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The Biden administration approved the large-scale and controversial Willow drilling project for ConocoPhillips on Alaska’s oil-rich North Slope on Monday.
The approval, although with some conditions, is one of President Joe Biden’s most consequential climate choices of his first administration.
It’s a blemish, say environmental groups, to…
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The run on Silicon Valley Bank (SVB) SIVB— on which nearly half of all venture-backed tech start-ups in the United States depend — is in part a rerun of a familiar story, but it’s more than that. Once again, economic policy and financial regulation has proven inadequate.
The news about the second-biggest bank failure in U.S. history came just days after Federal Reserve Chair Jerome Powell assured Congress that the financial condition of America’s banks was sound. But the timing should not be surprising. Given the large and…
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Trading in shares of First Republic Bank and Western Alliance Bancorp ended sharply lower in a tough day of trading for regional banks as fears over bank solvency persisted following the failures of Silicon Valley Bank, Signature Bank and Silvergate Capital.
Stocks were periodically halted or paused for trading amid the bank stock bloodbath, which saw many suffering percentage declines well into the double digits. Typically, bank stocks are stable compared with sectors such as technology, with daily moves above 5% being relatively…
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U.S. regulators came to the rescue of Silicon Valley Bank depositors late Sunday, triggering a modest relief rally in stock-index futures.
But investors were left to weigh the outlook for Federal Reserve rate increases after the central bank’s aggressive tightening was flagged by economists and analysts for setting the stage for the second-largest bank failure in U.S. history.
Federal regulators said depositors at Silicon Valley Bank, or SVB, would have access to all deposits on Monday morning. That includes uninsured deposits — those exceeding the FDIC’s $250,000 cap — in a move that analysts said would help avert runs similar to the event that capsized SVB from occurring elsewhere. SVB
SIVB,
stock and bondholders, however, will be wiped out.
Regulators said New York’s Signature Bank was also closed on Sunday and that its depositors would also be made whole.
The Fed also announced a new emergency loan program that it said would help assure banks have the ability to meet the needs of all their depositors.
“The American people and American businesses can have confidence that their bank deposits will be there when they need them,” President Joe Biden said in a statement Sunday night. “I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again,” he said, adding that he will deliver additional comments Monday.
A deal that spared depositors would be expected to let stocks “rally strongly,” said Barry Knapp, managing partner and director of research at Ironsides Macroeconomics, in a phone interview ahead of the announcement Sunday afternoon. Conversely, measures that would have forced depositors to take a hit would have had the potential to spark an ugly reaction, he said.
Futures on the Dow Jones Industrial Average
YM00,
rose 240 points, or 0.8% following the announcement, while S&P 500 futures
ES00,
were up 1% and Nasdaq-100 futures
NQ00,
gained 1.3%.
Investors will also be assessing the fallout to see if it complicates the Federal Reserve’s plans to hike interest rates further and potentially faster than previously expected in its bid to tamp down inflation.
SVB was closed by California regulators on Friday and taken over by the Federal Deposit Insurance Corp. Regulators raced over the weekend to come to a resolution for depositors after uncertainty around SVB triggered a sharp market selloff late last week.
“In what is an already jittery market, the emotional response to a failed bank reawakens our collective muscle memory of the GFC,” Art Hogan, chief market strategist at B. Riley Financial Wealth, told MarketWatch in an email, referring to the 2007-2009 financial crisis. “When the dust settles, we will likely find that SVB is not a ‘systematic’ issue.”
In a statement Sunday, Securities and Exchange Commission Chair Gary Gensler warned that regulators are on the lookout for misconduct: “In times of increased volatility and uncertainty, we at the SEC are particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly. Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws.”
Weekend Snapshot: What’s next for stocks after Silicon Valley Bank collapse as investors await crucial inflation reading
Knapp said a deal that leaves depositors whole would lift the overall market and allow bank stocks, which got hammered last week, to “rip” higher “because they are cheap” and the banking system “as a whole…is in really good shape.”
Banking stocks dropped sharply Thursday, led by shares of regional institutions, and extended their losses Friday. The selloff in bank stocks pulled down the broader market, leaving the S&P 500
SPX,
down 4.6%, nearly wiping out the large-cap benchmark’s early 2023 gains. The Dow
DJIA,
saw a 4.6% weekly fall, while the Nasdaq Composite
COMP,
declined 4.7%.
Investors sold stocks but piled into safe-haven U.S. Treasurys, prompting a sharp retreat in yields, which move opposite to prices.
