'The Banking system is safe' Biden says after failure of Silicon Valley Bank
Here are some significant developments:
New York lobbied federal officials to protect regional Signature Bank, Hochul says
New York lawmakers lobbied federal regulators to protect depositors of Signature Bank, New York Gov. Kathy Hochul (D) said Monday, warning that a failure of another regional bank could risk the downfall of the sector across the country.
New York officials shuttered Signature on Sunday and placed the bank in the receivership of the Federal Deposit Insurance Corporation (FDIC). But the state had been pushing for permission to intervene to help the struggling institution as early as Friday, Hochul said at a news conference.
On Sunday, Hochul’s office mounted a campaign to push officials from the Treasury Department, Federal Reserve and FDIC to give the state authority to take over Signature.
“The train had already left the track to be able to give assistance to SVB Bank, and we wanted to make sure that we included Signature,” Hochul said. “We were literally counting votes to make sure they’d be enough to put this over the finish line.”
Several bank stocks halted amid volatile trading
Stock exchanges halted trading of several midsize and regional banks in the aftermath of Silicon Valley Bank’s collapse.
The banks include PacWest Bancorp, First Republic Bank, Western Alliance Bancorporation, Customers Bancorp, Zions Bancorp, Comerica Incorporated Common Stock, Regions Financial, East West Bancorp and others, NasdaqTrader.com reported.
The stock exchanges cited Securities and Exchange Commission rules that require trading be halted when it reaches a certain level of volatility or when prices reach an upper or lower limit.
Goldman Sachs predicts Fed will skip rate hike in March
Goldman Sachs said in a weekend note that it no longer expects the Federal Reserve to raise interest rates next week after the government announced a plan to protect depositors at Silicon Valley Bank in the hope of preventing increased stress on the banking system.
The firm said that “in light of the stress in the banking system,” it no longer thought the committee would raise rates in March. It still expects rate increases in May, June and July, though it now sees “considerable uncertainty about the path.”
What you need to know about the SVB bank rescue plan
The U.S. government announced late Sunday that it would guarantee all deposits at Silicon Valley Bank, which regulators shut down Friday. Officials also revealed that they had shut down a second bank, Signature Bank of New York, and extended the same deposit protections to its customers. And the Federal Reserve announced it would create a separate lending facility to protect other banks from the ripple effects and prevent bank runs.
The moves capped three days of frenzied activity in the tech sector and among the nation’s top banking regulators, who feared the collapse of SVB could quickly trigger a much broader financial crisis.
Biden says bank management will be replaced
During his remarks from the White House on Monday, President Biden said that managers would be replaced at Silicon Valley Bank and any others taken over by the Federal Deposit Insurance Corporation.
“The people running the bank should not work there anymore,” Biden said.
He also noted that while customers would still have access to their money, bank investors would not be protected.
“They knowingly took a risk” Biden said. “And when the risk didn’t pay off, investors lose their money. That’s how capitalism works.”
Biden departed without taking questions from reporters.
Stocks fall in volatile trading as Biden seeks to reassure markets
Stocks fell slightly as markets opened Monday morning, with major indexes down amid volatile early trading.
The Dow Jones industrial average was down 0.6 percent shortly after trading opened at 9:30 a.m. Eastern, while the broader S&P 500 declined about 1 percent, and the tech-heavy Nasdaq index fell 0.9 percent.
Volatility on Wall Street is at its worst point in more than four months, even as President Biden sought to reassure Silicon Valley Bank customers and investors that their deposits would be safe. The CBOE VIX index, known as Wall Street’s “fear gauge,” was up nearly 19 percent shortly after market open.
Biden seeks to calm customers and investors after bank failure
President Biden on Monday sought to calm customers and investors fearful of a systemic crisis in the wake of the failure of Silicon Valley Bank.
“Thanks for the quick action. In my administration over the past few days, Americans can have confidence that the banking system is safe,” Biden said in an announcement at the White House. “Your deposits will be there when you need them.”
Officials had announced that depositors with money at the failed California bank would be paid back in full and able to access their money Monday morning.
First Republic shares tank 60 percent in banking sector rout
Shares of First Republic Bank cratered more than 60 percent in early trading Monday as the banking sector got pummeled.
The sell-off comes even after executives said the San Francisco bank had received help from the U.S. Federal Reserve as well as JPMorgan Chase, bringing its total unused liquidity to more than $70 billion. “First Republic’s capital and liquidity positions are very strong, and its capital remains well above the regulatory threshold for well-capitalized banks,” founder and executive chairman Jim Herbert said in a statement. Shares tumbled 33 percent Friday.
