ReportWire

Tag: Federal Deposit Insurance Corporation

  • Citigroup to cut 20,000 jobs by 2026 following latest financial losses

    Citigroup to cut 20,000 jobs by 2026 following latest financial losses

    Low unemployment streak extends another month


    Low unemployment streak extends another month

    02:47

    Citigroup is planning to lay off 20,000 employees, or about 10% of its workforce, in the next two years as it comes off its worst quarterly financial results in more than a decade. 

    The embattled bank on Friday reported $1.8 billion in losses in the fourth quarter of 2023, while revenue fell 3% to $17.4 billion from last year, according to its latest financial filings. The layoffs could save the bank as much as $2.5 billion, Citigroup’s presentation to investors shows. 

    “While the fourth quarter was very disappointing due to the impact of notable items, we made substantial progress simplifying Citi and executing our strategy in 2023,” Citigroup CEO Jane Fraser said Friday in a statement. 

    Citi’s layoffs will bring its headcount to 180,000 by 2026, a Citigroup representative told CBS MoneyWatch. The cuts follow a smaller round of job reductions that eliminated roughly 10% of senior manager roles at the bank late last year, Bloomberg reported. 

    Citi’s workforce reductions form part of a larger reorganization effort aimed at improving the bank’s financials and stock price. The restructuring is expected to reduce Citi’s expenses as low as $51 billion, bringing the bank closer to its profit goals, Reuters reported. 

    Citibank’s organizational overhaul comes as financial institutions are attempting to recover from a turbulent year that included a decline in their stock prices. According to Forbes, the 15 largest banks in the U.S. lost more than $46 million in value in a single day last August.

    Elizabeth Napolitano


    elizabeth-napolitano-cbsmoneywatch-cropped.jpg

    Elizabeth Napolitano is a freelance reporter at CBS MoneyWatch, where she covers business and technology news. She also writes for CoinDesk. Before joining CBS, she interned at NBC News’ BizTech Unit and worked on The Associated Press’ web scraping team.

    Source link

  • Nearly half of Americans are worried about their money in banks, survey shows

    Nearly half of Americans are worried about their money in banks, survey shows

    Nearly half of Americans are worried about their money in banks, survey shows – CBS News


    Watch CBS News



    New polling from Gallup shows that 48% of Americans are worried about their money in banks and other financial institutions, and Republicans and Independents are more concerned about the safety of their money than Democrats. Axios markets correspondent Emily Peck discusses bank deposits and the FDIC with CBS News’ Vlad Duthiers and Anne-Marie Green.

    Be the first to know

    Get browser notifications for breaking news, live events, and exclusive reporting.


    Source link

  • What you need to know about recent bank failures. Is your money safe?

    What you need to know about recent bank failures. Is your money safe?

    Recent turmoil in the banking industry may have you worried about your money.

    Shares of PacWest, a small regional bank based in Los Angeles, plunged almost 40% Thursday after the company confirmed it may put itself up for sale. Anxiety over potential bank runs has sent shares of smaller banks tumbling. A bank run is when large numbers of people withdraw their money from a bank all at once.

    Since March, three regional banks have failed — Silicon Valley Bank, Signature Bank and First Republic Bank. If the recent bank collapses have you worried about the safety of your money, here’s what you need to know:

    Is my money safe?

    Yes, if your money is in a U.S. bank insured by the Federal Deposit Insurance Corp. and you have less than $250,000 there. If the bank fails, you’ll get your money back.

    Nearly all banks are FDIC insured. You can look for the FDIC logo at bank teller windows or on the entrance to your bank branch.

    Credit unions are insured by the National Credit Union Administration.

    If you have over $250,000 in individual accounts at one bank, which most people don’t, the amount over $250,000 is considered uninsured and experts recommend that you move the remainder of your money to a different financial institution, said Caleb Silver, editor in chief of Investopedia, a financial media website.


    Struggling banks create uncertainty for Wall Street

    02:10

    If you have multiple individual accounts at the same bank, for example a savings account and certificate of deposit, those are added together and the total is insured up to $250,000. (Read on for more about how joint accounts are protected.)

    Federal officials have been taking steps to make sure other banks aren’t impacted.

