Will there be bank runs despite Fed action and Joe Biden’s assurances?
This is just the headlines from today.
Firstly senile Joe, would like you to know that the banking system is in fine shape.
From mainstream news. All they are talking about is if there is going to be contagion and how this is prevented.
But, guess what no one in New Zealand will be talking about
This is all the NZ media has to say.
Is that their way of saying: “Sod you! We’re OK!”
However, the big question is can this be contained.?
SVB Fallout Spreads Around World From London to Singapore
Startup founders in California’s Bay Area are panicking about access to money and paying employees. Fears of contagion have reached Canada, India and China. In the UK, SVB’s unit is set to be declared insolvent, has already ceased trading and is no longer taking new customers. On Saturday, the leaders of roughly 180 tech companies sent a letter calling on UK Chancellor Jeremy Hunt to intervene.
“The loss of deposits has the potential to cripple the sector and set the ecosystem back 20 years,” they said in the letter seen by Bloomberg. “Many businesses will be sent into involuntary liquidation overnight.”
This is just the beginning. SVB had branches in China, Denmark, Germany, India, Israel and Sweden, too. Founders are warning that the bank’s failure could wipe out startups around the world without government intervention. SVB’s joint venture in China, SPD Silicon Valley Bank Co., was seeking to calm local clients overnight by reminding them that operations have been independent and stable.
“This crisis will start on Monday and so we call on you to prevent it now,” UK startup founders and chief executive officers said in the letter to Hunt. The companies listed in the letter include Uncapped, Apian, Pockit and Pivotal Earth.
Fallout from the Silicon Valley Bank collapse has directed attention to a $620 billion ticking time bomb in the banking system that has the potential to spell doom for the financial system.
From Bloomberg
SVB Fallout Spreads Around World From London to Singapore
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More than 100 founders and CEOs are writing to UK Chancellor
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SVB’s collapse has led to cash crunch for startups globally
America’s $620 billion ticking time bomb: FDIC reveals the extraordinary amount of ‘unrealized losses’ across U.S. banks amid fears more will collapse after the sudden failure of SVB and Signature
- Martin Gruenberg, chair of the Federal Deposit Insurance Corporation (FDIC) spoke on March 6 at the Institute of International Bankers
- Gruenberg revealed $620 billion in ‘unrealized losses’ at US banks and financial institutions – when an asset’s value has decreased, but it has not yet been sold
- On Sunday evening the Federal Reserve announced those with deposits in collapsed Silicon Valley Bank would get all their money back
From Zero Hedge
First Republic Shares Crash 60% As Regional Bank ‘Crisis In Confidence’ Spreads
First Republic Bank’s stock crashed in premarket trading in New York following a statement issued on Sunday night that sought to ease investor worries about its liquidity situation in the wake of the failures of Silicon Valley Bank and Signature Bank.
Shares of the regional bank are down 60% in the premarket. The lender said in a statement late Sunday that it had more than $70 billion in unused liquidity to fund operations from agreements that included the Federal Reserve and JPMorgan Chase & Co.
“The additional borrowing capacity from the Federal Reserve, continued access to funding through the Federal Home Loan Bank, and ability to access additional financing through JPMorgan Chase & Co. increases, diversifies, and further strengthens First Republic’s existing liquidity profile,” the bank said, adding that more liquidity is available through the Fed’s new lending facility.
“The plunge in its shares is classic market psychology at work, with investors starting to question the credentials of any lender that may be remotely in the same category of Silicon Valley Bank,” Bloomberg’s Ven Ram wrote.
We pointed out over the weekend, “as a result of the SVB failure – one look at what is already taking place at some smaller, vulnerable banks such as this First Republic Branch in Brentwood should be sufficient to see what comes tomorrow if the Fed makes the wrong decision today.”
Despite the emergency lending program announced by the Fed and Treasury on Sunday to increase the availability of funds to meet bank withdrawals and prevent runs on other banks, fears have not been alleviated as other regional banks continue to experience significant pressure.
And why would that be? Well, as we outlined, “banks which are sitting on some $620 billion in unrealized losses on all securities (both Available for Sale and Held to Maturity) at the end of last year, according to the Federal Deposit Insurance Corp.”
If the Fed’s goal was to shore up wavering confidence in the banking system by announcing the alphabet soup of bailout facilities, the BTFP lending program — well, it hasn’t worked yet this morning:
- PacWest Bancorp’s stock tumbled 27%
- Western Alliance Bancorp’s shares slid 17%
- Charles Schwab’s shares lost 6.7%
- Bank of America’s stock fell 4.4%
- Citizens Financial Group’s stock declined 2.7%
- Wells Fargo’s stock slid 2.3%
The current question on everyone’s mind is whether the measures taken by the Fed are sufficient in preventing further depositor panic at other regional banks.
