Salem Radio Network News Tuesday, March 21, 2023


Silicon Valley Bank collapse: What you need to know

(Reuters) – Battered Japanese bank stocks clawed back some of their heavy losses, as regulators and financial executives hosed down investor concerns about contagion after the collapse of Silicon Valley Bank (SVB).

Markets and financial authorities remained on edge, however, with U.S. deposit holders seeking the safety of larger banks amid growing worries about the health of smaller institutions and the prospect of more failures in the sector.


* SVB Financial Group said Goldman Sachs Group Inc was the acquirer of a bond portfolio on which it booked a $1.8 billion loss, a transaction that set in motion the failure of SVB.

* Charles Schwab has ample liquidity, the chief executive of the bank and brokerage said, moving to allay concerns about a “doomsday scenario” that has weighed broadly on bank stocks.

* Ratings agency Moody’s cut its outlook on the U.S. banking system to negative from stable “to reflect the rapid deterioration in the operating environment.”

* The Republican chairman of the House Financial Services Committee urged confidence in the U.S. banking system and said the Federal Reserve and regulator FDIC had “acted swiftly and boldly” within the law.

* The Federal Reserve is considering tougher rules and oversight for midsize banks similar in size to SVB, according to a source familiar with the matter.

* Apollo Global Management Inc, Blackstone Inc and KKR & Co Inc have expressed interest in a book of loans held by SVB, Bloomberg News reported, citing people familiar with the matter.

* U.S. prosecutors were investigating Signature Bank’s association with crypto clients before regulators suddenly seized the lender last weekend, Bloomberg also reported.

* Democratic U.S. Senator Elizabeth Warren called on Federal Reserve Chair Jerome Powell to recuse himself from an internal review of recent bank failures, saying his actions “directly contributed” to them.

* Senate Banking Committee Chairman Sherrod Brown urged Congress to enact regulations to strengthen stress tests and capital and liquidity standards for banks, and said he hoped the Fed would not raise rates when it meets next.


* Asian equities rose sharply, tracking a relief rally on Wall Street, as fears about contagion in the banking system eased and markets welcomed U.S. inflation data that was in line with expectations.

* The S&P 500 regional banks index rebounded 1.4%, leaving it with a 26% loss over the past five sessions. First Republic Bank surged 27%, while KeyCorp jumped 7%.

Among large U.S. banks, Citigroup regained almost 6% and Wells Fargo added 4.6%.

* U.S. Treasury yields rose on Tuesday, a day after major declines, as investors consolidated positions and weighed the monetary policy impact of banking system turmoil against stubbornly high inflation.

* Euro zone government bond yields rose as investors reckoned repricing of the European Central Bank’s tightening path in recent days might have been overdone.

* Traders currently see a 77% chance of a 25 basis-point increase at the meeting, while expectations for no rate hike have fallen to 23%. Early last week, a 25 basis-point hike was fully priced in, with a 70% chance seen of 50 basis points.


* “I appreciate and understand the doomsday scenario but I also think getting the facts out is very important – that our clients are not reacting in the manner that the doomsday scenario would indicate,” Walt Bettinger, CEO of Charles Schwab, told Reuters.

(Compiled by Anna Driver and Lincoln Feast; Editing by Sam Holmes)


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