SVB’s failure is being blamed on a mismatch between assets and liabilities. The bank catered to tech startups and venture-capital firms. Deposits grew rapidly and were placed in long-dated bonds, particularly government-backed mortgage securities. As the Federal Reserve began aggressively raising interest rates roughly a year ago, funding sources for tech startups dried up, putting pressure on deposits. At the same time, Fed rate hikes triggered a historic bond-market selloff, putting a big dent in the value of SVB’s securities holdings.
SVB was forced to sell a large chunk of those holdings at a loss to meet withdrawals, leading it to plan a dilutive share offering that stoked a further run on deposits and ultimately led to its collapse.
See: Silicon Valley Bank is a reminder that ‘things tend to break’ when Fed hikes rates
Meanwhile, the Fed’s newly announced Bank Term Lending Program will make loans of up to 12 months to banks and other depository institutions. In a crucial twist, it will allow the assets used as collateral for those loans to be valued at par, or face value, rather than marked to market. The Fed will also accept collateral at its discount window on the same conditions.
“These are strong moves,” said Paul Ashworth, chief North America economist at Capital Economics, in a note.
By accepting collateral at par rather than marking to market means that banks that have accumulated more than $600 billion in unreazlied losses on held-to-maturity Treasury and mortgage-backed securities portfolios and had failed to hedge interest-rate risk should be able to survive, he said.
“Rationally, this should be enough to stop any contagion from spreading and taking down more banks, which can happen in the blink of an eye in the digital age,” Ashworth wrote. “But contagion has always been more about irrational fear, so we would stress that there is no guarantee this will work.”
Analysts and economists had largely dismissed the notion that SVB’s woes marked a systemic problem in the banking system. Instead, SVB appeared to be a “a rather special case of poor balance-sheet management, holding massive amounts of long-duration bonds funded by short-term liabilities,” said Erik F. Nielsen, group chief economics adviser at UniCredit Bank, in a Sunday note.
Mismanagement aside, the Fed’s rate hikes created an environment that set the stage for problems, analysts said. A deeply inverted yield curve, in which short-dated Treasury yields run sharply above longer-dated Treasurys, amplifies liability and asset mismatches.
The yield on the 2-year note early last week traded more than 100 basis points, or a full percentage point, above the 10-year for the first time since the early 1980s.
“Inverting the yield curve as deeply as they did…there’s going to be more accidents if they continue down that path,” Knapp said. “Push that thing to 150 basis points and see what happens. You’re going to have more blowups.”
Fed-funds futures traders last week moved to price in a more-than-70% chance of an outsize 50-basis-point, or half a percentage point, rise in the benchmark interest rate at the Fed’s March meeting after Chair Jerome Powell told lawmakers that rates would need to move higher than previously anticipated. Expectations swung back to a 25-basis-point, or quarter-point move, as the SVB collapse unfolded, with traders also scaling back expectations for when rates will likely peak.
Meanwhile, a flight to safety saw the yield on the 2-year Treasury note, which had earlier in the week topped 5% for the first time since 2007, end the week down 27.3 basis points at 4.586%.
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U.S. regulators came to the rescue of Silicon Valley Bank depositors late Sunday, triggering a modest relief rally in stock-index futures.
But investors were left to weigh the outlook for Federal Reserve rate increases after the central bank’s aggressive tightening was flagged by economists and analysts for setting the stage for the second-largest bank failure in U.S. history.
Federal regulators said depositors at Silicon Valley Bank, or SVB, would have access to all deposits on Monday morning. That includes uninsured deposits — those exceeding the FDIC’s $250,000 cap — in a move that analysts said would help avert runs similar to the event that capsized SVB from occurring elsewhere. SVB
SIVB,
stock and bondholders, however, will be wiped out.
Regulators said New York’s Signature Bank was also closed on Sunday and that its depositors would also be made whole.
The Fed also announced a new emergency loan program that it said would help assure banks have the ability to meet the needs of all their depositors.
A deal that spared depositors would be expected to let stocks “rally strongly,” said Barry Knapp, managing partner and director of research at Ironsides Macroeconomics, in a phone interview ahead of the announcement Sunday afternoon. Conversely, measures that would have forced depositors to take a hit would have had the potential to spark an ugly reaction, he said.
Futures on the Dow Jones Industrial Average
YM00,
rose 240 points, or 0.8% following the announcement, while S&P 500 futures
ES00,
were up 1% and Nasdaq-100 futures
NQ00,
gained 1.3%.
