Democrat representative Jeff Jackson explains Silicon Valley Bank collapse
Wall Street rebounded on Tuesday as inflation data met expectations and regional bank shares bounced back after Monday’s sharp falls following the collapse of Silicon Valley Bank (SVB).
Six regional financial institutions remain under tight scrutiny but the response from regulators to protect depositors appears to have addressed market concerns.
Nevertheless, credit ratings firm Moody’s has cut its outlook for the whole of the US banking system to negative from stable “to reflect the rapid deterioration in the operating environment”.
Meanwhile, the US Securities and Exchange Commission and Department of Justice have reportedly opened probes into the failure of SVB and any share trades undertaken by management in the run-up to its shuttering on Friday. A class-action lawsuit has also been filed by investors against the parent company, CEO and CFO.
Tim Mayopoulos, the newly appointed CEO of SVB, has declared the bank is back open for business, opening new accounts and making new loans. He served as CEO of Fannie Mae bringing it back to profitability after the 2008 financial crisis.
Elsewhere, Wall Street expert Robert Kiyosaki, famed for predicting the Lehman Brothers’ failure, has pegged Credit Suisse as the next major bank most likely to collapse.
Demise of SVB disrupts the disruptors in tech
Silicon Valley Bank’s collapse rattled the technology industry that had been the bank’s backbone, leaving shell-shocked entrepreneurs thankful for the government reprieve that saved their money while they mourned the loss of a place that served as a chummy club of innovation.
Silicon Valley Bank’s demise disrupts the disruptors in tech
Silicon Valley Bank’s collapse rattled the technology industry that had been the bank’s backbone, leaving shell-shocked entrepreneurs thankful for the government reprieve that saved their money while they mourned the loss of a place that served as a chummy club of innovation
Oliver O’Connell15 March 2023 04:45
BUT New York regulator says Signature Bank closure ‘nothing to do with crypto’
New York’s financial regulator has pushed back on former Rep Barney Frank’s comments, saying its decision to close Signature Bank had “nothing to do with crypto,” citing what it called “a significant crisis of confidence in the bank’s leadership” that occurred over the weekend after regulators shuttered Silicon Valley Bank.
Mr Frank is a board member of Signature Bank and was one of the pioneers of the landmark Dodd-Frank Act, which was enacted after the 2008 financial crisis to better insulate the banking system from shocks.
“I think part of what happened was that regulators wanted to send a very strong anti-crypto message,” Mr Frank told CNBC on Monday. “We became the poster boy because there was no insolvency based on the fundamentals.”
But NYDFS denied his claims in a statement on Tuesday, saying that its decision to close Signature Bank on Sunday and appoint the Federal Deposit Insurance Corp as receiver “was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.”
“The decisions made over the weekend had nothing to do with crypto. Signature was a traditional commercial bank with a wide range of activities and customers,” an NYDFS spokesperson said.
“DFS has been facilitating well-regulated crypto activities for several years, and is a national model for regulating the space,” they said.
The spokesperson added that as withdrawal requests ballooned over the weekend, Signature Bank failed to provide reliable and consistent data.
Mr Frank said he was surprised the regulator said the decision to close the bank was not related to cryptocurrency.
“I think that was a factor,” he said in an interview. “I’m puzzled as to why it was closed.”
He added that to his knowledge, bank executives were working to provide data to regulators.
“What we heard from our executives is that the deposit situation had stabilised and they would be getting the capital from the discount window and I continue to be convinced that if we had opened on Monday given the announcements of those two policies, we would have been in a reasonably good shape and certainly functional,” he said.
Signature was a commercial bank with private client offices with nine national business lines including commercial real estate and digital asset banking.
With reporting from Reuters
Oliver O’Connell15 March 2023 03:15
Barney Frank claims Signature Bank seized to send banks a message
A regulatory takeover of a New York-based bank was intended to send a message to U.S. banks to stay away from the cryptocurrency business, a former member of Congress who was on the bank’s board says.
Former US Rep. Barney Frank said Monday that he believes the state officials behind the action were trying to make an example of Signature Bank.
“This was just a way to tell people, ‘We don’t want you dealing with crypto,’” Frank told The Associated Press in a telephone interview.
Oliver O’Connell15 March 2023 02:45
Voices: Ghosts of the 2008 financial crisis loom over Biden’s response
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.
Oliver O’Connell15 March 2023 01:15
DOJ and SEC to probe stock sales ahead of Silicon Valley Bank collapse, report says
The tech and start-up-focused lender based in Santa Clara, California, was taken over by regulators on Friday during a run on its deposits, making it the second-largest bank failure in US history.
It is not unusual for there to be such investigations when large financial institutions or public companies collapse or suffer unexpected losses, but the separate probes will also look at stock sales that company bosses made days before the bank failed.
Oliver O’Connell15 March 2023 00:15
Lawmaker’s explanation of Silicon Valley Bank’s collapse goes viral
A congressman has been widely praised for posting a two-and-a-half-minute video to Twitter and TikTok clearly laying out the Silicon Valley Bank situation.
At 2am on Monday morning, he filmed a video for social media explaining how the Silicon Valley Bank crisis began, what was being done about it, and to discourage panic.
Oliver O’Connell14 March 2023 23:45
Voices: The Silicon Valley Bank collapse has made three things horrifically clear
It was no Lehman Brothers moment, but there are three hard lessons to be learned from the past few days, writes David Callaway.
Oliver O’Connell14 March 2023 23:15
Biden says banking system is ‘safe’ and vows accountability for executives
President Joe Biden reassured Americans that the nation’s banking system is safe after Silicon Valley Bank collapsed last week and said there would be accountability for financial executives.
The president’s actions come after the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation announced on Sunday evening that depositors for Silicon Valley Bank would have access to their money.
Eric Garcia filed this report from Washington, DC, on Monday.
Oliver O’Connell14 March 2023 22:45
Jeremy Hunt hails ‘great resilience’ as HSBC rescues Silicon Valley Bank UK branch
Jeremy Hunt says HSBC’s purchase of Silicon Valley Bank UK is a “very important outcome” and praised “great resilience” in the UK’s financial system. “A sale has been agreed… And what that means is that all those really important companies that had deposits with Silicon Valley Bank UK can access their deposits and access normal banking services as of this morning,” the chancellor said. “It’s a very important outcome and no taxpayer’s money has been used. It’s a result of a lot of hard work.” Click here to sign up for our newsletters.
Oliver O’Connell14 March 2023 22:15
Recap: Why did Silicon Valley Bank collapse?
The collapse of the 16th largest bank in the US sent ripples through global markets on Monday as governments and businesses scrambled to figure out what the impact would be and how it could be contained.
On Monday, the UK government said that HSBC would take over the UK wing of the bank.
But what was SVB, why did it collapse, and are other banks at risk? We examine these questions here.
Oliver O’Connell14 March 2023 21:45