), however, are drawing a direct line between the faltering banks and the 2018 bill.
The progressive pair, along with dozens of other Democrats, introduced a bill on Tuesday that would repeal the 2018 Dodd-Frank rollback by restoring the regulation threshold to $50 billion.
The legislation comes after Biden this week called on Congress and banking regulators “to strengthen the rules for banks to make it less likely that this kind of bank failure will happen again and to protect American jobs and small businesses.”
Stabenow said she has concerns with the threshold under the Warren-Porter bill.
“My reason to support the bill originally was because I felt the $50 billion threshold was too low."
"And so she moves it all the way back down to that."
"And so that’s the question of mine,” she said.
“And I think we need to look at, you know, what really happened here?"
"I mean, there’s total incompetence of this bank, certainly."
"And the question is what would make a difference?"
"That’s what I’m interested in,” she added, later saying “I think it’s just looking at, you know, what can we do to address this situation without going back to hurting small banks.”
Coons said it was “premature” to consider “specific solutions” when the cause of the bank failure remains unknown, and Kaine said he first wants to review Barr’s analysis before making a decision on Warren’s bill.
But if Barr says the repeal of the rollback would be a good thing to do, Kaine said he would “be favorably inclined.”
One proponent of Warren’s bill could be Rep. André Carson (D-Ind.), who supported the 2018 rollback.
Asked about his vote, the congressman told The Hill in a statement that, in light of the bank closures, it is time to move standards back in the direction of Dodd-Frank.
“In light of recent events, I believe it’s time to review and update those changes to bring the requirements closer in line to our original Dodd-Frank standards, which I was proud to vote to establish,” he told The Hill.
“This will help strengthen our financial system to keep it resilient and reliable as economic tides ebb and flow.”
https://www.msn.com/en-us/news/politics ... b496&ei=20
"Democrats defend deregulation vote amid banking blame game"
Story by Mychael Schnell
18 MARCH 2023
Democrats on Capitol Hill are defending their vote for a 2018 banking deregulation bill that President Biden and other members of the party are blaming for last week’s stunning collapse of Silicon Valley Bank and Signature Bank.
Forty-nine Democrats — 33 in the House and 16 in the Senate — plus Sen. Angus King (I-Maine), who caucuses with Democrats, joined Republicans in 2018 to pass the deregulation bill.
Nineteen of them are still in the House, all of whom will have to face voters next year, and 12 are in the Senate, five of whom are up for reelection in 2024.
Sen. Kyrsten Sinema (I-Ariz.), who was in the House as a Democrat in 2018 and voted for the deregulation bill, is also up for reelection next year.
Proponents of the legislation, which former President Trump signed into law, saw it as a way to provide relief to small and midsize banks that were struggling with rigorous regulations put in place under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which was enacted after the 2008 financial crisis.
But a number of Democrats are now blaming that rollback for the failure of Silicon Valley Bank and Signature Bank — which were exempted from the regulations in 2018 — putting the measure’s Democratic supporters on the defensive as the banking blame game heats up on Capitol Hill.
Asked if she regretted her vote for the bill, Sen. Debbie Stabenow (Mich.), a member of Democratic leadership who is retiring next year, told The Hill, “Not at all.”
“It was very important to me to make sure that our small banks, community banks and credit unions, who did not cause the financial crisis in 2008, were given some flexibility,” she said.
Rep. Josh Gottheimer (D-N.J.) also said he does not regret his vote for the rollback, calling the Dodd-Frank regulations “impossible” for small, medium-sized and regional banks.
“You had a set of rules that literally applied to the largest few institutions in the country and also to our small and medium-size and regional banks."
"It was impossible, and they were all actually merging and selling to the larger banks and you had no community banks left in this country,” he said during an interview with CNN on Tuesday.
The 2018 bill — formally known as the Economic Growth, Regulatory Relief and Consumer Protection Act — exempted some banks from stricter Federal Reserve oversight and stress tests mandated under the Dodd-Frank Act by raising the asset threshold for those regulations from $50 billion to $250 billion.
Silicon Valley Bank and Signature Bank both fell within that range.
“Let’s be clear."
"The failure of Silicon Valley Bank is a direct result of an absurd 2018 bank deregulation bill signed by Donald Trump that I strongly opposed,” Sen. Bernie Sanders (I-Vt.) wrote in a statement.
Sen. Elizabeth Warren (D-Mass.), who voted against the 2018 bill and is now leading an effort to undo the legislation, said Silicon Valley Bank (SVB) and Signature Bank “would have been subject to stronger liquidity and capital requirements to withstand financial shocks” if Congress and the Federal Reserve had not rolled back stricter oversight.
“They would have been required to conduct regular stress tests to expose their vulnerabilities and shore up their businesses,” she wrote in a New York Times op-ed.
“But because those requirements were repealed, when an old-fashioned bank run hit S.V.B., the bank couldn’t withstand the pressure — and Signature’s collapse was close behind.
Silicon Valley Bank, a California-based institution that mainly catered to startups, was taken over by federal regulators last Friday after a massive run on the bank amid liquidity issues.
Days later, state regulations seized Signature Bank, a New York-based establishment that largely did business with real estate companies and law firms, following another rush by customers to withdraw deposits.
The Signature Valley Bank collapse is now the second-largest bank failure in American history, and the Signature Bank break down is the third-largest.
Sen. Tim Kaine (D-Va.), who stood by his vote for the 2018 deregulation bill, told The Hill that the Old Dominion lost a chunk of its banks between 2010 and 2018 because small banks, faced with having to hire compliance departments, decided to sell to larger institutions, which led to branches closing and employees being laid off.
“My community banks, as you get a few years into implementation, kind of laid this issue down."
"They said, hey look, a law that was designed to stop too big to fail is also accelerating too small to succeed,” Kaine, who is up for reelection in 2024, said.
“Community banks, when the [2018] banking bill was put together, they’re like, we strongly support this."
"They were strongly supportive and they still are, and they’ve done well in Virginia in the last few years,” he added.
Sen. Gary Peters (D-Mich.) also said he does not regret his 2018 vote in support of the deregulation bill, and cautioned against jumping to conclusions about the cause of the collapses.
“I don’t know all the facts,” Peters said.
“Right now we got an investigation going on; the feds are gonna look at exactly what happened."
"I don’t think we should jump to any conclusions, so we actually investigate and look at the facts.”
The Justice Department and Securities and Exchange Commission are both investigating Silicon Valley Bank’s collapse, and the Federal Reserve has launched its own probe.
The central bank said a review of the probe, which is being led by Vice Chair for Supervision Michael Barr, will be released publicly on May 1.
Sen. Chris Coons (D-Del.), who voted for the 2018 bill, said it is “premature” to connect the five-year-old bill to last week’s collapse.
“I think it’s premature to say we know that this action by regulators under the previous administration — or this action legislatively under the previous administration — made the difference,” he told The Hill.
“We don’t know that.”