    “People who have their money in insured accounts have nothing to worry about,” said Mark Hamrick, senior economic analyst at Bankrate.com. “Simply make sure that deposits fall within the guaranteed limits, whether it’s FDIC or the credit union equivalent.”

    Customers of banks that have been sold will have access to their money from the new owner, according to the FDIC. For example, JPMorgan Chase acquired First Republic Bank when it failed earlier this week and customers are able to access all of their money from JPMorgan.

    Are there red flags I should look for with my bank?

    If you are worried about your bank closing in the near future, there are some things you can watch out for, according to Silver:

    — If it is publicly listed, watch the stock price.

    — Keep an eye on the quarterly and annual reports from your bank.

    — Start a Google alert for your bank in case there are news stories about it.

    You want to make sure you pay close attention to the way your bank is behaving, Silver said.

    “If they’re trying to raise money through a share offering or if they’re trying to sell more stock, they might have trouble on their balance sheet,” said Silver.

    Public companies, including banks, do sell shares or issue new ones for various reasons, so context matters. First Republic did so this year when the hazards it faced were well known, and it kicked off an exodus of investors and depositors.

    Should I look for alternatives?

    If you have more than $250,000 in your bank, there are a few things you can do:

    — Open a joint account

    You can protect up to $500,000 by opening a joint account with someone else, such as your spouse, said Greg McBride, chief financial analyst at Bankrate.

    “A married couple can easily protect a million dollars at the same bank by each having an individual account and together having a joint account,” McBride said.

    — Move to another financial institution

    Moving your money to other financial institutions and having up to $250,000 in each account will ensure that your money is insured by the FDIC, McBride said.

    — Do not withdraw cash


    Fed takes some blame for Silicon Valley Bank collapse

    00:25

    Do no withdraw cash

    Despite the recent uncertainty, experts don’t recommend withdrawing cash from your account. Keeping your money in financial institutions rather than in your home is safer, especially when the amount is insured.

    “It’s not a time to pull your money out of the bank,” Silver said.

    Even people with uninsured deposits usually get nearly all of their money back.

    “It takes time, but generally all depositors — both insured and uninsured — get their money back,” said Todd Phillips, a consultant and former attorney at the FDIC. “Uninsured depositors may have to wait some time, and may have to take haircut where they lose 10 to 15% of their savings, but it’s never zero.”

    How long does it take for insured money to be available if a bank fails?

    Historically, the FDIC says it has returned insured deposits within a few days of a bank closing. The FDIC will either provide that amount in a new account at another insured bank or issue a check.

    How much money can be insured in joint accounts?

    If you have a joint account, the FDIC covers each individual up to $250,000. You can have both joint and single accounts at the same bank and be insured for each.

    So if a couple each has individual accounts and a joint account where they have equal withdrawal rights, they can each have up to $250,000 insured in their single accounts and up to $250,000 in their joint accounts. That means each of them will have up to $500,000 insured.

    What about other investments?

    Customers should take a close look at the types of investments they have in their bank to know how much of their assets are insured by the FDIC. The FDIC offers an Electronic Deposit Insurance Estimator, a tool to know how much of your money is insured per financial institution.

    FDIC deposit insurance covers:
    — Checking accounts
    — Negotiable Order of Withdrawal (NOW) accounts
    — Savings accounts
    — Money Market Deposit Accounts (MMDAs)
    — Certificates of Deposit (CDs)
    — Cashier’s checks
    — Money orders
    — Other official items issued by an insured bank

    FDIC deposit insurance doesn’t cover:
    — Stock investments 
    — Bond investments
    — Mutual funds
    — Life insurance policies?
    — Annuities
    — Municipal securities 
    — Safe deposit boxes or their contents
    — U.S. Treasury bills, bonds, or notes
    — Crypto assets


    What bank stock falls could signal for economy

    04:10

    How does a credit union compare to a bank?

    Both credit unions and banks allow customers to open savings and checking accounts, among other financial products.

    The key difference is that credit unions are not-for-profit institutions, which tends to translate into lower fees and lower balance requirements, while banks are for-profit. Sometimes it also means that it’s easier for credit union customers to be approved for loans, McBride said.

    Usually, customers are allowed to join credit unions based on where they live or work.