Then there’s this: “There’s no doubt in my mind: There’s going to be more. How many more? I don’t know,” William Isaac, the former chairman of the Federal Deposit Insurance Corporation, told Politico on Sunday. “Seems to me to be a lot like the 1980s,” he added.
… and Cramer strikes again.
There is no doubt this has spread to Europe.
The banking system appears to be melting down in the United States as Inter-Bank Liquidity has fallen to almost zero.
The chart below shows it:
What this means is that banks are NOT lending to each other; not even for overnight, or over a weekend!
When Bankers stop lending to EACH OTHER, there are gigantic trust issues. The Banking system seems to be coming apart in real time, today.
All Banks Are CRASHING! Customers Furious to Find Available Credit Has Been CUT, Market Trade Halt
Over the weekend, when parsing through the carnage sweeping the US banking sector, we analyzed which banks are facing the highest deposit-run risk in the aftermath of the SIVB – and now SBNY – failures, and focused on a handful of names who have the bulk of their funding in the form of deposits – deposits which are now suddenly at risk amid what seems to be a major bank run
Anecdote from Hal Turner
I am pleased to report to all of you that several HUNDRED readers of this web site reported to me via email today that they WERE able to get whatever cash they sought, from their bank today. NOT ONE PROBLEM anywhere!
As all of you know, late last week and especially into the weekend, several large regional banks failed and there was panic about people losing money. Bank Runs were FEARED but did not materialize.
Tens-of-thousands of people around the United States read this web site every day, and several hundred of them (~476) emailed me at various points during today, to tell me they took cash out of the bank. Some took two thousand. Some took five thousand. One took fifteen thousand. Many took other varying amounts.
Absolutely EVERY person who wrote me said they were able to get what they sought without even a question being asked about why they wanted the money.
So while the news about the banks isn’t good, the reality on the street seems to be that things are functioning OK . . . today.
And it seems to me that TODAY was the big question. It seems to me that TODAY was going to be the harbinger of what would take place on a growing scale, this week. Thankfully, it appears to me that everything is fine.
I wanted all of you to know.
The U.S. government on Sunday sought to affirm confidence in the U.S. banking system by announcing protection for all depositors in Silicon Valley Bank.
Treasury Secretary Janet Yellen approved measures to resolve the failure of Silicon Valley Bank “in a manner that fully protects all depositors,” the Treasury said Sunday in a joint statement with the Fed and FDIC.
This means that deposits beyond the $250,000 limit on FDIC insurance will be available on Monday. The Treasury said the measures will not come at a cost to taxpayers.
In a joint statement by the U.S. Treasury, the Federal Reserve, and the Federal Deposit Insurance Corp, the government said:
Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.
After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
Finally, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.
The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.
The Federal Reserve added:
To support American businesses and households, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy.
The Federal Reserve is prepared to address any liquidity pressures that may arise.
The financing will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress.
With approval of the Treasury Secretary, the Department of the Treasury will make available up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP. The Federal Reserve does not anticipate that it will be necessary to draw on these backstop funds.
After receiving a recommendation from the boards of the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve, Treasury Secretary Yellen, after consultation with the President, approved actions to enable the FDIC to complete its resolution of Silicon Valley Bank in a manner that fully protects all depositors, both insured and uninsured. These actions will reduce stress across the financial system, support financial stability and minimize any impact on businesses, households, taxpayers, and the broader economy.
The Board is carefully monitoring developments in financial markets. The capital and liquidity positions of the U.S. banking system are strong and the U.S. financial system is resilient.
Depository institutions may obtain liquidity against a wide range of collateral through the discount window, which remains open and available. In addition, the discount window will apply the same margins used for the securities eligible for the BTFP, further increasing lendable value at the window.
The Board is closely monitoring conditions across the financial system and is prepared to use its full range of tools to support households and businesses, and will take additional steps as appropriate.
Trading of the stock in Credit Suisse was HALTED overnight after another 15% plunge in its stock value. Commerzbank dropped 11%. In the USA, Federal Republic dropped another 66%, with Western Alliance Bancorp down 52% and PacWest down 37% in pre-market trading.
Despite a staggering loosening of credit available to banks from the Federal Reserve over the weekend, Investor confidence is still plummeting for most of the same banks that saw this trouble late last week.
