ECON [FINANCE] First Deathburger Thread of the 2023 Banking Crisis. ALL welcome (hall passes at the door). Have At It.

Status
Not open for further replies.
jward

jward

passin' thru
BenIan said:
https://twitter.com/i/web/status/1635069268663603201
View: http://twitter.com/unusual_whales/status/1635069268663603201?s=46&t=hShkPmBswXm7ZNKzWKjNCQ
Click to expand...

ECON - US President Joe Biden delivers remarks on the banking system following the failures of California-based Silicon Valley Bank and New York-based Signat

FRANCE 24 English @France24_en 4m US President Joe Biden delivers remarks on the banking system following the failures of California-based Silicon Valley Bank and New York-based Signature Bank Business profile picture FRANCE 24 English @France24_en LIVE: Biden delivers remarks on banking...
www.timebomb2000.com www.timebomb2000.com
 
W

WalknTrot

Veteran Member
Squid said:
Silicon Valley Bank did not fail because Auntie Bee and Uncle Frank took out their money.

Silicon Valley Bank failed because big time venture capital money meaning it was a business bank run that forced the bank to change their collateral from hold to maturity to mark at market (it forced the bank to move a bucket of Treasuries bought at lower rates to todays rates). This financial accounting move with the massive deposit withdraw demand made the bank fail.

Now we get the knock-off effects. Business across the board will now feel forced to move all primary savings accounts from smaller regional banks to the large too big to fail banks. A secondary business bank run could repeat the process to ALL non big 4 too big to fail banks.

Your $454.00 account is Not what has the Fed and Treasury in damage control mode. The spill over effects and business banking reset is likely all they are or should be thinking about.

This ‘bank run’ has very little to do with you and I. We are just spectators or using another analogy bugs flying over the interstate.
Click to expand...

Yup. Nothing I can do about any of it. I'm just here for the dancing bears.
 
Cacheman

Cacheman

Ultra MAGA!
brownstone.org

Where Is Occupy Silicon Valley? ⋆ Brownstone Institute

When evaluating this, one cannot ignore the reality that the Democratic Party is completely beholden to Silicon Valley.
brownstone.org brownstone.org

Where Is Occupy Silicon Valley? ⋆ Brownstone Institute​


Craig Pirrong

6–7 minutes


Bank failures tend to come in waves, and we are experiencing at least a mini-wave now.

Banks fail for three basic reasons: 1. Credit transformation: deterioration in borrower creditworthiness, usually due to an adverse economic shock (e.g., a real estate bust). 2. Maturity transformation: borrowing short, lending long, and then getting hammered when interest rates rise. 3. Liquidity transformation combined with an exogenous liquidity shock, a la Diamond-Dybvig, where idiosyncratic depositor needs for cash lead to withdrawals that exceed liquid assets and therefore trigger fire sales of illiquid assets.

The two most notable failures of late–Silicon Valley Bank and Silvergate–are examples of 2 and 3 respectively.

In some respects, SVB is the most astounding. Not because a bank failed in the old-fashioned way, but because it was funded primarily by the deposits of supposed financial sophisticates–and because of the disgusting policy response of the Treasury and the Fed.

SVB took in oodles of cash, especially in the past couple of years. The cashcade was so immense that SVB could not find enough traditional banking business (loans) to soak it up, so they bought lots of Treasuries. And long duration Treasuries to boot.

And then Powell and the Fed applied the boot, jacking up rates. Bonds have cratered in the last year, and took SVB’s balance sheet with it.

Again, an old story. And hardly a harbinger of systemic risk–unless such reckless maturity mismatches are systemic.

SVB was the Banker to the Silicon Valley Stars, notably VCs and tech firms. These firms are the ones that deposited immense sums in exchange for a pittance of return. Case in point, Roku, put almost $500 million–yes, you read that right, 9 figures led with a 5–into SVB!!!

I mean: what the eff? Was the Treasurer a moron? For who other than a moron would hold that much in cash in a single institution? (Roku claims its devices “make your home a smarter.” Maybe they should have hired a smarter treasurer and CFO, or replaced them with one of its devices). Hell, why is a company holding that much in cash period?

