Re: California bank regulators shutter the Silicon Valley Bank

First Republic slid 25% despite gaining nearly 10% in the previous session. The stock got a boost Thursday when a group of banks said it would aid First Republic with $30 billion in deposits as a sign of confidence in the banking system. That dip weighed on the SPDR Regional Banking ETF (KRE), which was down 4.8%.

U.S.-listed shares of Credit Suisse were also down 5% as traders parsed through the bank’s announcement that it would borrow up to $50 billion francs, or nearly $54 billion, from the Swiss National Bank [Swiss central bank]. Shares were unchanged when the market closed on Thursday. ... dates.html
"Everyone is entitled to their own opinion, but not their own facts." - Daniel Patrick Moynihan

Re: California bank regulators shutter the Silicon Valley Bank

Troubled bank Credit Suisse has been rescued by its Swiss rival UBS [Union Bank of Switzerland] in a government-backed deal. Sunday evening's announcement came after a weekend of emergency talks in Switzerland between the two banks and the country's financial regulators. The Swiss National Bank said the deal was the best way to restore the confidence of financial markets and to manage risks to the economy.
Credit Suisse shareholders were deprived of a vote on the deal and will receive one share in UBS for every 22.48 shares they own, valuing the bank at $3.15bn (£2.6bn). At the close of business on Friday Credit Suisse was valued at around $8bn (£6.5bn). But the deal has achieved what regulators set out to do - securing a result before the financial markets opened on Monday. In a statement Switzerland's central bank said "a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation". The federal government said in order to reduce any risks for UBS it would grant a guarantee against potential losses worth $9.6bn (£7.9bn) The Swiss central bank has also offered liquidity assistance of up to $110bn (£90bn).
So farewell to Credit Suisse. Founded in 1856, the bank has been a pillar of the Swiss financial sector ever since. Although buffeted by the financial crisis of 2008, Credit Suisse did manage to weather that storm without a government bailout, unlike its rival-turned-rescuer UBS. More recently, the marketing face of Credit Suisse has been Switzerland's tennis god Roger Federer. He smiles down from posters at Swiss airports, a symbol of strength, excellence, staying power and reliability. But behind the glossy promotion were some big problems. Divisive management, costly exposure to collapsed finance company Greensill Capital, a seedy money laundering case, and waning customer confidence in the last few months, which saw billions being withdrawn from the bank. All it took to turn those doubts into a stampede was an apparently off the cuff remark from the Saudi National Bank, which owns almost 10% of Credit Suisse, suggesting it would not be increasing its investment. Credit Suisse's shares went into free fall, and even a statement of confidence from the Swiss National Bank, and an offer of $50bn (£41bn) in financial support, couldn't stabilise the situation.
How could this have happened? After the financial crisis 15 years ago Switzerland introduced strict so-called "too big to fail" laws for its biggest banks. Never again, went the thinking, should the Swiss taxpayer have to bail out a Swiss bank, as happened with UBS. But Credit Suisse is a "too big to fail" bank. In theory, it had the capital to prevent this week's catastrophe. Also in theory Swiss financial regulators and the Swiss National Bank keep an eye on those systemically important banks and can intervene before disaster strikes. It was odd, last week, to see the rest of the world reacting with real concern as Credit Suisse shares tumbled, and to hear, at first, nothing from Switzerland.
As the government met in emergency session to try to find a solution, you could almost smell the panic in Bern. It's hard to avoid the conclusion, some Swiss are now saying, that the very people who should have acted to prevent Credit Suisse's meltdown were asleep at the wheel. That lack of attention is going to be very costly. UBS's takeover, for the paltry sum of $3 billion, besides being an utter humiliation for Credit Suisse, is likely to leave its shareholders a good bit poorer. There will also be job losses, perhaps in the thousands. There are Credit Suisse and UBS branches in just about every Swiss town. Once the takeover is complete, there will be little point in UBS keeping them all open. But perhaps the most costly damage of all could be to Switzerland's reputation as a safe place to invest.
"Everyone is entitled to their own opinion, but not their own facts." - Daniel Patrick Moynihan

Re: California bank regulators shutter the Silicon Valley Bank


The FDIC insures people's deposits up to $250,000. The Biden Administration wants to raise that limit. This looks like it's aimed at bailing out rich Silicon Valley people, not the middle class. ... -deposits/ ... alley-bank

What's up with that?
"San Francisco Liberal With A Gun" (reloading instruction) (podcast)
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Re: California bank regulators shutter the Silicon Valley Bank

The world's leading central banks jointly announced new action to try to keep U.S. dollars flowing easily through the global banking system, returning to a strategy used extensively in past crises. The Federal Reserve, along with the European Central Bank, Bank of England, Bank of Canada, Bank of Japan, and Swiss National Bank, with their Sunday evening (U.S. time) aimed to make dollar swap lines more readily available.

It comes after Swiss bank UBS took over its rival Credit Suisse with substantial financial guarantees from the Swiss government and its central bank earlier Sunday. It is a sign of the severity of the risk global central banks see from the series of strains in the banking system worldwide since Silicon Valley Bank failed nine days ago. In times of financial stress, global banks often become more reluctant to lend dollars to each other, creating additional tightening of global credit.