The senator cited other factors that may have led to the bank’s crumbling, including management failure, a failure to plan for inflation risk and regulatory oversight failure.
Warren and Rep. Katie Porter (D-Calif.), however, are drawing a direct line between the faltering banks and the 2018 bill.
The progressive pair, along with dozens of other Democrats, introduced a bill on Tuesday that would repeal the 2018 Dodd-Frank rollback by restoring the regulation threshold to $50 billion.
The legislation comes after Biden this week called on Congress and banking regulators “to strengthen the rules for banks to make it less likely that this kind of bank failure will happen again and to protect American jobs and small businesses.”
Stabenow said she has concerns with the threshold under the Warren-Porter bill.
“My reason to support the bill originally was because I felt the $50 billion threshold was too low."
"And so she moves it all the way back down to that."
"And so that’s the question of mine,” she said.
“And I think we need to look at, you know, what really happened here?"
"I mean, there’s total incompetence of this bank, certainly."
"And the question is what would make a difference?"
"That’s what I’m interested in,” she added, later saying “I think it’s just looking at, you know, what can we do to address this situation without going back to hurting small banks.”
Coons said it was “premature” to consider “specific solutions” when the cause of the bank failure remains unknown, and Kaine said he first wants to review Barr’s analysis before making a decision on Warren’s bill.
But if Barr says the repeal of the rollback would be a good thing to do, Kaine said he would “be favorably inclined.”
One proponent of Warren’s bill could be Rep. André Carson (D-Ind.), who supported the 2018 rollback.
Asked about his vote, the congressman told The Hill in a statement that, in light of the bank closures, it is time to move standards back in the direction of Dodd-Frank.
“In light of recent events, I believe it’s time to review and update those changes to bring the requirements closer in line to our original Dodd-Frank standards, which I was proud to vote to establish,” he told The Hill.
“This will help strengthen our financial system to keep it resilient and reliable as economic tides ebb and flow.”
https://www.msn.com/en-us/news/politics ... b496&ei=20
Re: LEST WE FORGET THE LOOTERS
1945
"Joe Biden Might Have Just Destroyed America’s Banks- By bailing out all depositors—even those who had more than the already insured $250,000 in the banks in question—the federal government has just nationalized the banking sector."
ByBrandon Weichert
15 MARCH 2023
President Joe Biden has done something that most statists in America have only fantasized about doing.
The forty-sixth president has effectively nationalized the U.S. banking system.
In response to the collapse of the Silicon Valley Bank (SVB), a small bank that was responsible for providing loans to a large number of America’s start-up companies—notably those in biotechnology—the Biden Administration announced that it would not bail the bank out as the U.S. government had done during the 2008 Great Recession.
So, you ask, what did Joe Biden do in response to this challenge?
What Joe Biden Did
Instead, the Federal Reserve stepped in with the Bank Term Funding Program (BTFP) which will offer “loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying financial assets as collateral."
"These assets will be valued at par.”
Behind that program, the Fed is going to “backstop” the BTFP with a possible $25 billion from the Exchange Stabilization Fund (ESF).
The ESF came out of the 1930s and was used throughout the COVID-19-induced financial crisis by the Fed to “help stabilize markets by accepting a broader range of assets as collateral for loans to financial institutions.”
This action, in turn, essentially helps to keep the economy running normally during a downturn – thereby, in theory, preventing a financial crisis from becoming a full-blown depression.
To be clear: this money is from the U.S. Department of Treasury and is used to cover any losses the Fed may experience in propping up failing banks.
So, while the Biden Administration insists that no tax dollars will be used to bail the SVB (and very soon other small banks around the country) out, if the ESF money is used — and there are losses associated in deploying those assets — then, yes, tax dollars will have been used.
How is the Biden Administration able to claim that they are not using tax dollars for these bailouts?
How It “Works”
The bulk of the funding for the Biden Administration’s policy will come not from taxpayers but from the Federal Deposit Insurance Corporation (FDIC), which has around $250 million in its coffers.
The money is paid for by the banks themselves, which are assessed fees by the FDIC over the span of their operations.
Because of the political implications of these actions, the Biden team insists that this is not a bailout.
According to the Biden Administration, these moves are merely extraordinary measures to ensure the normal functioning of what Biden has repeatedly — laughably, in my honest opinion — referred to as a “strong as Hell” economy.
Whether it is FDIC money or tax dollars being used to bail out a bank, the fact remains that the federal government is ordering money to be used to save the banking system again.
More important is the way in which the bank is being bailed out.
Rather than bailing out bondholders, the U.S. government is bailing out all depositors.
This has never been done before.
What’s more, as Shark Tank’s Kevin O’Leary lamented to Fox News host Neil Cavuto, by bailing out all depositors — even those who had more than the already insured $250,000 in the banks in question — the federal government has just nationalized the banking sector.
After all, it isn’t just SVB’s depositors who have been put at risk by that bank’s horrific management.
It is the small-to-medium-sized, regional banks that have massive exposure to this SVB contagion.
As O’Leary noted in his Fox News interview, by making everyone whole at those banks, the government was effectively removing risk from the banking sector; now whether one is a good or bad bank manager won’t matter anymore.
David P. Goldman of The Asia Times notes that “commercial and industrial loans at smaller banks were only half of the lending by large banks."
"By 2022, smaller banks’ loan books were as large as the big banks.”
So, when Biden and his apparatchiks take to the airwaves to insist that there is no systemic risk to the market, you should be skeptical.
This isn’t only going to impact SVB or a few other smaller banks.
This banking crisis is going hit almost all the smaller banks — and will, therefore, impact the whole banking sector, because so many larger banks depend on business with those smaller banks.
Think back to the language of the BTFP.
According to the Fed, the BTFP will “help stabilize markets by accepting a broader range of assets as collateral for loans to financial institutions.”
That sounds charged with systemic risk, doesn’t it?
Making America European
The likeliest outcome of these actions is not only the nationalization of the banking system.
It is also the reduction of the banking system to just a few big banks running all other banks.
This is where things get creepy: centralization of banking power and its ultimate fusion with political power.
In the meantime, too, the impact on small businesses, which account for 48 percent of all employment in the United States, will be detrimental.
The Small Business Administration (SBA) is fond of telling the public that “small businesses are the backbone of the American economy.”
They truly are.
Should these engines of growth be denied access to loans in order to grow their operations, the U.S. economy will be harder hit than it already has been.
Lest we forget that the Silicon Valley “innovators” who stand to lose their rear ends because of the collapse of SVB are scheduled to go to Congress next week, hat-in-hand, and beg for a bailout.
All Congressmen and women must resist their pleas.
Even if they are companies working with the Department of Defense on innovation.
The U.S. government cannot spend any more money on dying enterprises than it already has.
Lastly, it is important to understand just how, precisely, the banking crisis of 2023 began.
Yes, it was bad management and poor leadership at SVB.
Further, it was the government that made the failure possible.