A few of these alleged masters of the universe (like Palantir) saw the writing on the wall and yanked their deposits: deposits fell by a quarter on Friday alone, sealing the bank’s doom. Those who were slow to run howled to the high heavens over the weekend that if there was not a bailout there would be a holocaust in the tech sector.

Even though the systemic risk posed by SVB’s failure is nil (or if not, then every bank is systemically important), the Treasury Department and the Fed responded to these howls and guaranteed all the deposits–even though the FDIC’s formal deposit insurance limit is $250,000. You know, .05 percent of Roku’s deposit.

When evaluating this, one cannot ignore the reality that the Democratic Party is completely beholden to Silicon Valley. This is beyond scandalous.
Occupy Silicon Valley, anyone?

Treasury Secretary Janet Yellen insulted our intelligence by assuring us this is not a bailout. Well, it’s not a taxpayer bailout, strictly speaking, because the Treasury is not providing the backstop. Instead, it is being funded by a “special assessment” on solvent banks. Which are owned and funded by people who also pay taxes. And such an “assessment” is a tax in everything but name–because it is a contribution by private entities compelled by the government.

The policy implications of this are disastrous. The whole problem with such bailouts is moral hazard. What is to stop banks from engaging in such reckless behavior as SVB did if they can obtain seemingly unlimited funding from those who know that they will be bailed out if things go pear-shaped?

And the regulatory failure here demonstrates that bank regulation–despite the supposed “reforms” of Frankendodd–can’t even catch or constrain the oldest bet-the-bank strategy in the book. Free banking–no deposit insurance, no bailing out of depositors–couldn’t do worse, and would likely do better.

No, the failure of SVB is not the scandal here. The scandal is the political response to it. This reveals yet again how captured the government is. This time not by Wall Street, but by tech companies and oligarchs that are currently the primary source of Democratic political funding.

A couple of weeks ago the Silvergate story looked juicy, but SVB has put it in the shade. Silvergate also grew dramatically, but on the back of crypto rather than SV tech. It became the main banker for many crypto firms and entrepreneurs. The crypto meltdown did not affect Silvergate directly, but it did crush its depositors, the aforesaid crypto firms and entrepreneurs. They withdrew a lot of funding, and an old-fashioned liquidity mismatch did it in.

In traditional banks, deposit funding is “sticky.” Banks that rely on wholesale funding (“hot money”) are more vulnerable to runs. Silvergate’s funding was not traditional sticky deposit funding, nor was it hot money per se. It was money that was pretty cool as long as crypto was cool, and became hot once crypto melted down.

A run started, but the run was precipitated by a liquidity shock. Simple story, really.
Silvergate’s failure was not a scandal. SVB’s failure per se was not a scandal (except to the extent that our vaunted banking regulators failed to prevent the most prosaic type of failure).

Again–the scandal is the politically tainted response that will have baleful consequences in the future, as the response virtually guarantees that there will be more SVBs in the future.
 
hiwall

hiwall

Has No Life - Lives on TB
With steady money being pumped into the system everything could keep running pretty smooth.
But then we got into a recession with very high inflation and the money pump mostly stopped.
Now all the hundreds of zombie companies are in deep trouble. The banks that had embraced these zombie companies are now also in trouble.
We are about to see the results.
 
mzkitty

mzkitty

I give up.
Cacheman said:
Treasury Secretary Janet Yellen insulted our intelligence by assuring us this is not a bailout. Well, it’s not a taxpayer bailout, strictly speaking, because the Treasury is not providing the backstop. Instead, it is being funded by a “special assessment” on solvent banks. Which are owned and funded by people who also pay taxes. And such an “assessment” is a tax in everything but name–because it is a contribution by private entities compelled by the government.
Click to expand...

How cute.

:rolleyes:
 
West

West

Senior
Yeah, everything is fine! There's plenty of loose change hanging around, they will save the banksters with other people's currency not yours! Read their lips!

We just need more stimulus. That's the answer but they just don't listen!

:D
 
Red Baron

Red Baron

Paleo-Conservative
_______________
newlogo.jpg


Current Trading Halts​


Mar 13, 2023


Halt times displayed are Eastern Time (ET).

