Biden says Silicon Valley Bank managers will be fired
Two top executives at Silicon Valley Bank have been slapped with a class-action lawsuit over the company’s stunning collapse.
The lawsuit names CEO Greg Becker and CFO Daniel Beck, alleging they knowingly misled stockholders SVB’s ability to navigate risks.
It comes hours after President Joe Biden addressed the nation regarding the SVB collapse, as the US government takes steps to try to prevent an escalating financial crisis.
Mr Biden said that “no losses will be borne by the taxpayers. Instead, the money will come from the fees that banks pay into the Deposit Insurance Fund”.
“The management of these banks will be fired. If the bank is taken over by FDIC, the people running the bank should not work there anymore,” Mr Biden said.
The president said that “investors in the banks will not be protected”.
“They knowingly took a risk. And when the risk didn’t pay off, investors lose their money. That’s how capitalism works,” he added.
“I’m going to ask Congress and the banking regulators to strengthen the rules for banks, to make it less likely this kind of bank failure would happen again.”
Premium: Silicon Valley rescue saves UK tech industry – but shares in other banks plummet
Britain’s tech industry was saved from a crisis on Monday after HSBC rescued the UK arm of Silicon Valley Bank in a deal brokered by the government and the Bank of England.
Oliver O’Connell13 March 2023 23:00
Start-ups, small businesses and online sellers despair at frozen funds
It’s not just large tech firms and venture capital funds caught up in the collapse of Silicon Valley Bank. There are numerous small businesses, kitchen table start-ups and side-hustle online retailers impacted by the sudden bank failure.
They range from business owners unable to pay employees to Etsy sellers worried about paying bills as online payments stalled.
Oliver O’Connell13 March 2023 22:15
Voices: The ghosts of the 2008 financial crisis loom over Biden’s response to Silicon Valley Bank
When President Joe Biden announced on Monday that people who had deposited their money in the now-unraveled Silicon Valley Bank would have their money available, he emphasised that American taxpayers would not be left on the hook.
Similarly, he added that the people responsible at the bank would need to be fired and that investors in Silicon Valley Bank would not be made whole, arguing that they took a risk and now have to suffer the losses.
On the surface, the Silicon Valley Bank collapse, as well as the closing of Signature Bank in New York, appears quite similar to the 2008 financial crisis that took banks like AIG to the brink and led to the collapse of Lehman Brothers. At the time, Mr Biden was a sitting senator running for vice president alongside Barack Obama. Both of them, as well as their White House opponent at the time, voted for the Troubled Assets Relief Program, or TARP, which became known as the “bailout” in the popular imagination.
But there are important distinctions between 2008 and today.
Oliver O’Connell13 March 2023 21:45
Shopify CEO: ‘Very minor impact for us’
Tobi Lutke, CEO of e-commerce platform Shopify, shared an email sent out to merchants offering to help if their funds were frozen at Silicon Valley Bank and confirmed that the collapse of the bank had only had “very minor impact for us”.
Oliver O’Connell13 March 2023 21:30
Watch: Ro Khanna says stock sale money should be ‘clawed back’ for depositors
Oliver O’Connell13 March 2023 21:16
Fed’s top regulator to lead review of supervision of SVB
The Federal Reserve Board on Monday announced that Vice Chair for Supervision Michael S Barr is leading a review of the supervision and regulation of Silicon Valley Bank, in light of its failure. The review will be publicly released by 1 May.
“The events surrounding Silicon Valley Bank demand a thorough, transparent, and swift review by the Federal Reserve,” said Chair Jerome H. Powell.
“We need to have humility, and conduct a careful and thorough review of how we supervised and regulated this firm, and what we should learn from this experience,” said Vice Chair Barr.
Oliver O’Connell13 March 2023 21:05
Democrat lawmaker posts TikTok Silicon Valley Bank explainer
Democratic Rep Jeff Jackson of North Carolina has posted a helpful explainer about the Silicon Valley Bank collapse to TikTok in which he lays out as clearly as possible what happened to the doomed bank, what the federal government is doing about it, and why it is important not to panic.
Oliver O’Connell13 March 2023 20:45
Warren: ‘We need stronger rules and stronger oversight of banks like SVB’
Oliver O’Connell13 March 2023 20:40
FDIC planning another auction of Silicon Valley Bank
Regulators are planning to take another crack at auctioning failed Silicon Valley Bank, according to people familiar with the matter, after they were unable to find a buyer for the firm over the weekend.
Officials from the Federal Deposit Insurance Corp told Senate Republicans on Monday that they had additional flexibility to sell the firm now that regulators had declared its failure a threat to the financial system, according to people familiar with the briefing and notes on the discussion reviewed by The Wall Street Journal.
Oliver O’Connell13 March 2023 20:30
Sliding bank shares drag Wall Street in choppy trade
Sliding bank shared dragged Wall Street on Monday with investors worried about contagion from the Silicon Valley Bank collapse, but trade was choppy and some sectors benefited from hopes the Federal Reserve could ease up on interest rate hikes.
SVB Financial’s sudden shutdown on Friday after a failed capital raise had investors worried about risks to other banks from the Fed’s sharp rate hikes over the last year. But many speculated the central bank could now become less hawkish, and the yield on the 2-year Treasury tumbled.
Regulators over the weekend stepped in to restore investor confidence in the banking system, saying SVB’s depositors will have access to their funds on Monday.
To some investors, the Fed’s decision next week will also hinge on inflation data due this week.
“If we get shockingly bad Consumer Price Index and Producer Price Index, the Fed is going to find itself in a tough spot or a much tougher spot that it even finds itself in ahead of those prints,” said Orion Advisor Solutions CIO Timothy Holland.
According to preliminary data, the S&P 500 lost 5.82 points, or 0.16%, to end at 3,855.54 points, while the Nasdaq Composite gained 49.74 points, or 0.45%, to 11,188.63. The Dow Jones Industrial Average fell 86.66 points, or 0.27%, to 31,822.08.
The benchmark S&P 500 is now up about 1% for the year so far. Earlier in the session it fell, briefly erasing all the year-to-date gains.
Oliver O’Connell13 March 2023 20:25