The stimulus that both Presidents Donald J. Trump and Joe Biden poured into the economy prompted Fed Chairman Jerome Powell to spike the interest rates.
Because SVB and so many other banks had become accustomed to chronically low interest rates and easy money, the bank leadership did not anticipate a reversal in its good fortune.
With interest rates high, the bank collapsed as it couldn’t cover its losses.
The Biden Administration has proposed trillions of dollars in additional spending with its new federal budget proposal.
As I noted in a previous piece, Biden’s budget was unserious.
The proposal was a trial balloon designed to get people talking about taxing the wealthy; to engage in Biden’s chaotic class war.
Should any semblance of his budget be passed, the spending involved will only worsen the financial crisis we now find ourselves in.
What’s more, if Powell keeps raising interest rates, more banks will find themselves needing help.
Joe Biden is spending the country into oblivion.
He is bailing out wealthy depositors at these banks.
Under Biden, our once-private banking industry has essentially been nationalized, too.
With each year this man remains in office, a little bit more of America you and I knew will be chipped away.
Eventually, we will look much like the European Union: a boon for crony capitalists and a nightmare for innovators.
As former President Donald Trump might tweet, Sad!
Brandon J. Weichert is a former Congressional staffer and geopolitical analyst who serves as a Senior Editor for 19FortyFive.com. Weichert is a contributor at The Washington Times, as well as a contributing editor at American Greatness and the Asia Times. He is the author of Winning Space: How America Remains a Superpower(Republic Book Publishers), The Shadow War: Iran’s Quest for Supremacy (March 28), and Biohacked: China’s Race to Control Life (May 16). Weichert can be followed via Twitter @WeTheBrandon.
https://www.19fortyfive.com/2023/03/joe ... cas-banks/
"Joe Biden Might Have Just Destroyed America’s Banks- By bailing out all depositors—even those who had more than the already insured $250,000 in the banks in question—the federal government has just nationalized the banking sector."
ByBrandon Weichert
15 MARCH 2023
President Joe Biden has done something that most statists in America have only fantasized about doing.
The forty-sixth president has effectively nationalized the U.S. banking system.
In response to the collapse of the Silicon Valley Bank (SVB), a small bank that was responsible for providing loans to a large number of America’s start-up companies—notably those in biotechnology—the Biden Administration announced that it would not bail the bank out as the U.S. government had done during the 2008 Great Recession.
So, you ask, what did Joe Biden do in response to this challenge?
What Joe Biden Did
Instead, the Federal Reserve stepped in with the Bank Term Funding Program (BTFP) which will offer “loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying financial assets as collateral."
"These assets will be valued at par.”
Behind that program, the Fed is going to “backstop” the BTFP with a possible $25 billion from the Exchange Stabilization Fund (ESF).
The ESF came out of the 1930s and was used throughout the COVID-19-induced financial crisis by the Fed to “help stabilize markets by accepting a broader range of assets as collateral for loans to financial institutions.”
This action, in turn, essentially helps to keep the economy running normally during a downturn – thereby, in theory, preventing a financial crisis from becoming a full-blown depression.
To be clear: this money is from the U.S. Department of Treasury and is used to cover any losses the Fed may experience in propping up failing banks.
So, while the Biden Administration insists that no tax dollars will be used to bail the SVB (and very soon other small banks around the country) out, if the ESF money is used — and there are losses associated in deploying those assets — then, yes, tax dollars will have been used.
How is the Biden Administration able to claim that they are not using tax dollars for these bailouts?
How It “Works”
The bulk of the funding for the Biden Administration’s policy will come not from taxpayers but from the Federal Deposit Insurance Corporation (FDIC), which has around $250 million in its coffers.
The money is paid for by the banks themselves, which are assessed fees by the FDIC over the span of their operations.
Because of the political implications of these actions, the Biden team insists that this is not a bailout.
According to the Biden Administration, these moves are merely extraordinary measures to ensure the normal functioning of what Biden has repeatedly — laughably, in my honest opinion — referred to as a “strong as Hell” economy.
Whether it is FDIC money or tax dollars being used to bail out a bank, the fact remains that the federal government is ordering money to be used to save the banking system again.
More important is the way in which the bank is being bailed out.
Rather than bailing out bondholders, the U.S. government is bailing out all depositors.
This has never been done before.
What’s more, as Shark Tank’s Kevin O’Leary lamented to Fox News host Neil Cavuto, by bailing out all depositors — even those who had more than the already insured $250,000 in the banks in question — the federal government has just nationalized the banking sector.
After all, it isn’t just SVB’s depositors who have been put at risk by that bank’s horrific management.
It is the small-to-medium-sized, regional banks that have massive exposure to this SVB contagion.
As O’Leary noted in his Fox News interview, by making everyone whole at those banks, the government was effectively removing risk from the banking sector; now whether one is a good or bad bank manager won’t matter anymore.
David P. Goldman of The Asia Times notes that “commercial and industrial loans at smaller banks were only half of the lending by large banks."
"By 2022, smaller banks’ loan books were as large as the big banks.”
So, when Biden and his apparatchiks take to the airwaves to insist that there is no systemic risk to the market, you should be skeptical.
This isn’t only going to impact SVB or a few other smaller banks.
This banking crisis is going hit almost all the smaller banks — and will, therefore, impact the whole banking sector, because so many larger banks depend on business with those smaller banks.
Think back to the language of the BTFP.
According to the Fed, the BTFP will “help stabilize markets by accepting a broader range of assets as collateral for loans to financial institutions.”
That sounds charged with systemic risk, doesn’t it?
Making America European
The likeliest outcome of these actions is not only the nationalization of the banking system.
It is also the reduction of the banking system to just a few big banks running all other banks.
This is where things get creepy: centralization of banking power and its ultimate fusion with political power.
In the meantime, too, the impact on small businesses, which account for 48 percent of all employment in the United States, will be detrimental.
The Small Business Administration (SBA) is fond of telling the public that “small businesses are the backbone of the American economy.”
They truly are.
Should these engines of growth be denied access to loans in order to grow their operations, the U.S. economy will be harder hit than it already has been.
Lest we forget that the Silicon Valley “innovators” who stand to lose their rear ends because of the collapse of SVB are scheduled to go to Congress next week, hat-in-hand, and beg for a bailout.
All Congressmen and women must resist their pleas.
Even if they are companies working with the Department of Defense on innovation.
The U.S. government cannot spend any more money on dying enterprises than it already has.
Lastly, it is important to understand just how, precisely, the banking crisis of 2023 began.
Yes, it was bad management and poor leadership at SVB.
Further, it was the government that made the failure possible.
The stimulus that both Presidents Donald J. Trump and Joe Biden poured into the economy prompted Fed Chairman Jerome Powell to spike the interest rates.
Because SVB and so many other banks had become accustomed to chronically low interest rates and easy money, the bank leadership did not anticipate a reversal in its good fortune.
With interest rates high, the bank collapsed as it couldn’t cover its losses.