Halt DateHalt TimeIssue SymbolIssue NameMarketReason CodesPause Threshold PriceResumption DateResumption Quote TimeResumption Trade Time
03/13/202309:50:10WALWestern Alliance Bancorporation Common Stock (DE)NYSEM
03/13/202309:50:52BOHBank of Hawaii Corporation Common StockNYSEM
03/13/202309:49:05SCHWThe Charles Schwab Corporation - Common Stock (par value $0.01)NYSEM
03/13/202309:49:21EWBCEast West Bancorp, Inc.NASDAQLUDP03/13/202309:49:21
03/13/202309:49:50FHN-FNYSEM
03/13/202309:48:07RFRegions Financial Corporation Common StockNYSEM
03/13/202309:48:08GNEGenie Energy Ltd. Class B Common Stock StockNYSEM
03/13/202309:48:21FRCFIRST REPUBLIC BANK Common StockNYSEM
03/13/202309:47:12AUB-ANYSEM
03/13/202309:47:33CMAComerica Incorporated Common StockNYSEM
03/13/202309:46:32PACWPPacWest BancorpNASDAQLUDP03/13/202309:46:32
03/13/202309:45:17CUBICustomers Bancorp, Inc - Common StockNYSEM03/13/202309:51:0209:51:02
03/13/202309:45:35BOHBank of Hawaii Corporation Common StockNYSEM03/13/202309:50:3509:50:35
03/13/202309:44:44PACWPacWest BancorpNASDAQLUDP03/13/202309:44:4409:49:44
03/13/202309:44:52CUBBCustomers Bancorp, Inc 5.375% Subordinated Notes Due 2034NYSEM03/13/202309:49:5209:49:52
03/13/202309:43:08CUBI-ENYSEM03/13/202309:48:0809:48:08
03/13/202309:43:08ZIONZions Bancorporation N.A.NASDAQLUDP03/13/202309:43:08
03/13/202309:43:29CUBI-FNYSEM
03/13/202309:42:09FRCFIRST REPUBLIC BANK Common StockNYSEM03/13/202309:47:4009:47:40
03/13/202309:42:29RFRegions Financial Corporation Common StockNYSEM03/13/202309:47:3309:47:33
03/13/202309:42:45EWBCEast West Bancorp, Inc.NASDAQLUDP03/13/202309:42:4509:47:45
03/13/202309:41:11CMAComerica Incorporated Common StockNYSEM03/13/202309:46:3809:46:38
03/13/202309:40:01EUDAEUDA Health Hldgs Ltd Ord ShsNASDAQLUDP03/13/202309:40:0109:45:01
03/13/202309:40:42FHNFirst Horizon Corporation Common StockNYSEM03/13/202309:45:5609:45:56
03/13/202309:40:53TCBIOTexas Capital Bnc Dpsh 5.75 PsNASDAQLUDP03/13/202309:40:53
03/13/202309:39:13SCHWThe Charles Schwab Corporation - Common Stock (par value $0.01)NYSEM03/13/202309:44:1709:44:17
03/13/202309:39:24BOHBank of Hawaii Corporation Common StockNYSEM03/13/202309:45:1509:45:15
03/13/202309:39:46SPKXConvexityShares Trust ConvexityShares 1x SPIKES Futures ETFNYSE ArcaM03/13/202309:44:4609:44:46
03/13/202309:39:53WALWestern Alliance Bancorporation Common Stock (DE)NYSEM03/13/202309:45:0009:45:00
03/13/202309:38:00OBIOOrchestra BioMed Holdings OrdNASDAQLUDP03/13/202309:38:0009:43:00
03/13/202309:38:00PACWPacWest BancorpNASDAQLUDP03/13/202309:38:0009:43:00