    Credit unions serve a smaller number of customers, which also allows for a more personalized experience. The tradeoff is that banks tend to have larger staff, more physical branches and newer technology.

    When it comes to the safety of customer’s money, both banks and credit unions insure up to $250,000 per individual customer. While banks are insured by the FDIC, credit unions are insured by the NCUA.

    “Whether at a bank or a credit union, your money is safe. There’s no need to worry about the safety or access to your money,” McBride said. 

    The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. 

    Source link

  • Covering collapse of SVB could cost $20 billion, FDIC chairman to tell Congress

    Covering collapse of SVB could cost $20 billion, FDIC chairman to tell Congress

    The Federal Deposit Insurance Corporation (FDIC) estimates the cost to the Deposit Insurance Fund to cover the collapse of Silicon Valley Bank is $20 billion — including $18 billion to cover uninsured deposits, according to the chairman of the FDIC, Martin Gruenberg. And the failure of Signature Bank is likely to require about $2.5 billion, including $1.6 billion to cover its uninsured deposits. 

    “I would emphasize that these estimates are subject to significant uncertainty and are likely to change, depending on the ultimate value realized from each receivership,” Gruenberg, whose agency was appointed to manage both banks after their collapse, is expected to tell lawmakers Tuesday when he testifies before the Senate Banking Committee. 

    Gruenberg and top officials from the Federal Reserve and Treasury Department are set to testify before the committee about the failures of the two banks and will attempt to reassure lawmakers that the banking system remains sound, and mismanagement is to blame for the second greatest bank failure in U.S. history.

    “SVB failed because the bank’s management did not effectively manage its interest rate and liquidity risk, and the bank then suffered a devastating and unexpected run by its uninsured depositors in a period of less than 24 hours,” Federal Reserve Vice Chair of Supervision Michael Barr will tell senators according to his prepared remarks about the bank, which collapsed on Mar. 10. He is also expected to say the bank waited too long to address its problems. 

    Barr is leading the Federal Reserve’s review of the two bank failures. That report will be released May 1. In his remarks, Barr notes that the Federal Reserve was fully responsible for the federal supervision and regulation of the bank, and the Fed’s review will examine both the growth and management of Silicon Valley Bank, as well as the Fed’s engagement with the bank and regulatory requirements that applied to the bank.

    “SVB’s failure demands a thorough review of what happened, including the Federal Reserve’s oversight of the bank,” Barr will say. “I am committed to ensuring that the Federal Reserve fully accounts for any supervisory or regulatory failings, and that we fully address what went wrong.”

    The sale of each of the FDIC managed bridge banks has been completed; a large portion of Signature Bank was sold to Flagstar Bank, and SVB has been sold to First Citizens Bank.

    The FDIC has already started its own investigation into who should be held accountable in the wake of the failures. According to his prepared remarks, Gruenberg is expected to tell lawmakers that the FDIC will review the deposit insurance system, and will release its report at the same time as the Fed issues its report, on May 1. 

    As fears spread about the solvency of the banking system, the Treasury Department, Federal Reserve and FDIC announced on Mar. 12 that the FDIC would be able to guarantee all deposits at both Silicon Valley Bank and Signature Bank beyond its stated limit of $250,000. 

    The losses to the Deposit Insurance Fund will have to be recovered through special assessments on banks. The FDIC aims to issue more information on those assessments related to the failures of Signature Bank and Silicon Valley Bank, taking into account input from the public comment process in May.

    Despite the recent failures, Gruenberg will also argue that the U.S. banking system remains sound.

    Sarah Ewall-Wice

    CBS News reporter covering economic policy.

    Source link

  • Years after the housing crash, the specter of

    Years after the housing crash, the specter of

    During the 2008 financial crisis, so-called too-big-to-fail banks were deemed too large and too intertwined with the U.S. economy for the government to allow them to collapse despite their role in causing the subprime loan crash.

    Yet 15 years later, the forced sale of 166-year-old Credit Suisse — one of 30 banks around the world designated by regulators as “globally significant,” as well as the startling failure of regional lender Silicon Valley Bank (SVB) — are rekindling concerns about the risk of financial institutions defined as too big to fail. 