The Biden Administration has proposed trillions of dollars in additional spending with its new federal budget proposal.
As I noted in a previous piece, Biden’s budget was unserious.
The proposal was a trial balloon designed to get people talking about taxing the wealthy; to engage in Biden’s chaotic class war.
Should any semblance of his budget be passed, the spending involved will only worsen the financial crisis we now find ourselves in.
What’s more, if Powell keeps raising interest rates, more banks will find themselves needing help.
Joe Biden is spending the country into oblivion.
He is bailing out wealthy depositors at these banks.
Under Biden, our once-private banking industry has essentially been nationalized, too.
With each year this man remains in office, a little bit more of America you and I knew will be chipped away.
Eventually, we will look much like the European Union: a boon for crony capitalists and a nightmare for innovators.
As former President Donald Trump might tweet, Sad!
Brandon J. Weichert is a former Congressional staffer and geopolitical analyst who serves as a Senior Editor for 19FortyFive.com. Weichert is a contributor at The Washington Times, as well as a contributing editor at American Greatness and the Asia Times. He is the author of Winning Space: How America Remains a Superpower(Republic Book Publishers), The Shadow War: Iran’s Quest for Supremacy (March 28), and Biohacked: China’s Race to Control Life (May 16). Weichert can be followed via Twitter @WeTheBrandon.
https://www.19fortyfive.com/2023/03/joe ... cas-banks/
Re: LEST WE FORGET THE LOOTERS
REUTERS
"Yellen vows to safeguard deposits at smaller U.S. banks, intervene if needed"
By David Lawder
March 21, 2023
WASHINGTON, March 21 (Reuters) - U.S. Treasury Secretary Janet Yellen told bankers on Tuesday that she is prepared to intervene to protect depositors in smaller U.S. banks suffering deposit runs that threaten more contagion amid the worst financial system turmoil in more than a decade.
In a speech aimed at calming nerves rattled by two prominent bank failures this month, Yellen said that the U.S. banking system was stabilizing and steps taken to guarantee deposits in those institutions, showed a "resolute commitment" to ensure depositors' savings and banks remain safe.
"The steps we took were not focused on aiding specific banks or classes of banks."
"Our intervention was necessary to protect the broader U.S. banking system," Yellen told an American Bankers Association conference in Washington.
"And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion," she added in prepared remarks that drew a standing ovation from the assembled bankers after she delivered them.
Yellen, speaking more than a week after the Federal Deposit Insurance Corp (FDIC) closed the failing Silicon Valley Bank and Signature Bank, said the "decisive and forceful" actions were strengthening public confidence in the U.S. banking system and protecting the American economy.
In those cases, the Treasury, the Federal Reserve and the FDIC invoked "systemic risk exceptions" that allowed them to guarantee billions of dollars of uninsured deposits, and Yellen said the actions, along with new Fed lending facilities, reduced the risk of further bank failures.
Yellen did not provide details on what further interventions may be warranted, but shifted emphasis toward smaller regional and community banks, which have sought protections to stop deposits from fleeing to larger institutions seen as "too big to fail."
In a U.S. Senate hearing last week, Yellen said universal deposit guarantees would only be granted to those at failing banks determined to pose a systemic risk.
Some banking groups have called for congressional authority for temporary universal guarantees on all U.S. bank deposits, but the conservative Republican House Freedom Caucus opposes expanding deposit guarantees beyond the FDIC's current $250,000 limit -- a major roadblock to swift action to stem a deeper crisis.
At a separate event, U.S. Deputy Treasury Secretary Wally Adeyemo also emphasized the importance of community and minority-owned banks as the department considers how to further strengthen financial stability.
Yellen said a "dynamic and diverse banking system" was needed to support the U.S. economy, with large, mid-sized and small banks all playing a role in supporting households and small businesses and increasing competition in financial services.
CONFIDENCE BEFORE RULE REVISIONS
The Treasury chief said she is currently focused on restoring the confidence of bank depositors, but will evaluate banking regulations to determine whether adjustments are needed to address the risks that banks face today, which are more focused on interest rates and liquidity than asset quality.
She declined to speculate on what changes may be needed, adding that the Fed would examine why SVB and Signature Bank failed.
She said the Fed's discount window lending and new Bank Term Funding facility, which allows banks to borrow against certain bonds held at par value rather than diminished market values amid higher interest rates, were working as intended and aggregate deposit outflows from regional banks have stabilized.
A move by large banks to deposit $30 billion into troubled First Republic Bank last week "represents a vote of confidence in our banking system," Yellen added.
Yellen said she was keeping in close contact with bankers, state and federal regulators, market participants and international counterparts about the banking situation.
She added that the situation was "very different" from the 2008-2009 global financial crisis, when subprime mortgage assets put many banks under stress, and that the financial system is "significantly stronger than it was 15 years ago."
Reporting by David Lawder; Additional reporting by Andrea Shalal, Pete Schroeder and Douglas Gillison; Editing by Lincoln Feast and Andrea Ricci
https://www.reuters.com/markets/us/trea ... 023-03-21/
"Yellen vows to safeguard deposits at smaller U.S. banks, intervene if needed"
By David Lawder
March 21, 2023
WASHINGTON, March 21 (Reuters) - U.S. Treasury Secretary Janet Yellen told bankers on Tuesday that she is prepared to intervene to protect depositors in smaller U.S. banks suffering deposit runs that threaten more contagion amid the worst financial system turmoil in more than a decade.
In a speech aimed at calming nerves rattled by two prominent bank failures this month, Yellen said that the U.S. banking system was stabilizing and steps taken to guarantee deposits in those institutions, showed a "resolute commitment" to ensure depositors' savings and banks remain safe.
"The steps we took were not focused on aiding specific banks or classes of banks."
"Our intervention was necessary to protect the broader U.S. banking system," Yellen told an American Bankers Association conference in Washington.
"And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion," she added in prepared remarks that drew a standing ovation from the assembled bankers after she delivered them.
Yellen, speaking more than a week after the Federal Deposit Insurance Corp (FDIC) closed the failing Silicon Valley Bank and Signature Bank, said the "decisive and forceful" actions were strengthening public confidence in the U.S. banking system and protecting the American economy.
In those cases, the Treasury, the Federal Reserve and the FDIC invoked "systemic risk exceptions" that allowed them to guarantee billions of dollars of uninsured deposits, and Yellen said the actions, along with new Fed lending facilities, reduced the risk of further bank failures.
Yellen did not provide details on what further interventions may be warranted, but shifted emphasis toward smaller regional and community banks, which have sought protections to stop deposits from fleeing to larger institutions seen as "too big to fail."
In a U.S. Senate hearing last week, Yellen said universal deposit guarantees would only be granted to those at failing banks determined to pose a systemic risk.
Some banking groups have called for congressional authority for temporary universal guarantees on all U.S. bank deposits, but the conservative Republican House Freedom Caucus opposes expanding deposit guarantees beyond the FDIC's current $250,000 limit -- a major roadblock to swift action to stem a deeper crisis.