Investors will also be assessing the fallout to see if it complicates the Federal Reserve’s plans to hike interest rates further and potentially faster than previously expected in its bid to tamp down inflation.
SVB was closed by California regulators on Friday and taken over by the Federal Deposit Insurance Corp. Regulators raced over the weekend to come to a resolution for depositors after uncertainty around SVB triggered a sharp market selloff late last week.
“In what is an already jittery market, the emotional response to a failed bank reawakens our collective muscle memory of the GFC,” Art Hogan, chief market strategist at B. Riley Financial Wealth, told MarketWatch in an email, referring to the 2007-2009 financial crisis. “When the dust settles, we will likely find that SVB is not a ‘systematic’ issue.”
In a statement Sunday, Securities and Exchange Commission Chair Gary Gensler warned that regulators are on the lookout for misconduct: “In times of increased volatility and uncertainty, we at the SEC are particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly. Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws.”
Weekend Snapshot: What’s next for stocks after Silicon Valley Bank collapse as investors await crucial inflation reading
Knapp said a deal that leaves depositors whole would lift the overall market and allow bank stocks, which got hammered last week, to “rip” higher “because they are cheap” and the banking system “as a whole…is in really good shape.”
Banking stocks dropped sharply Thursday, led by shares of regional institutions, and extended their losses Friday. The selloff in bank stocks pulled down the broader market, leaving the S&P 500
SPX,
down 4.6%, nearly wiping out the large-cap benchmark’s early 2023 gains. The Dow
DJIA,
saw a 4.6% weekly fall, while the Nasdaq Composite
COMP,
declined 4.7%.
Investors sold stocks but piled into safe-haven U.S. Treasurys, prompting a sharp retreat in yields, which move opposite to prices.
SVB’s failure is being blamed on a mismatch between assets and liabilities. The bank catered to tech startups and venture-capital firms. Deposits grew rapidly and were placed in long-dated bonds, particularly government-backed mortgage securities. As the Federal Reserve began aggressively raising interest rates roughly a year ago, funding sources for tech startups dried up, putting pressure on deposits. At the same time, Fed rate hikes triggered a historic bond-market selloff, putting a big dent in the value of SVB’s securities holdings.
SVB was forced to sell a large chunk of those holdings at a loss to meet withdrawals, leading it to plan a dilutive share offering that stoked a further run on deposits and ultimately led to its collapse.
See: Silicon Valley Bank is a reminder that ‘things tend to break’ when Fed hikes rates
Meanwhile, the Fed’s newly announced Bank Term Lending Program will make loans of up to 12 months to banks and other depository institutions. In a crucial twist, it will allow the assets used as collateral for those loans to be valued at par, or face value, rather than marked to market. The Fed will also accept collateral at its discount window on the same conditions.
“These are strong moves,” said Paul Ashworth, chief North America economist at Capital Economics, in a note.
By accepting collateral at par rather than marking to market means that banks that have accumulated more than $600 billion in unreazlied losses on held-to-maturity Treasury and mortgage-backed securities portfolios and had failed to hedge interest-rate risk should be able to survive, he said.
“Rationally, this should be enough to stop any contagion from spreading and taking down more banks, which can happen in the blink of an eye in the digital age,” Ashworth wrote. “But contagion has always been more about irrational fear, so we would stress that there is no guarantee this will work.”
Analysts and economists had largely dismissed the notion that SVB’s woes marked a systemic problem in the banking system. Instead, SVB appeared to be a “a rather special case of poor balance-sheet management, holding massive amounts of long-duration bonds funded by short-term liabilities,” said Erik F. Nielsen, group chief economics adviser at UniCredit Bank, in a Sunday note.
Mismanagement aside, the Fed’s rate hikes created an environment that set the stage for problems, analysts said. A deeply inverted yield curve, in which short-dated Treasury yields run sharply above longer-dated Treasurys, amplifies liability and asset mismatches.
The yield on the 2-year note early last week traded more than 100 basis points, or a full percentage point, above the 10-year for the first time since the early 1980s.
“Inverting the yield curve as deeply as they did…there’s going to be more accidents if they continue down that path,” Knapp said. “Push that thing to 150 basis points and see what happens. You’re going to have more blowups.”
Fed-funds futures traders last week moved to price in a more-than-70% chance of an outsize 50-basis-point, or half a percentage point, rise in the benchmark interest rate at the Fed’s March meeting after Chair Jerome Powell told lawmakers that rates would need to move higher than previously anticipated. Expectations swung back to a 25-basis-point, or quarter-point move, as the SVB collapse unfolded, with traders also scaling back expectations for when rates will likely peak.