03/13/202309:38:24GNEGenie Energy Ltd. Class B Common Stock StockNYSEM03/13/202309:47:2709:47:27
03/13/202309:38:42FRC-INYSEM
03/13/202309:37:04CUBICustomers Bancorp, Inc - Common StockNYSEM03/13/202309:42:0409:42:04
03/13/202309:37:17FRC-HNYSEM
03/13/202309:36:28CCBCoastal Financial Corp Cm StNASDAQLUDP03/13/202309:36:2809:41:28
03/13/202309:36:31RFRegions Financial Corporation Common StockNYSEM03/13/202309:42:0709:42:07
03/13/202309:36:42FRCFIRST REPUBLIC BANK Common StockNYSEM03/13/202309:41:4509:41:45
03/13/202309:35:00ZIONZions Bancorporation N.A.NASDAQLUDP03/13/202309:35:0009:40:00
03/13/202309:35:10CMAComerica Incorporated Common StockNYSEM03/13/202309:40:2809:40:28
03/13/202309:35:47SPKYConvexityShares Trust ConvexityShares Daily 1.5x SPIKES Futures ETFNYSE ArcaM03/13/202309:40:4709:40:47
03/13/202309:33:26WALWestern Alliance Bancorporation Common Stock (DE)NYSEM03/13/202309:38:3609:38:36
03/13/202309:33:31SCHWThe Charles Schwab Corporation - Common Stock (par value $0.01)NYSEM03/13/202309:38:3609:38:36
03/13/202309:32:15EWBCEast West Bancorp, Inc.NASDAQLUDP03/13/202309:32:1509:42:15
03/13/202309:31:06FRCFIRST REPUBLIC BANK Common StockNYSEM03/13/202309:36:1709:36:17
03/13/202309:31:08DEFITeucrium Corn Fund Hashdex Bitcoin Futures ETFNYSE ArcaM03/13/202309:36:0809:36:08
03/13/202309:31:18AGM.AFederal Agricultural Mortgage Corporation Common StockNYSEM03/13/202309:36:1809:36:18
03/13/202309:30:17SPKYConvexityShares Trust ConvexityShares Daily 1.5x SPIKES Futures ETFNYSE ArcaM03/13/202309:35:1709:35:17
03/13/202309:30:18ARTLArtelo Biosciences, Inc. CSNASDAQLUDP03/13/202309:30:1809:35:18
03/13/202309:30:18ASRVAmeriServ Financial Inc.NASDAQLUDP03/13/202309:30:1809:45:19
03/13/202309:30:18HBANLHuntington Banc Dep Shs JNASDAQLUDP03/13/202309:30:1809:50:19
03/13/202309:30:18MGYRMagyar Bancorp IncNASDAQLUDP03/13/202309:30:1809:35:18
03/13/202309:30:18WAFDPWashington Fed Ds 4.875 PsNASDAQLUDP03/13/202309:30:1809:46:36
03/13/202309:30:30MCBCMacatawa Bank CorporationNASDAQLUDP03/13/202309:30:30
03/13/202309:30:35PACWPacWest BancorpNASDAQLUDP03/13/202309:30:3509:35:35
03/13/202307:55:27MOBVMobiv Acquisition Co CSNASDAQT1
T2
T3		03/13/202308:25:0008:30:00
03/13/202307:55:27MOBVUMobiv Acq Corp UnitNASDAQT1
T2
T3		03/13/202308:30:0008:35:00
03/13/202307:55:27MOBVWMobiv Acquisition Corp WNASDAQT1
T2
T3		03/13/202308:30:0008:35:00
03/13/202307:25:09MRSNMersana Therapeutics CMNASDAQT1
T2
T3		03/13/202307:55:0008:00:00
03/13/202304:00:01SBNYSignature BankNASDAQT12
03/13/202304:00:01SBNYPSignature Bk Dp ShsNASDAQT12
-------------------------
 