At a separate event, U.S. Deputy Treasury Secretary Wally Adeyemo also emphasized the importance of community and minority-owned banks as the department considers how to further strengthen financial stability.
Yellen said a "dynamic and diverse banking system" was needed to support the U.S. economy, with large, mid-sized and small banks all playing a role in supporting households and small businesses and increasing competition in financial services.
CONFIDENCE BEFORE RULE REVISIONS
The Treasury chief said she is currently focused on restoring the confidence of bank depositors, but will evaluate banking regulations to determine whether adjustments are needed to address the risks that banks face today, which are more focused on interest rates and liquidity than asset quality.
She declined to speculate on what changes may be needed, adding that the Fed would examine why SVB and Signature Bank failed.
She said the Fed's discount window lending and new Bank Term Funding facility, which allows banks to borrow against certain bonds held at par value rather than diminished market values amid higher interest rates, were working as intended and aggregate deposit outflows from regional banks have stabilized.
A move by large banks to deposit $30 billion into troubled First Republic Bank last week "represents a vote of confidence in our banking system," Yellen added.
Yellen said she was keeping in close contact with bankers, state and federal regulators, market participants and international counterparts about the banking situation.
She added that the situation was "very different" from the 2008-2009 global financial crisis, when subprime mortgage assets put many banks under stress, and that the financial system is "significantly stronger than it was 15 years ago."
Reporting by David Lawder; Additional reporting by Andrea Shalal, Pete Schroeder and Douglas Gillison; Editing by Lincoln Feast and Andrea Ricci
https://www.reuters.com/markets/us/trea ... 023-03-21/
Re: LEST WE FORGET THE LOOTERS
REUTERS
"US not considering 'blanket insurance' for bank deposits, Yellen says"
By David Lawder and Rami Ayyub
March 22, 2023
WASHINGTON, March 22 (Reuters) - U.S. Treasury Secretary Janet Yellen told lawmakers on Wednesday that the Federal Deposit Insurance Corporation (FDIC) was not considering providing "blanket insurance" for banking deposits following the collapse of two prominent U.S. banks this month.
Some banking groups have urged Congress to temporarily guarantee all U.S. bank deposits, a move they say will stem a deeper crisis after the failure of Silicon Valley Bank and Signature Bank.
Yellen, speaking before a U.S. Senate subcommittee, said she believed it was "worthwhile" to look at changes to FDIC deposit insurance, but that increasing it beyond the current $250,000 limit was not being considered.
When a bank failure "is deemed a systemic risk, which I think of as the risk of a contagious bank run, (we) are likely to invoke (a) systemic risk exception, which permits the FDIC to protect all deposits," Yellen said, adding the department will determine systemic risks on a case-by-case basis.
Yellen said the administration was not considering "anything having to do with blanket insurance or guarantees of deposits."
Shares in beleaguered First Republic Bank, which has lost much of its value since the U.S. banking crisis started on March 8, dropped 15.5% to end Wednesday at $13.33 following Yellen's remarks.
Yellen told the Senate's Appropriations Subcommittee on Financial Services and General Government that banks nationwide were worried about contagion from the bank failures, and that President Joe Biden's administration was focused on stabilizing the banking system.
She said the collapse of Silicon Valley Bank involved an "overwhelmingly rapid" bank run.
"To the best of my knowledge, we've never seen deposits flee at the pace that they did from Silicon Valley Bank," Yellen said.
Any losses to the FDIC's deposit insurance fund due to the bank collapses will be recovered by a special assessment on banks, the FDIC has said.
Yellen said it was "not obvious" that banks would pass those costs on to bank customers.
Yellen also said the Treasury Department was working to restore the Financial Stability Oversight Council's (FSOC) ability to designate non-bank financial institutions as systemically important, subjecting them to stronger regulations.
This reflects concerns that financial risks may be migrating to less-regulated hedge funds and so-called "shadow banking" institutions.
Editing by Chizu Nomiyama and David Gregorio
https://www.reuters.com/markets/us/us-w ... 023-03-22/
"US not considering 'blanket insurance' for bank deposits, Yellen says"
By David Lawder and Rami Ayyub
March 22, 2023
WASHINGTON, March 22 (Reuters) - U.S. Treasury Secretary Janet Yellen told lawmakers on Wednesday that the Federal Deposit Insurance Corporation (FDIC) was not considering providing "blanket insurance" for banking deposits following the collapse of two prominent U.S. banks this month.
Some banking groups have urged Congress to temporarily guarantee all U.S. bank deposits, a move they say will stem a deeper crisis after the failure of Silicon Valley Bank and Signature Bank.
Yellen, speaking before a U.S. Senate subcommittee, said she believed it was "worthwhile" to look at changes to FDIC deposit insurance, but that increasing it beyond the current $250,000 limit was not being considered.
When a bank failure "is deemed a systemic risk, which I think of as the risk of a contagious bank run, (we) are likely to invoke (a) systemic risk exception, which permits the FDIC to protect all deposits," Yellen said, adding the department will determine systemic risks on a case-by-case basis.
Yellen said the administration was not considering "anything having to do with blanket insurance or guarantees of deposits."
Shares in beleaguered First Republic Bank, which has lost much of its value since the U.S. banking crisis started on March 8, dropped 15.5% to end Wednesday at $13.33 following Yellen's remarks.
Yellen told the Senate's Appropriations Subcommittee on Financial Services and General Government that banks nationwide were worried about contagion from the bank failures, and that President Joe Biden's administration was focused on stabilizing the banking system.
She said the collapse of Silicon Valley Bank involved an "overwhelmingly rapid" bank run.
"To the best of my knowledge, we've never seen deposits flee at the pace that they did from Silicon Valley Bank," Yellen said.
Any losses to the FDIC's deposit insurance fund due to the bank collapses will be recovered by a special assessment on banks, the FDIC has said.
Yellen said it was "not obvious" that banks would pass those costs on to bank customers.
Yellen also said the Treasury Department was working to restore the Financial Stability Oversight Council's (FSOC) ability to designate non-bank financial institutions as systemically important, subjecting them to stronger regulations.
This reflects concerns that financial risks may be migrating to less-regulated hedge funds and so-called "shadow banking" institutions.
Editing by Chizu Nomiyama and David Gregorio
https://www.reuters.com/markets/us/us-w ... 023-03-22/
Re: LEST WE FORGET THE LOOTERS
REUTERS
"Yellen: FDIC estimate of $2.5 bln loss related to Signature Bank is not final determination"
By Reuters Staff
MARCH 23, 2023
WASHINGTON, March 23 (Reuters) - Treasury Secretary Janet Yellen said on Thursday the U.S. Federal Deposit Insurance Corporation’s (FDIC) estimation of a $2.5 billion loss related to Signature Bank was not a final determination.
New York-based Signature Bank closed earlier this month, days after the failure of Silicon Valley Bank, throwing the stock market into a turmoil and the banking system into a crisis.