Meanwhile, a flight to safety saw the yield on the 2-year Treasury note, which had earlier in the week topped 5% for the first time since 2007, end the week down 27.3 basis points at 4.586%.
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State authorities closed New York-based Signature Bank
SBNY,
on Sunday, after Silicon Valley Bank was shut down by regulators on Friday in the biggest bank failure since the 2008 financial crisis.
All depositors of Signature Bank will be made whole, according to a joint statement by the Department of the Treasury, Federal Reserve and FDIC.
Also see: Silicon Valley Bank depositors will get ‘all of their money,’ regulators say
Signature Bank has been popular among crypto companies, especially after crypto-friendly Silvergate Bank
SI,
said last Wednesday it would close its operations.
Signature Bank provides deposit services for its clients’ digital assets, but does not invest in, does not trade, does not hold on its own balance sheet nor provide custody of digital assets, and does not lend against or make loans collateralized by such assets, the company said.
The Federal Reserve on Sunday also announced a new emergency loan program to bolster the capacity of the banking system.
U.S. equity markets traded higher Sunday afternoon, with the Dow futures
YM00,
up 0.5%, and the S&P 500
ES00,
futures up 0.8%. Futures for the Nasdaq 100
NQ00,
rose 0.9%, according to FactSet data.
Major cryptocurrencies rallied Sunday. Bitcoin
BTCUSD,
surged 6.4% in the past 24 hours to around $21,842 and ether
ETHUSD,
gained 7% to $1,576, according to CoinDesk data.
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U.S. financial regulators on Sunday said Silicon Valley Bank customers would have access to all their money on Monday, days after the bank failed.
Announcing new steps, the Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation said their moves would “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.”
The FDIC will be able to complete its resolution of Silicon Valley Bank
SIVB,
“in a manner that fully protects all depositors,” a joint statement said. “Depositors will have access to all of their money starting Monday, March 13,” the statement added, and no losses will be borne by U.S. taxpayers.
“The American people and American businesses can have confidence that their bank deposits will be there when they need them,” President Joe Biden said in a statement Sunday night. “I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”
Read more: Full text of Treasury, Fed and FDIC joint statement on SVB and Signature Bank
Signature Bank in New York was closed Sunday by its state regulator, the joint announcement said. “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,” said the joint statement.
Read: Crypto-friendly Signature Bank shut down by regulators after collapses of SVB, Silvergate
Separately, the Fed said it would make additional funding available to banks to ensure they meet depositors’ needs through a new “Bank Term Funding Program.”
See: Fed announces new emergency loan program for banks to ease contagion risk from Silicon Valley Bank
Under the new program, banks and other lenders will be able to pledge Treasurys and mortgage-backed securities for cash. Banks can pledge collateral at par.
This will eliminate the need for a bank to quickly sell its assets in times of stress.
The central bank said “it is prepared to address any liquidity pressures that may arise.”
In a separate statement Sunday, Securities and Exchange Commission Chair Gary Gensler said regulators are monitoring markets amid the recent turmoil. and promised to prosecute “any form of misconduct that might threaten investors, capital formation, or the markets more broadly.”
Greg Robb contributed to this story.
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It’s all eyes on federal banking regulators as investors sift through the aftermath of last week’s market-rattling collapse of Silicon Valley Bank.
The name of the game — and the key to a near-term market bounce — could be a deal that makes depositors at Silicon Valley Bank, or SVB, whole, analysts said. And efforts by regulators appeared to be focused on soothing worries over the ability of companies to access uninsured deposits — most such deposits exceed the FDIC’s $250,000 cap — in order to prevent runs similar to the event that capsized SVB from occurring elsewhere.
“If a deal gets struck tonight that doesn’t haircut depositors, the market is going to rally strongly,” said Barry Knapp, managing partner and director of research at Ironsides Macroeconomics, in a phone interview Sunday afternoon.
Investors will also be assessing the fallout to see if it complicates the Federal Reserve’s plans to hike interest rates further and potentially faster than previously expected in its bid to tamp down inflation.
SVB was closed by California regulators on Friday and taken over by the Federal Deposit Insurance Corp., which was conducting an auction of the bank Sunday afternoon, according to news reports.