The banking sector sold off even as the broader U.S. stock market held up, with smaller banks taking the brunt. The SPDR S&P Bank index, which tracks U.S. bank stocks, was down nearly 7 percent by 8:50 a.m. Eastern time. Salt Lake City-based Zions Bancorp was down 23 percent, PacWest Bancorp dropped 42 percent, Western Alliance Bancorp dropped 63 percent and Texas-based Comerica bank shed 20 percent.
The East Coast’s big banks saw smaller declines, as some analysts suggested larger and more diverse banks would see an influx of deposits at the expense of smaller ones. JPMorgan Chase was down just 2 percent in early trading, Bank of America lost 5.3 percent, and Citibank traded down 3.8 percent.
“Americans can have confidence that the banking system is safe,” President Biden said as he began his address.
These companies were affected by the Silicon Valley Bank crash
The collapse Friday of Silicon Valley Bank — the second-largest bank failure in U.S. history — sent anxiety across the financial system and shook the tech industry, raising concerns about whether companies would be able to get their money back and pay their employees.
The federal government took over the bank after a surprise filing Wednesday night revealed that it had sold $21 billion in assets and was unloading stock to raise money. Here are some of the companies affected by the fall of Silicon Valley Bank, which was known for serving start-ups, tech companies and venture capitalists.
This is an excerpt from a full story.
Silicon Valley Bank CEO should return stock-sale gains, lawmaker says
The list of companies and banks potentially affected by Friday’s collapse of Silicon Valley Bank is growing. But at least one person seems to have cashed in recently: chief executive Greg Becker, whose trust sold $3.6 million worth of shares on Feb. 27, according to SEC filings.
Becker is now coming under scrutiny, including from a personal acquaintance, Rep. Ro Khanna (D-Calif.), who said Sunday that Becker should give that money back.
“There should be a clawback of any of that money,” Khanna said in an interview with The Washington Post. “It should be going to the depositors.”
European stocks crater as failure of Silicon Valley Bank rocks markets
European stocks took a beating Monday as investors reckoned with the failure of Silicon Valley Bank, whose collapse Friday sent ripples throughout global markets.
The banking sector was hit hard, as some of the continent’s largest financial institutions sold off. London-based HSBC lost 3.8 percent, France’s BNP Paribas lost nearly 4 percent, and Spain’s Santander Bank lost 4.1 percent.
Germany’s DAX index lost 2.3 percent by 8 a.m. Eastern time, while London’s FTSE 100 fell 1.7 percent and France’s CAC 40 lost 2.3 percent.
HSBC acquiring Silicon Valley Bank’s U.K. arm for just over $1
LONDON — HSBC has agreed to buy Silicon Valley Bank’s subsidiary in the United Kingdom for 1 pound — just over $1 — under a deal facilitated by the British government and the Bank of England following the U.S. lender’s collapse.
“This acquisition makes excellent strategic sense for our business in the UK,” the chief executive of HSBC, Noel Quinn, said in a statement Monday.
The British government said customer deposits would be protected “with no taxpayer support.”
Under the terms of the agreement, HSBC’s U.K. subsidiary will finance the acquisition of Silicon Valley Bank UK Limited, which is expected to be completed immediately. The deal excludes all assets and liabilities of the parent company, SVB.
This is an excerpt from a full story.
Analysis: The political fallout from the Silicon Valley Bank mess
Silicon Valley Bank customers will wake up Monday with access to their money.
That may avert turmoil in financial markets, but scrutiny of the high-stakes weekend drama is probably just beginning in Washington, The Post’s Leigh Ann Caldwell and Theodoric Meyer write in The Early 202. Per our colleagues:
On Sunday night, the Biden administration announced an extraordinary intervention aimed at averting a banking crisis by reassuring SVB customers that all of their deposits would be protected, not just the $250,000 covered by the FDIC.But it’s not just SVB that needed the help.Authorities said they were also extending protection to depositors of a second bank, Signature Bank of New York, which state regulators closed on Sunday as unease in the financial sector appeared to spread.Separately, the Federal Reserve announced it was creating a new lending facility for the nation’s banks, designed to buttress them against financial risks caused by Friday’s collapse of SVB. ...The move comes after an uncertain weekend full of briefings for members of Congress and congressional staff about the collapse of SVB. While many lawmakers — mostly Democrats — were pleased with the administration and the Fed’s actions, debate in Congress is most likely just beginning.
You can read the full analysis here.
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