Reporting by Kanishka Singh in Washington; Editing by Chris Reese
https://www.reuters.com/article/global- ... SW1N34P03F
"Yellen: FDIC estimate of $2.5 bln loss related to Signature Bank is not final determination"
By Reuters Staff
MARCH 23, 2023
WASHINGTON, March 23 (Reuters) - Treasury Secretary Janet Yellen said on Thursday the U.S. Federal Deposit Insurance Corporation’s (FDIC) estimation of a $2.5 billion loss related to Signature Bank was not a final determination.
New York-based Signature Bank closed earlier this month, days after the failure of Silicon Valley Bank, throwing the stock market into a turmoil and the banking system into a crisis.
Reporting by Kanishka Singh in Washington; Editing by Chris Reese
https://www.reuters.com/article/global- ... SW1N34P03F
Re: LEST WE FORGET THE LOOTERS
REUTERS
"Yellen says US prepared to take additional actions to keep bank deposits safe"
By David Lawder and Kanishka Singh
March 23, 2023
WASHINGTON, March 23 (Reuters) - Treasury Secretary Janet Yellen reiterated on Thursday that she was prepared to take further actions to ensure that Americans' bank deposits stay safe amid turmoil in the U.S. banking system.
"As I have said, we have used important tools to act quickly to prevent contagion."
"And they are tools we could use again," Yellen said in prepared remarks to the U.S. House of Representatives Appropriations subcommittee hearing.
"The strong actions we have taken ensure that Americans' deposits are safe."
"Certainly, we would be prepared to take additional actions if warranted," Yellen added.
Silicon Valley Bank was taken over by federal regulators on March 10, followed days later by Signature Bank.
Multiple federal agencies, including the U.S. Department of Justice and the Securities and Exchange Commission, are probing SVB.
Global banking markets have been skittish and investors remain fearful of wider economic repercussions.
Given that Congress is divided in control, with Republicans holding a majority in the House of Representatives and President Joe Biden's fellow Democrats leading the Senate, any new legislation in light of the banking crisis would require bipartisan support.
House Financial Services Committee Chairman Patrick McHenry, a Republican, said on Wednesday it was too early to tell if new legislation was necessary after the recent failures of Signature Bank and Silicon Valley Bank.
Biden said last week the banking crisis has calmed down, and promised Americans that their deposits are safe.
Yellen also said supply chain pressures and shipping costs were coming down and were eventually likely to bring down inflation.
She added that a U.S. debt default would undermine the dollar's reserve currency status and that a failure to raise the debt ceiling would lead to a recession or worse.
Reporting by David Lawder; writing by Kanishka Singh
https://www.reuters.com/markets/us/yell ... 023-03-23/
"Yellen says US prepared to take additional actions to keep bank deposits safe"
By David Lawder and Kanishka Singh
March 23, 2023
WASHINGTON, March 23 (Reuters) - Treasury Secretary Janet Yellen reiterated on Thursday that she was prepared to take further actions to ensure that Americans' bank deposits stay safe amid turmoil in the U.S. banking system.
"As I have said, we have used important tools to act quickly to prevent contagion."
"And they are tools we could use again," Yellen said in prepared remarks to the U.S. House of Representatives Appropriations subcommittee hearing.
"The strong actions we have taken ensure that Americans' deposits are safe."
"Certainly, we would be prepared to take additional actions if warranted," Yellen added.
Silicon Valley Bank was taken over by federal regulators on March 10, followed days later by Signature Bank.
Multiple federal agencies, including the U.S. Department of Justice and the Securities and Exchange Commission, are probing SVB.
Global banking markets have been skittish and investors remain fearful of wider economic repercussions.
Given that Congress is divided in control, with Republicans holding a majority in the House of Representatives and President Joe Biden's fellow Democrats leading the Senate, any new legislation in light of the banking crisis would require bipartisan support.
House Financial Services Committee Chairman Patrick McHenry, a Republican, said on Wednesday it was too early to tell if new legislation was necessary after the recent failures of Signature Bank and Silicon Valley Bank.
Biden said last week the banking crisis has calmed down, and promised Americans that their deposits are safe.
Yellen also said supply chain pressures and shipping costs were coming down and were eventually likely to bring down inflation.
She added that a U.S. debt default would undermine the dollar's reserve currency status and that a failure to raise the debt ceiling would lead to a recession or worse.
Reporting by David Lawder; writing by Kanishka Singh
https://www.reuters.com/markets/us/yell ... 023-03-23/
Re: LEST WE FORGET THE LOOTERS
FORTUNE
"‘Gerbil banking’ preceded the Great Depression. We’re seeing it again today"
Story by Maureen O’Hara
23 MARCH 2023
The recent action by a consortium of banks to deposit money in First Republic Bank harkens back to an earlier attempt to counter bank runs: the U.S. Postal Savings system.
Banking in the 19th century was notoriously unstable, with bank runs or “panics” coming all too frequently.
By the turn of the 20th century, such runs were almost seasonal, prompting depositors to withdraw in advance of what might be a coming run, thereby, of course, precipitating liquidity crises at banks.
This came to a head in the Panic of 1907, the granddaddy of panics, when the banking system collapsed.
Congress at that time considered an array of solutions to bank instability such as deposit insurance (favored by the Democrats), postal savings (favored by the Republicans), and a central bank (favored by almost none of them but viewed as something to study).
Republican William Howard Tafts’ election in 1908 sealed the deal, and we got a Postal Savings system.
The idea of Postal Savings was simple.
There were post offices everywhere and they would take deposits from individuals, paying them a slightly lower interest rate than the banks offered (a maximum deposit of $2,000 was also imposed to reduce competition with the banks).
Now, when individuals became concerned about bank solvency and withdrew their funds, they could put the money in Postal Savings instead of under their mattresses.
And what would the Postal Savings system do with the funds?
Put the money back into the banks!
This gerbil-like treadmill would thus keep the funds in the banking system, while giving the Postal Savings system interest on its bank deposits to pay the system’s depositors.
The circularity of flows out of and then back into the banking system at the heart of the Postal Savings system did have a certain cleverness to it.
As David Easley and I showed in a research paper, this system worked pretty well until the onset of the Great Depression.
Faced with growing numbers of bank failures, even the Postal Savings system lost faith in the banks, and so shifted its investments from deposits to government bonds.
While certainly not the major cause of banking’s problems, we showed that this action contributed to the liquidity problems undermining the banking system.
With the collapse of the banking system in 1933, the view that the Postal Savings system could restore stability to the banking system similarly vanished, setting the stage for the establishment of FDIC deposit insurance.
The latest banking woes demonstrated once again that when concerns arise, depositors flee – but this time to the largest banks which are viewed as “Too Big to Fail”.
And what did they do with the money?
Already awash with deposits, they made the decision to put some back into First Republic.
The gerbil lives again!
The actions of the large banks are admirable, but clearly, this is only a short-run answer.