See: U.S. and U.K. regulators consider ways to help SVB depositors, FDIC auctioning assets – reports
“We want to make sure that the troubles that exist at one bank don’t create contagion to others that are sound,” Treasury Secretary Janet Yellen said in a Sunday morning interview on “Face the Nation” on CBS, while ruling out a bailout that would rescue bondholders and shareholders of SVB parent SVB Financial Group SIVB.
“We are concerned about depositors and are focused on trying to meet their needs,” she said.
Continued uncertainty could leave a “sell first, ask questions later” dynamic in effect Monday.
“In what is an already jittery market, the emotional response to a failed bank reawakens our collective muscle memory of the GFC,” Art Hogan, chief market strategist at B. Riley Financial Wealth, told MarketWatch in an email, referring to the 2007-2009 financial crisis. “When the dust settles, we will likely find that SVB is not a ‘systematic’ issue.”
Weekend Snapshot: What’s next for stocks after Silicon Valley Bank collapse as investors await crucial inflation reading
Knapp warned that market turmoil with significant potential downside for stocks could ensue if depositors are forced to take a haircut, likely sparking runs at other institutions. A deal that leaves depositors whole would lift the overall market and allow bank stocks, which got hammered last week, to “rip” higher “because they are cheap” and the banking system “as a whole…is in really good shape.”
Muscle memory, meanwhile, was in effect at the end of last week. Banking stocks dropped sharply Thursday, led by shares of regional institutions, and extended their losses Friday. The selloff in bank stocks pulled down the broader market, leaving the S&P 500
SPX,
down 4.6%, nearly wiping out the large-cap benchmark’s early 2023 gains.
The Dow Jones Industrial Average
DJIA,
saw a 4.6% weekly fall, while the Nasdaq Composite
COMP,
declined 4.7%. Investors sold stocks but piled into safe-haven U.S. Treasurys, prompting a sharp retreat in yields, which move opposite to prices.
SVB’s failure is being blamed on a mismatch between assets and liabilities. The bank catered to tech startups and venture-capital firms. Deposits grew rapidly and were placed in long-dated bonds, particularly government-backed mortgage securities. As the Federal Reserve began aggressively raising interest rates roughly a year ago, funding sources for tech startups dried up, putting pressure on deposits. At the same time, Fed rate hikes triggered a historic bond-market selloff, putting a big dent in the value of SVB’s securities holdings.
See: Silicon Valley Bank is a reminder that ‘things tend to break’ when Fed hikes rates
SVB was forced to sell a large chunk of those holdings at a loss to meet withdrawals, leading it to plan a dilutive share offering that stoked a further run on deposits and ultimately led to its collapse.
Analysts and economists largely dismissed the notion that SVB’s woes marked a systemic problem in the banking system.
Also see: 20 banks that are sitting on huge potential securities losses—as was SVB
Instead, SVB appears to be a “a rather special case of poor balance-sheet management, holding massive amounts of long-duration bonds funded by short-term liabilities,” said Erik F. Nielsen, group chief economics adviser at UniCredit Bank, in a Sunday note.
“I’ll stick my neck out and suggest that markets are vastly overreacting,” he said.
Implications for the Fed’s monetary policy path also loom large. Fed-funds futures traders last week moved to price in a more-than-70% chance of an outsize 50-basis-point, or half a percentage point, rise in the benchmark interest rate at the Fed’s March meeting after Chair Jerome Powell told lawmakers that rates would need to move higher than previously anticipated.
Expectations swung back to a 25-basis-point, or quarter-point move, as the SVB collapse unfolded, with traders also scaling back expectations for when rates will likely peak.
Meanwhile, a flight to safety saw the yield on the 2-year Treasury note, which had earlier in the week topped 5% for the first time since 2007, end the week down 27.3 basis points at 4.586%.
The market reaction wasn’t unusual, said Michael Kramer of Mott Capital Management, in a Sunday note, and should reverse once the situation around SVB calms down.
Powell said incoming economic data would determine the size of the Fed’s next rate move. The market reaction to a stronger-than-expected rise in February nonfarm payrolls, which was tempered by a slowdown in wage growth and a rise in the unemployment rate, was clouded by the tumult around SVB.
“I think they will raise rates by at least 25 basis points and signal that more rate hikes are coming,” Kramer said. “If they were to pause rate hikes unexpectedly, it would send a warning message that they are seeing something of grave concern, causing a significant change in their policy path, and that would not be bullish for stocks.”
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LONDON — The BBC’s sports coverage faced a second day of severe disruptions Sunday as dozens of staff refused to work in solidarity with top soccer host Gary Lineker, who was suspended by the broadcaster after he tweeted criticism of the British government’s asylum policy.