    One thing that’s changed in the intervening years since the housing bust: The nation’s largest banks have only grown larger. JPMorgan Chase now has $2.6 billion in assets, a 16% increase from 2008, while Bank of America’s assets have jumped 69% to $3.1 trillion. At the same time, lawmakers in 2018 weakened the post-crisis regulations enacted in what came to be known as Dodd-Frank, a sweeping law passed in 2010 aimed at ensuring the safety of the U.S. banking systems. 

    The “too big to fail” banks “are still incredibly risky, and they are bigger and more concentrated than before,” said Mike Konczal, the director of macroeconomic analysis at the Roosevelt Institute, a liberal-leaning think tank.

    To be sure, the 2008 financial crisis involved issues including complex financial instruments, such as mortgage-backed securities, credit default swaps and derivatives, along with lax lending standards. Such issues aren’t playing a part in the recent banking turmoil. 

    Instead, Switzerland’s Credit Suisse was hamstrung by a number of other problems, including a $5.5 billion loss on its dealings with private investment firm Archegos in 2021 and a spying scandal. When its biggest investor, Saudi National Bank, last week declined to put up more money, investors and depositors headed for the exits, paving the way for UBS’ takeover of the bank on Sunday.

    According to the Financial Stability Board, the U.S. banks considered “global systemically important banks” are:

    • JPMorgan Chase
    • Bank of America
    • Citi
    • Goldman Sachs
    • Bank of New York Mellon
    • Morgan Stanley
    • State Street
    • Wells Fargo

    “Very boring banking” but still risky

    Investors cast a more skeptical look at Credit Suisse in the aftermath of SVB’s March 10 collapse, when U.S. regulators took over the regional bank and declared it insolvent. Unlike the 2008 crisis, SVB’s problems stemmed from what Konczal calls “very boring banking, all things considered.”

    SVB was hit by a double-whammy of higher interest rates, which lowered the value of its U.S. government and mortgage bond holdings, and a faster cash-burn rate by its tech-heavy customers due to the slowing economy. With depositors withdrawing money at a faster clip, SVB had to sell its bonds to shore up its capital, but took a $1.8 billion loss on the sale because of the decline in the value of those investments. 

    SVB also had a significantly higher share of uninsured depositors than other banks, which meant that much of their assets wouldn’t be protected by the FDIC’s $250,000 insurance if the bank failed. As a result, spooked depositors rushed to withdraw their funds, creating a classic “run on the bank.” 

    Experts say Congress opened the door to such problems five years ago when it loosened parts of Dodd-Frank, which among other changes forced the nation’s biggest banks to adopt safer lending and investing practices. Under that law, banks with more than $50 billion in assets became subject to stringent requirements including a stress test, which examines whether a bank has enough capital to survive when financial conditions sour. 

    The 2018 law blunting Dodd-Frank lifted that threshold from $50 billion in assets to $250 billion. That meant SVB, with just over $200 billion in assets, didn’t have to undergo a stress test.

    “[T]here would have been increased scrutiny” Konczal said, noting the move to weaken the banking laws. 

    “It certainly was the case that Congress and regulators really did believe that banks in this [midsize] range would have less of a problem and it would be mitigated,” he said.

    “Contagion” risks

    Senator Elizabeth Warren, a Democrat from Massachusetts, introduced a bill on March 14 that would roll back the 2018 law weakening Dodd-Frank. Other lawmakers are proposing an overhaul of FDIC insurance in order to protect a greater share of deposits. 

    Warren noted in a statement that she had warned that rolling back parts of Dodd-Frank would cause banks to “load up on risk to boost their profits and collapse, threatening our entire economy — and that is precisely what happened.”

    Asked if one of the “too big to fail” banks could falter, Konczal noted the banking problems aren’t as bad as in 2008, while adding, “We just don’t know.” 

    “Everyone thought it was fine with when the Fed bailed out Bear Stears, and five months later Lehman [Brothers] failed,” he said.


    Cohn says there’s a “contagion effect” if people lose confidence in banks

    06:03

    Meanwhile, part of the issue impacting the banking industry boils down to something that’s hard to address through regulation: “contagion,” or the potential for depositors’ fears about bank safety to migrate to other institutions, causing more bank runs and additional failures. 

    “Bank runs are a crisis of confidence,” said Gary Cohn, the former top economic adviser in the Trump White House who is now vice chairman of IBM, told CBS News’ “Face the Nation.” 