Is a new U.S. Postal Savings System the answer?
No.
Deposit insurance has proven its worth in protecting retail depositors, who, if they have amounts above the insurance cut-off can simply open accounts at multiple banks.
Corporations also qualify for deposit insurance and they face the same $250,000 limit–but is this the appropriate level?
The reported inability of some companies to make payroll payments following Silicon Valley Bank's closure and the need for a larger scale to meet basic corporate banking needs suggests it's not.
The argument for insurance limits is based on limiting moral hazard at banks.
But where this cut-off limit should be is debatable, and the FDIC’s willingness to deviate from its stated level when the need arises underscores the arbitrary nature of this guarantee limit.
SVB's corporate customer-driven bank run underscores why it is time to re-examine this important aspect of our banking system protection.
Maureen O’Hara is the Purcell Professor of Finance at the Johnson College of Business, Cornell University, and a former President of the American Finance Association.
https://www.msn.com/en-us/money/markets ... 26e6&ei=12
"‘Gerbil banking’ preceded the Great Depression. We’re seeing it again today"
Story by Maureen O’Hara
23 MARCH 2023
The recent action by a consortium of banks to deposit money in First Republic Bank harkens back to an earlier attempt to counter bank runs: the U.S. Postal Savings system.
Banking in the 19th century was notoriously unstable, with bank runs or “panics” coming all too frequently.
By the turn of the 20th century, such runs were almost seasonal, prompting depositors to withdraw in advance of what might be a coming run, thereby, of course, precipitating liquidity crises at banks.
This came to a head in the Panic of 1907, the granddaddy of panics, when the banking system collapsed.
Congress at that time considered an array of solutions to bank instability such as deposit insurance (favored by the Democrats), postal savings (favored by the Republicans), and a central bank (favored by almost none of them but viewed as something to study).
Republican William Howard Tafts’ election in 1908 sealed the deal, and we got a Postal Savings system.
The idea of Postal Savings was simple.
There were post offices everywhere and they would take deposits from individuals, paying them a slightly lower interest rate than the banks offered (a maximum deposit of $2,000 was also imposed to reduce competition with the banks).
Now, when individuals became concerned about bank solvency and withdrew their funds, they could put the money in Postal Savings instead of under their mattresses.
And what would the Postal Savings system do with the funds?
Put the money back into the banks!
This gerbil-like treadmill would thus keep the funds in the banking system, while giving the Postal Savings system interest on its bank deposits to pay the system’s depositors.
The circularity of flows out of and then back into the banking system at the heart of the Postal Savings system did have a certain cleverness to it.
As David Easley and I showed in a research paper, this system worked pretty well until the onset of the Great Depression.
Faced with growing numbers of bank failures, even the Postal Savings system lost faith in the banks, and so shifted its investments from deposits to government bonds.
While certainly not the major cause of banking’s problems, we showed that this action contributed to the liquidity problems undermining the banking system.
With the collapse of the banking system in 1933, the view that the Postal Savings system could restore stability to the banking system similarly vanished, setting the stage for the establishment of FDIC deposit insurance.
The latest banking woes demonstrated once again that when concerns arise, depositors flee – but this time to the largest banks which are viewed as “Too Big to Fail”.
And what did they do with the money?
Already awash with deposits, they made the decision to put some back into First Republic.
The gerbil lives again!
The actions of the large banks are admirable, but clearly, this is only a short-run answer.
Is a new U.S. Postal Savings System the answer?
No.
Deposit insurance has proven its worth in protecting retail depositors, who, if they have amounts above the insurance cut-off can simply open accounts at multiple banks.
Corporations also qualify for deposit insurance and they face the same $250,000 limit–but is this the appropriate level?
The reported inability of some companies to make payroll payments following Silicon Valley Bank's closure and the need for a larger scale to meet basic corporate banking needs suggests it's not.
The argument for insurance limits is based on limiting moral hazard at banks.
But where this cut-off limit should be is debatable, and the FDIC’s willingness to deviate from its stated level when the need arises underscores the arbitrary nature of this guarantee limit.
SVB's corporate customer-driven bank run underscores why it is time to re-examine this important aspect of our banking system protection.
Maureen O’Hara is the Purcell Professor of Finance at the Johnson College of Business, Cornell University, and a former President of the American Finance Association.
https://www.msn.com/en-us/money/markets ... 26e6&ei=12
Re: LEST WE FORGET THE LOOTERS
REUTERS
"Deutsche Bank tumbles as jittery investors seek safer shores"
By Amanda Cooper, Sruthi Shankar and Amruta Khandekar
March 24, 2023
March 24 (Reuters) - Shares of Germany's largest bank Deutsche Bank plunged on Friday as investors fretted that regulators and central banks have yet to contain the worst shock to the sector since the 2008 global financial crisis.
Wider indicators of financial market stress were also flashing, with the euro falling against the dollar, euro zone government bond yields sinking and the costs of insuring against bank defaults surging despite assurances from policymakers that the global banking system is safe.
In the latest effort to reassure investors, the U.S. Treasury said the Financial Stability Oversight Council - which comprises the heads of various U.S. regulators - agreed at a Friday meeting that the U.S. banking system is "sound and resilient."
The meeting was chaired by U.S. Treasury Secretary Janet Yellen, whose comments are being closely watched by markets for an indication of how far authorities are willing to go to shore up the banking sector after the collapse of Silicon Valley Bank and Signature Bank earlier this month.
Earlier in the day, Germany's Deutsche Bank was thrust into the investor spotlight and slumped 8.5% alongside a sharp jump in the cost of insuring its bonds against the risk of default.
The index of top European bank shares ended down 3.8%.
"The market is suspicious, or weary is maybe a better way to put it, that there are more problems out there that have come forth," said Joseph Trevisani, senior analyst at FXstreet.com.
"It takes time."
"It's going to have to be weeks without any problems in the banking system before markets will be convinced that it's not a systemic problem."
Banking analysts stressed the difference between Credit Suisse AG - which needed a rescue by bigger Swiss peer UBS AG - and Deutsche Bank, saying the German bank boasted strong fundamentals and profitability.
The research firm Autonomous said it was "crystal clear" Deutsche is "NOT the next Credit Suisse," while JPMorgan analysts wrote "we are not concerned" and that Deutsche's fundamentals were "solid".
Paul van der Westhuizen, senior strategist at Rabobank, cited Deutsche's profitability as the "fundamental difference" between the two European banks, given Credit Suisse did not have a profitable outlook for 2023.
"It's a very profitable bank."
"There's no reason to worry," German Chancellor Olaf Scholz also said.
Still, shares in Germany's largest bank have lost a fifth of their value so far this month and the cost of its five-year credit default swaps (CDS) - a form of insurance for bondholders - jumped to a four-year high on Friday, based on data from S&P Market Intelligence.
Short sellers have made a profit of over $100 million on paper betting against Deutsche Bank stock over the last two weeks, financial data company Ortex said on Friday.
Deutsche Bank declined to comment.