Red Baron

Red Baron

Paleo-Conservative
_______________
The schedule of trading halt codes below identifies the reason for which trading in FINRA®/CQS securities is halted. When an issue resumes quoting, the code will change. Listed below are the trading halt code identifiers and a description of what each represents:

Trade Halt CodeTrade Halt Description
T1Halt - News Pending
Trading is halted pending the release of material news.
T2Halt - News Released
The news has begun the dissemination process through a Regulation FD compliant method(s).
T5Single Stock Trading Pause in Effect
Trading has been paused by NASDAQ due to a 10% or more price move in the security in a five-minute period.
T6Halt - Extraordinary Market Activity
Trading is halted when extraordinary market activity in the security is occurring; NASDAQ determines that such extraordinary market activity is likely to have a material effect on the market for that security; and 1) NASDAQ believes that such extraordinary market activity is caused by the misuse or malfunction of an electronic quotation, communication, reporting or execution system operated by or linked to NASDAQ; or 2) after consultation with either a national securities exchange trading the security on an unlisted trading privileges basis or a non-NASDAQ FINRA facility trading the security, NASDAQ believes such extraordinary market activity is caused by the misuse or malfunction of an electronic quotation, communication, reporting or execution system operated by or linked to such national securities exchange or non- NASDAQ FINRA facility.
T8Halt - Exchange-Traded-Fund (ETF)
Trading is halted in an ETF due to the consideration of, among other factors: 1) the extent to which trading has ceased in the underlying security(s); 2) whether trading has been halted or suspended in the primary market(s) for any combination of underlying securities accounting for 20% or more of the applicable current index group value; 3) the presence of other unusual conditions or circumstances deemed to be detrimental to the maintenance of a fair and orderly market.
T12Halt - Additional Information Requested by NASDAQ
Trading is halted pending receipt of additional information requested by NASDAQ.
H4Halt - Non-compliance
Trading is halted due to the company's non-compliance with NASDAQ listing requirements.
H9Halt - Not Current
Trading is halted because the company is not current in its required filings.
H10Halt - SEC Trading Suspension
The Securities and Exchange Commission has suspended trading in this stock.
H11Halt - Regulatory Concern
Trading is halted in conjunction with another exchange or market for regulatory reasons.
O1Operations Halt, Contact Market Operations
IPO1IPO Issue not yet Trading
M1Corporate Action
M2Quotation Not Available
LUDPVolatility Trading Pause
LUDSVolatility Trading Pause - Straddle Condition
MWC1Market Wide Circuit Breaker Halt - Level 1
MWC2Market Wide Circuit Breaker Halt - Level 2
MWC3Market Wide Circuit Breaker Halt - Level 3
MWC0Market Wide Circuit Breaker Halt - Carry over from previous day
T3News and Resumption Times
The news has been fully disseminated through a Regulation FD compliant method(s); or NASDAQ has determined either that system misuse or malfunction that caused extraordinary market activity will no longer have a material effect on the market for the security or that system misuse or malfunction is not the cause of the extraordinary market activity; or NASDAQ has determined the conditions which led to a halt in an Exchange-Traded Fund are no longer present. Two times will be displayed: (1) the time when market participants can enter quotations, followed by (2) the time the security will be released for trading. All trade halt and resumption times will be posted in HH:MM:SS format.
T7Single Stock Trading Pause/Quotation-Only Period
Quotations have resumed for affected security, but trading remains paused.
R4Qualifications Issues Reviewed/Resolved; Quotations/Trading to Resume
R9Filing Requirements Satisfied/Resolved; Quotations/Trading To Resume
C3Issuer News Not Forthcoming; Quotations/Trading To Resume
C4Qualifications Halt ended; maint. req. met; Resume
C9Qualifications Halt Concluded; Filings Met; Quotes/Trades To Resume
C11Trade Halt Concluded By Other Regulatory Auth,; Quotes/Trades Resume
R1New Issue Available
R2Issue Available
IPOQIPO security released for quotation
IPOEIPO security - positioning window extension
MWCQMarket Wide Circuit Breaker Resumption
MVolatility Trading Pause
Trading has been paused in an Exchange-Listed issue (Market Category Code = C)
DSecurity deletion from NASDAQ / CQS
SpaceReason Not Available
NotesHalt codes H4 and H9 may be activated in situations where a SEC trading suspension is terminated and a NASDAQ trading halt is terminated, but the company in either instance is not in compliance with specific NASDAQ requirements. Any questions related to a specific trading halt or to the trading halts codes should be directed to MarketWatch at 800.537.3929 or 301.978.8500.
 
Cardinal

Cardinal

Chickministrator
_______________
Moar:
www.dailymail.co.uk

Bank shares down 74% in pre-market trading despite Biden's backing

Trading was temporarily halted in dozens of regional banks this morning as shares fell by up to 75 percent when the market opened after Joe Biden claimed 'US banking is safe.'
www.dailymail.co.uk www.dailymail.co.uk

Biden says 'US banking is safe' as shares plummet up to 74% in pre-market trading despite president's guarantee scheme for SVB and Signature Bank - amid fears of a rout when stock market opens at 9.30am​