    He added, “There are thousands of small and regional banks in the United States — this usually doesn’t stop after two [banks].”

    Source link

  • First Republic Bank woes mount despite Wall Street rescue

    First Republic Bank woes mount despite Wall Street rescue

    Shares of First Republic Bank continued their free-fall despite a rare move by the biggest U.S. banks to pump $30 billion into the regional lender.

    The company’s stock plunged more than 47% on Monday, while trading was halted numerous times because of volatility. The shares, which have dropped around 88% in the past two weeks, closed at $12.18 after hitting an all-time low of $11.52 last week.

    The sudden collapse of Silicon Valley Bank (SVB) on March 10, along with New York’s Signature Bank two days later, has shaken investor confidence in regional lenders like $213 billion First Republic. In particular, concern has focused on such lenders’ uninsured deposits, or account funds exceeding the Federal Deposit Insurance Corp.’s $250,000 cap.

    As those concerns deepened, First Republic Bank received a $30 billion rescue package from 11 of the biggest U.S. banks last week in an effort to prevent its collapse. Over the weekend, the bank’s credit rating was downgraded by S&P Global Ratings, which said the rescue package should ease near-term liquidity pressures, but “may not solve the substantial business, liquidity, funding and profitability challenges” that it believes the San Francisco-based bank is now likely facing.

    In other banking news, the bidding process for the successor of Silicon Valley Bank is being extended by the FDIC to give more time to work out a potential deal.

    The FDIC said Monday that there’s been “substantial interest” from multiple parties for Silicon Valley Bridge Bank. The agency said it’s going to allow parties to submit separate bids for Silicon Valley Bridge Bank and its subsidiary Silicon Valley Private Bank in order to simplify the bidding process and expand the pool of possible bidders.

    Qualified insured banks and qualified insured banks working with non-bank partners will be able to submit whole-bank bids or bids on the deposits or assets of the institutions. Bank and non-bank financial firms will be allowed to bid on asset portfolios.

    Bids for Silicon Valley Bridge Bank must be submitted by by 8 p.m. ET on Friday, while bids for Silicon Valley Private Bank are due by 8:00 p.m. ET on Wednesday.

    On Friday the parent of Silicon Valley Bank filed for Chapter 11 bankruptcy protection, and Silicon Valley Bridge Bank was not included in the Chapter 11 filing.

    SVB Financial Group is no longer affiliated with Silicon Valley Bank after its seizure by the FDIC. Its collapse was the second biggest bank failure in U.S. history after the demise of Washington Mutual in 2008.


    UBS agrees to take over Credit Suisse amid Silicon Valley Bank fallout

    02:52

    The shuttering of Silicon Valley Bank and of New York-based Signature Bank has revived bad memories of the financial crisis that plunged the United States into the Great Recession of 2007-2009.

    The federal government, determined to restore public confidence in the banking system, moved to protect all the banks’ deposits, even those that exceeded the FDIC’s $250,000 limit per individual account.

    The turmoil in the banking industry spread to Europe and forced a deal under which UBS will acquire troubled rival Credit Suisse for almost $3.25 billion. The deal was orchestrated by Swiss regulators. Shares of UBS rose 4.4%.

    The FDIC said late Sunday that New York Community Bank agreed to buy a significant chunk of the failed Signature Bank in a $2.7 billion deal.

    Shares of New York Community Bancorp jumped 33%.

    Despite all of the concerns swirling around the banking sector, Wall Street is rising on Monday following all of the moves being made to restore confidence in the banking sector.

    Source link

  • FDIC announces agreement to sell Signature Bank assets to New York Community Bancorp

    FDIC announces agreement to sell Signature Bank assets to New York Community Bancorp

    A subsidiary of New York Community Bancorp has entered into an agreement with U.S. regulators to purchase deposits and loans from New York-based Signature Bank, which was closed earlier this month.

    The Federal Deposit Insurance Corporation said the deal would see Flagstar Bank, the subsidiary, assume substantially all deposits and certain loan portfolios, and all 40 of Signature Bank’s former branches. The FDIC said roughly $60 billion of the bank’s loans and $4 billion of its deposits will remain in receivership.

    Source link