Worries in Europe spilled over to the United States before some bank stocks bounced back.
JPMorgan Chase & Co ended down 1.5%, while Bank of America climbed 0.6%.
The S&P 500 regional banks index recovered 1.75%, with PacWest Bancorp rallying more than 3% and First Republic Bank falling 1.4%.
DILUTION CONCERNS
European banks' Additional Tier 1 (AT1) debt - a $275 billion market of bonds that can be written off during rescues to prevent the costs of bailouts falling onto taxpayers - also came under further selling pressure.
As part of the deal with UBS, the Swiss regulator determined that Credit Suisse's AT1 bonds with a notional value of $17 billion would be wiped out, stunning global credit markets.
Although authorities in Europe and Asia have said this week they would continue to impose losses on shareholders before bondholders, unease has lingered.
"The developments in the AT1 market mean that most European banks are incentivized at this point to issue common equity, which is diluting for shareholders and also the reason why banking stocks are being reset lower," said Peter Garnry, head of equity strategy at Saxo Bank.
In a bid to show it has ample capital while keeping funding costs in check, Italy's UniCredit is leaning towards repaying a perpetual bond at the earliest opportunity in June, a source close to the matter told Reuters.
A spokesperson for UniCredit declined to comment.
Amid the market volatility, European policymakers voiced support for their continent's banks, with Germany's Scholz, French President Emmanuel Macron and European Central Bank chief Christine Lagarde all saying the system was stable.
UBS CHALLENGES
Policymakers have stressed the turmoil is different from the global financial crisis 15 years ago, saying banks are better capitalised and funds more easily available.
But the worries spread quickly, and on Sunday UBS was rushed into taking over Credit Suisse after its Swiss rival lost the confidence of investors.
Brokerage group Jefferies said the deal would change an equity story for UBS which was based on a lower risk profile, organic growth and high capital returns.
"All these elements, which is what UBS shareholders bought into, are gone, likely for years," it said.
Reporting by Reuters bureaus; Writing by Toby Chopra and Deepa Babington; Editing by Jason Neely, Catherine Evans, Alexander Smith, Cynthia Osterman and Daniel Wallis
https://www.reuters.com/business/financ ... 023-03-24/
"Deutsche Bank tumbles as jittery investors seek safer shores"
By Amanda Cooper, Sruthi Shankar and Amruta Khandekar
March 24, 2023
March 24 (Reuters) - Shares of Germany's largest bank Deutsche Bank plunged on Friday as investors fretted that regulators and central banks have yet to contain the worst shock to the sector since the 2008 global financial crisis.
Wider indicators of financial market stress were also flashing, with the euro falling against the dollar, euro zone government bond yields sinking and the costs of insuring against bank defaults surging despite assurances from policymakers that the global banking system is safe.
In the latest effort to reassure investors, the U.S. Treasury said the Financial Stability Oversight Council - which comprises the heads of various U.S. regulators - agreed at a Friday meeting that the U.S. banking system is "sound and resilient."
The meeting was chaired by U.S. Treasury Secretary Janet Yellen, whose comments are being closely watched by markets for an indication of how far authorities are willing to go to shore up the banking sector after the collapse of Silicon Valley Bank and Signature Bank earlier this month.
Earlier in the day, Germany's Deutsche Bank was thrust into the investor spotlight and slumped 8.5% alongside a sharp jump in the cost of insuring its bonds against the risk of default.
The index of top European bank shares ended down 3.8%.
"The market is suspicious, or weary is maybe a better way to put it, that there are more problems out there that have come forth," said Joseph Trevisani, senior analyst at FXstreet.com.
"It takes time."
"It's going to have to be weeks without any problems in the banking system before markets will be convinced that it's not a systemic problem."
Banking analysts stressed the difference between Credit Suisse AG - which needed a rescue by bigger Swiss peer UBS AG - and Deutsche Bank, saying the German bank boasted strong fundamentals and profitability.
The research firm Autonomous said it was "crystal clear" Deutsche is "NOT the next Credit Suisse," while JPMorgan analysts wrote "we are not concerned" and that Deutsche's fundamentals were "solid".
Paul van der Westhuizen, senior strategist at Rabobank, cited Deutsche's profitability as the "fundamental difference" between the two European banks, given Credit Suisse did not have a profitable outlook for 2023.
"It's a very profitable bank."
"There's no reason to worry," German Chancellor Olaf Scholz also said.
Still, shares in Germany's largest bank have lost a fifth of their value so far this month and the cost of its five-year credit default swaps (CDS) - a form of insurance for bondholders - jumped to a four-year high on Friday, based on data from S&P Market Intelligence.
Short sellers have made a profit of over $100 million on paper betting against Deutsche Bank stock over the last two weeks, financial data company Ortex said on Friday.
Deutsche Bank declined to comment.
Worries in Europe spilled over to the United States before some bank stocks bounced back.
JPMorgan Chase & Co ended down 1.5%, while Bank of America climbed 0.6%.
The S&P 500 regional banks index recovered 1.75%, with PacWest Bancorp rallying more than 3% and First Republic Bank falling 1.4%.
DILUTION CONCERNS
European banks' Additional Tier 1 (AT1) debt - a $275 billion market of bonds that can be written off during rescues to prevent the costs of bailouts falling onto taxpayers - also came under further selling pressure.
As part of the deal with UBS, the Swiss regulator determined that Credit Suisse's AT1 bonds with a notional value of $17 billion would be wiped out, stunning global credit markets.
Although authorities in Europe and Asia have said this week they would continue to impose losses on shareholders before bondholders, unease has lingered.
"The developments in the AT1 market mean that most European banks are incentivized at this point to issue common equity, which is diluting for shareholders and also the reason why banking stocks are being reset lower," said Peter Garnry, head of equity strategy at Saxo Bank.
In a bid to show it has ample capital while keeping funding costs in check, Italy's UniCredit is leaning towards repaying a perpetual bond at the earliest opportunity in June, a source close to the matter told Reuters.
A spokesperson for UniCredit declined to comment.
Amid the market volatility, European policymakers voiced support for their continent's banks, with Germany's Scholz, French President Emmanuel Macron and European Central Bank chief Christine Lagarde all saying the system was stable.
UBS CHALLENGES
Policymakers have stressed the turmoil is different from the global financial crisis 15 years ago, saying banks are better capitalised and funds more easily available.
But the worries spread quickly, and on Sunday UBS was rushed into taking over Credit Suisse after its Swiss rival lost the confidence of investors.
Brokerage group Jefferies said the deal would change an equity story for UBS which was based on a lower risk profile, organic growth and high capital returns.
"All these elements, which is what UBS shareholders bought into, are gone, likely for years," it said.
Reporting by Reuters bureaus; Writing by Toby Chopra and Deepa Babington; Editing by Jason Neely, Catherine Evans, Alexander Smith, Cynthia Osterman and Daniel Wallis
https://www.reuters.com/business/financ ... 023-03-24/