Swap lines, used extensively in the 2008 global financial crisis and again in the early days of the pandemic in 2020, allow overseas central banks to access dollars direct from the Fed, and in turn, make dollar loans to their domestic banks. It places the Fed in a role, in effect, as a global lender of last resort. The swap lines are now part of a standing liquidity arrangement between leading central banks, but the announcement Sunday is aimed at increasing their effectiveness by making the liquidity available daily instead of weekly. ... swap-lines
"Everyone is entitled to their own opinion, but not their own facts." - Daniel Patrick Moynihan

Re: California bank regulators shutter the Silicon Valley Bank

U.S. stock futures are wavering after UBS agreed to buy rival Credit Suisse, the latest development in the banking turmoil set off by Silicon Valley Bank's collapse. Investors are reaching for the safety of government bonds and gold. The megamerger was engineered over the weekend by Swiss regulators and is part of a growing global effort to restore confidence in the banking system.

Credit Suisse shares are down over 60% early Monday, bringing them broadly in line with the value of UBS's cut-price bid. Global bank stocks and bonds are falling, after the wipeout of Credit Suisse's riskier bonds.

In the U.S., officials' main concern as markets prepare to open Monday is First Republic, which saw its shares plunge last week despite a rescue effort by the country's biggest banks.
Some investors are hoping the turmoil in the banking sector could prompt the Federal Reserve to pause its interest-rate increases this week.
"Everyone is entitled to their own opinion, but not their own facts." - Daniel Patrick Moynihan

Re: California bank regulators shutter the Silicon Valley Bank

It appears SVB bought too many bonds then got squeezed when interest rates rose. It appears this was a classic mistake of putting too many assets in one place, which regulations could prevent, or at least prudent managers could avoid. The parent bank who holds my mortgage bought some assets of the New York bank that failed. I wonder whether my mortgage would disappear if the parent bank failed. Wishful thinking. LOL.

While the firelight's aglow strange shadows from the flames will grow
'Til things we've never seen will seem familiar

Re: California bank regulators shutter the Silicon Valley Bank

First Republic Bank (FRC) was easily the S&P 500's biggest loser on the stock market today.

FRC stock crashed 47% to 12.18 on Monday, hitting a record low as First Republic becomes the new epicenter in the bank crisis. JPMorgan Chase (JPM) is advising California-based First Republic on strategic alternatives, including ways to raise capital. But as FRC stock continues to plunge, a share sale would become evermore dilutive.

Last Thursday, S&P 500 stock FRC popped 10% after JPMorgan and 10 other banks announced they were depositing $30 billion into First Republic. But shares dived 33% on Friday.

First Republic stock has plummeted 90.1% so far in March. Speculation is growing that First Republic needs a buyer, but regulators may be reluctant to let a major bank like JPMorgan make a sizable acquisition. ... oft-falls/

First Republic is the nations 14th or 15th largest bank in the US.

On Capitol Hill:
When Congress rewrote the rules for Wall Street following the 2008 financial crisis, it put the Federal Reserve at the center of oversight for the nation’s wounded banks. Now, the Fed is at the center of a political firestorm as Washington looks for culprits in a new banking crisis. Republicans like Sens. Bill Hagerty and Thom Tillis are criticizing the central bank for failing to head off the collapse of two lenders. Democratic Sens. Tim Kaine and Michael Bennet want to know whether the Fed failed to do its job. Sen. Elizabeth Warren is faulting steep interest rate hikes for fueling the problem. Even the Fed’s decision to launch a review of what went wrong is being slammed by some as an investigation of itself. “The Fed has mishandled this about seven different ways,” said Peter Conti-Brown, a professor at the Wharton School of the University of Pennsylvania and a leading expert on the central bank and its history.
Shortly afterward, the central bank said it would conduct a review of what went wrong to be led by its regulatory chief, Michael Barr, who took the Fed job in July 2022 — after the key post was left vacant for nine months. Among other things, Barr will be looking at the responsibility of the central bank and the San Francisco Fed, the regional branch that had direct oversight over SVB. He will also be diving headfirst into a roiling debate about whether the bank deregulation law passed in 2018, and its implementation by Barr’s Trump-appointed predecessor, are to blame. This could be an uncomfortable assignment: Barr’s boss, Fed Chair Jerome Powell, also oversaw that regulatory rollback — prompting Warren to call on Powell to recuse himself from the review “for the Fed’s inquiry to have credibility.”

Barr had already been considering toughening standards for larger banks — and facing resistance from Republican lawmakers. But the latest saga has prompted the Fed to focus more on regional lenders with between $100 billion and $250 billion in assets. according to a person familiar with the central bank’s thinking, who was granted anonymity to talk about sensitive issues.
Conti-Brown [UPenn] said the entire episode is unsettling. “Either the Fed and the Treasury have dramatically overreacted and in the process put public money and public credibility behind very wealthy individuals and companies, which were not legally entitled to that support,” he said. “On the other hand, if they did exactly what we need financial regulators to do, that tells us that our banking system is so woefully fragile that a single medium-sized bank will throw us into a Fed-declared financial crisis.” “That makes me wonder, what were the last 15 years for?” ... r-00087717
"Everyone is entitled to their own opinion, but not their own facts." - Daniel Patrick Moynihan

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