  • Biden spoke shortly before the market opened at 9.30am in attempt to shore up trust in the banking sector amid amid fears of a rout after the collapse of SVB
  • 'Our actions should give Americans confidence that the US banking system is safe,' the president told the press conference
  • But investors are smelling blood in the water. First Republic Bank saw its shares crash 74 percent to $21.50 from a high of $81.76 in premarket trading
By ROSS IBBETSON FOR DAILYMAIL.COM

PUBLISHED: 07:33 EDT, 13 March 2023 | UPDATED: 10:01 EDT, 13 March 2023


Trading has been halted in First Republic Bank this morning after shares by a record 67 percent before the market opened after Joe Biden claimed 'US banking safe'.
The San-Francisco based bank, whose clientele include Mark Zuckerberg saw its share price plunge to $27.08 from $81.76 as fears of a contagion in the sector spooked traders after the collapse of Silicon Valley Bank.
Western Alliance Bancorp dropped nearly 75 percent as the opening bell sounded while shares in PacWest Bancorp dropped more than 35 percent.

Biden moved to shore up trust before Wall Street opened after the White House yesterday promised SVB customers would be 'made whole' and that 'no losses will be borne by the taxpayer.'
'Americans can have confidence that the banking system is safe,' the president told a press conference. But he warned that those who backed the failed bank 'knowingly took a risk and when the risk didn't pay off, investors lose their money. That's how capitalism works.'
SVB's swift downfall on Friday - the second-largest banking collapse in history - has ignited anxiety over a contagion amid the Fed's sharpest rate hike cycle since the early 1980s.



Biden defended his response to the financial meltdown in less than four minutes of remarks, stating the bosses at SVB should be fired and suggested that relaxed regulations under Donald Trump were partly to blame.

'If the bank is taken over by FDIC, the people running the bank should not work there anymore,' he said.

He called for a 'full accounting' of what led to the shutdown of SVB and 'why those responsible can be held accountable.'

'In my administration, no one is above the law. And finally, I must reduce the risk of this happening again,' the president said.

Biden tried to project calm amid fears of a financial meltdown and a run on the banks after shares plummeted 74 percent in pre-market trading amid the second-largest banking collapse in U.S. history.

He defended his administration's response in his less than four-minute remarks, said the executives at Silicon Valley Bank should be fired and pointed the finger at Donald Trump for rolling back regulations.

'Americans can have confidence that the banking system is safe,' he said from the Roosevelt Room before a trip to California. 'Your deposits will be there when you need them.'

The failure of SVB tore into global markets overnight as Biden slept, with European bank shares suffering their biggest drop in more than a year and bond markets seeing a gigantic repricing of rate hike bets.

The dollar slid too as Wall Street heavyweights such as Goldman Sachs predicted the Fed would no longer lift interest rates next week, capping the biggest three-day rally for short-dated Treasuries since 1987.

The yield on the 10-year U.S. Treasury note fell to 3.507 percent, from 3.694 percent Friday as Wall Street's so-called 'fear gauge' spiked, with the the Cboe Volatility Index (VIX) rising to a five-month high at 27.84.

Europe's bank index tanked 6 percent having shed 3.8 percent Friday.

In Britain, banking stocks across the FTSE 100 and FTSE 250 have slumped nearly 4 percent despite HSBC's takeover of the UK arm of SVB for £1 ($1.21).

'We are seeing a classic flight to safety,' said Tom Caddick managing director at Nedgroup Investments. 'Higher interest rates and a slowing economy was always going to bite.'

The fears have been sparked over a $620 billion ticking-time bomb that US banks are sitting on after buying Treasuries and bonds while interest rates were low.

When interest rates rise, newly issued bonds start paying higher rates to investors, which makes the older bonds with lower rates less attractive and less valuable. Most banks and pension funds are affected.

Martin Gruenberg, chair of the Federal Deposit Insurance Corporation (FDIC), told the Institute of International Bankers last week: 'Most banks have some amount of unrealized losses on securities. The total of these unrealized losses, including securities that are available for sale or held to maturity, was about $620 billion at year-end 2022.

'Unrealized losses on securities have meaningfully reduced the reported equity capital of the banking industry.'

First Republic's customers are businesses and high-net worth individuals who are no longer happy to leave their money in low-interest accounts.

Over the last three decades it has boomed from a small operation to the lender of choice for wealthy clients, including Facebook founder Zuckerberg who was offered a 1.05 percent mortgage rate on a $5.95m loan for his five-bedroom Palo Alto home in March 2011.