Whether these banks can avail themselves of the new, loosened credit resources and possibly save themselves today, remains to be seen.
During the weekend, a major bank started making headlines, when Depositors at Wells Fargo reported problems with account balances and funds availability had NOT been fixed by the bank.
Moreover, Depositors in Bank of America put videos on social media showing lines at some BoA branches filled with customers who could not get answers from the bank’s customer service department.
Whether any of this turns into BANK RUNS today, remains to be seen…..
‘Death of a Climate Bank’: Silicon Valley Bank involved in more than ‘60% of community solar financing nationwide’ – ‘Issuing billions of dollars in loans’
“What hasn’t received as much attention is that Silicon Valley Bank was particularly important to the climate-tech sector. “Silicon Valley Bank was an integral part of the early-stage climate tech community and I hope that they survive in some form to continue that role,” Gabriel Kra, a managing director at Prelude Ventures, told me on Friday. Silicon Valley Bank served as a banker to dozens of climate and energy-tech companies, holding their cash on a day-to-day basis and issuing billions of dollars in loans in support of the type of large-scale, one-off projects that are essential to the sector. The bank’s website bragged about its particular support of solar, hydrogen, and energy-storage companies. It provided more than half a billion dollars in revolving credit to Sunrun, the country’s largest residential solar company.
ANOTHER BANK FAILURE: SIGNATURE BANK IN NEW YORK; SEIZED BY FDIC
Signature Bank in New York has been shut down by New York State Banking Regulators. It is one of at least twelve banks whose Thursday and Friday stock plunges made it clear the bank was in major trouble. Failed Silicon Valley Bank saw similar stock crashes before it, too, was seized by Banking Regulators, in what is now the second largest Bank Failure in U.S. History.
New York Banking Authorities confirm they have seized Signature Bank.
From RT
Charles Schwab leads US financial sector wipeout
Shares in the US financial and brokerage company Charles Schwab tumbled on Monday, as concerns rippled through the financial sector due to the recent collapse of tech and start-up-focused Silicon Valley Bank and crypto-related Signature Bank.
The Texas-based financial services corporation’s stock slumped by more than 20% during Monday trading, representing the company’s worst one-day sell-off since April 2000.
The wipeout came as the company touted its resilience after a reported 28% decline in average margin balances in February from a year earlier. In a statement, Schwab’s Chief Financial Officer Peter Crawford reassured shareholders and clients that cash outflows hadn’t accelerated this month compared to February, noting that 80% of the brokerage’s deposits are insured by the US government.
“These outflows reflect a continuation of client decisions to reallocate a portion of their cash into higher-yielding cash alternatives within Schwab,” he wrote. “Based on our ongoing analysis of these trends, we still believe client cash realignment decisions will largely abate during 2023.”
Schwab is ranked eighth among US banks by assets, with $7.05 trillion in client funds and 33.8 million active brokerage accounts at the end of last year. Some analysts say it is unlikely that Schwab will face a run like SVB did, due to its robust liquidity.
“Many banks and companies with related banking entities, such as Charles Schwab, also have a material amount of fixed income securities on their balance sheet with unrealized losses, as recently rising interest rates have decreased the value of fixed income securities,” Morningstar analyst Michael Wong wrote in a note last week.
The selloff of Schwab’s stock was triggered by recent failures in the US banking sector, with three lenders going bust in less than a week.
California-based, crypto-focused Silvergate was the first to announce its liquidation last Wednesday, followed by the implosion of Silicon Valley Bank on Friday. Signature Bank was the third significant lender to face ruin in the largest US bank collapse since the financial crisis of 2008. Bank failures have sparked concerns over the health of the entire US banking system, with many other lenders seeing their stocks plunge.
Biden Lies By Omission – Forgets to Tell Americans that We Are Bailing Out China’s Venture Capital Business with Silicon Valley Bank Rescue
What Biden did not share (his lie of omission) is that the US government is bailing out Chinese venture capitalists who had a significant amount of deposits in SVB.
Last night we reported that the South China Morning Post noted the bridge between SVB and China.
The collapse of Silicon Valley Bank (SVB) has created a sense of panic within China’s tech start-up and venture capital (VC) sector, as the lender served as a bridge between US capital and Chinese tech entrepreneurs
2 thoughts on “Will there be bank runs despite Fed action and Joe Biden’s assurances?”
What I’m hearing is that small banks are being set up for failure in order to drive everyone into the large banks … then it will easier to enact CBDC – central bank digital currencies = total control of how you spend your money, and easy denial of funds for any reason.
Yep. That’s about it.