Customers are enticed by lavish perks including cocktail parties at its swanky branches from Manhattan to Palm Beach. Many clients are on a first-name basis with their branch manager and cite personal attention as their reason for banking with the lender.

The San Francisco-based bank said yesterday it had secured additional financing through JPMorgan, giving it access to a total of $70 billion in funds through various sources.

The bank's chairman and CEO said in a joint statement its 'capital and liquidity positions are very strong' and that 'its capital remains well above the regulatory threshold for well-capitalized banks.'

Despite the cash infusion, investment bank Raymond James double downgraded its stock to 'market perform' from 'strong buy', highlighting the risk of deposit outflows that First Republic faces from panicked large depositors after the bank run at SVB.

68644547-11853651-image-a-25_1678709985752.jpg

+6
View gallery
68644545-11853651-image-a-26_1678709990040.jpg


SVB's failure is the largest since Washington Mutual went bust in 2008, a hallmark event that triggered a financial crisis that hobbled the economy for years. The 2008 crash prompted tougher rules in the US and beyond.

Since then, regulators have imposed more stringent capital requirements for US banks aimed at ensuring individual bank collapses will not harm the wider financial system and economy.

Over the weekend, the Fed and US Treasury announced a range of measures to stabilize the banking system and said customers at SVB would have access to their deposits on Monday.

The Fed also said it would make additional funding available through a new 'Bank Term Funding Program', which would offer loans up to one year to depository institutions, backed by Treasuries and other assets these institutions hold.

Authorities have also taken over New York-based Signature Bank, the second bank failure in a matter of days.

Analysts noted that, importantly, the Fed would accept collateral at par rather than marking to market, allowing banks to borrow funds without having to sell assets at a loss.

Overnight in Asia, the ongoing concerns were seen in Japan's Topix bank index which lost 4 percent, while Singapore's largest banks also shed around 1 percent.

Monday's rout left more than 99 percent of companies listed on Europe's benchmark STOXX 600 trading in the red. Only three stocks evaded the fall, Qinetiq, Reckitt and Vantage Towers, up 0.4 percent, 0.2 percent and 0.1 percent, respectively.

One glimmer of hope was that futures markets showed the Wall Street's benchmark S&P 500 opening fractionally higher later.

Such was the concern about financial stability that investors speculated the Fed would now be reluctant to rock the boat by lifting interest rates by a super-sized 50 basis points next week - and might not even hike at all.

Fed fund futures surged to price out any chance of a half-point hike, compared with around 70 percent before the SVB news broke last week. Instead, futures implied around a 14 percent chance the Fed would stand pat.

The implied peak for rates came all the way down to 5.08 percent, from 5.69 percent last Wednesday, and markets were back to pricing in rate cuts by the end of the year.

'In light of the stress in the banking system, we no longer expect the FOMC to deliver a rate hike at its next meeting on March 22,' wrote analysts at Goldman Sachs.

'We have left unchanged our expectation that the FOMC will deliver 25bp hikes in May, June, and July and now expect a 5.25-5.5 percent terminal rate, though we see considerable uncertainty about the path.'

Such talk, combined with the shift to safety, saw yields on two-year Treasuries rise 7 basis points at 0958 GMT to 4.63 percent, a world away from last week's 5.08 percent peak.

Yields were now down 66 basis points in just three sessions, a drop not seen since the Black Monday market crash in 1987.

Much will depend on what U.S. consumer price figures reveal on Tuesday, with an obvious risk that a high reading will pile pressure on the Fed to hike aggressively even with the financial system under strain.

The European Central Bank meets on Thursday and is still widely expected to lift its rates by 50 basis points and to flag more tightening ahead, though it will now have to take financial stability into account.

In currency markets, the dollar index, which measures the greenback's value against a basket of currencies, fell 0.3 percent. The pound and euro both rose around 0.2 percent while the safe-have Japanese yen surged more than 1 percent.

Gold climbed almost 1 percent as well to $1,885 an ounce, having jumped 2 percent on Friday. Oil prices lost over 1.5 percent though with Brent back at 81.48 a barrel and U.S. crude at $75.28 per barrel.
 
Status
Not open for further replies.
Top