Pressure was mounting on the BBC to resolve the crisis, with growing calls for its bosses to step down over allegations of political bias and suppressing free speech.
The BBC suspended Lineker, one of English soccer’s most lauded players and the corporation’s highest-paid presenter, on Friday after he tweeted a criticism of the U.K. government’s new migration policy and compared its language about migrants to that used in Nazi Germany.
He was referring to the Conservative government’s plans to stop migrants from arriving in small boats on U.K. shores by introducing tough new laws that would detain asylum seekers, deport them and ban them from ever re-entering the U.K.
Immigration and “taking back control” of Britain’s borders has been a hot-button issue in the U.K. since the 2016 Brexit referendum, and Prime Minister Rishi Sunak has made stopping the English Channel migrant crossings one of his top priorities. But his plans have drawn swift condemnation from the U.N.’s refugee agency and many rights groups, which call the policies unethical and unworkable.
Lineker’s suspension has triggered a huge backlash, and many of the BBC’s sports presenters and reporters walked out of their jobs Saturday in support of the presenter.
As a result, several daytime soccer shows were pulled at the last minute and “Match of the Day,” a popular late-night program showing highlights of Premier League games that day and regarded as something of a British institution since the 1960s, aired with no commentary and only featured shortened footage. Usually lasting around an hour and a half, Saturday’s “Match of the Day” only aired for 20 minutes.
No presenters are expected to accompany Sunday’s coverage of the Women’s Super League and “Match of the Day 2.”
Tim Davie, the BBC’s director-general, apologized for the disruption.
“It’s been a difficult day and I’m sorry that audiences have been affected and they haven’t got the programming,” Davie said on Saturday. “We are working very hard to resolve the situation and make sure that we get output back on air.”
Lineker, 62, is one of Britain’s most influential media figures and was paid 1.35 million pounds ($1.6 million) by the BBC last year.
One of England’s greatest strikers with 48 goals in 80 international appearances, he was a household name in Britain even before he became chief “Match of the Day” presenter in 1999.
The controversy began with a tweet on Tuesday from Lineker’s account describing the government’s plan to detain and deport migrants arriving by boat as “an immeasurably cruel policy directed at the most vulnerable people in language that is not dissimilar to that used by Germany in the 30s.”
The Conservative government called Lineker’s Nazi comparison offensive and unacceptable, and some lawmakers said he should be fired.
It was the latest controversy over the role of the 100-year-old BBC, which is funded by a license fee paid by all households with a television.
The broadcaster’s neutrality came under recent scrutiny over revelations that its chairman, Richard Sharp — a Conservative Party donor — helped arrange a loan for then Prime Minister Boris Johnson in 2021, weeks before he was appointed to the BBC post on the government’s recommendation.
___
More AP soccer: https://apnews.com/hub/soccer and https://twitter.com/AP_Sports
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BEIJING — China on Sunday reappointed Yi Gang as head of the central bank in an effort to reassure entrepreneurs and financial markets by showing continuity at the top while other economic officials change during a period of uncertainty in the world’s second-largest economy.
Yi, whose official title is governor of the People’s Bank of China, plays no role in making monetary policy, unlike his counterparts in other major economies. His official duties lie in “implementing monetary policy,” or carrying out decisions made by a policymaking body whose membership is a secret.
But the central bank governor acts as spokesperson for monetary policy, is the most prominent Chinese figure in global finance and is in charge of reassuring bankers and investors at a time when China’s economy is emerging from drastically slower growth.
At the March 5 opening of the annual session of China’s rubber-stamp parliament, the National People’s Congress, China announced plans for a consumer-led revival of the struggling economy, setting this year’s growth target at “around 5%.”
Last year’s growth fell to 3%, the second-weakest level since at least the 1970s, putting president and head of the ruling Communist Party Xi Jinping under exceptional pressure to revitalize the economy.
A longtime veteran of monetary policy departments, Yi was first appointed governor of the People’s Bank of China in March 2018, taking over from the highly regarded Zhou Xiaochuan.
Before becoming governor, Yi spent 20 years at the central bank after getting his Ph.D. from the University of Illinois and working as a professor of economics at Indiana University from 1986 to 1994.
He is also a co-founder and professor at Peking University’s China Center for Economic Research.
The party made a similar decision to opt for continuity in 2013, when then-PBOC governor Zhou, who already had been in the job for a decade, stayed on as governor while all other economic regulators changed.
Yi’s reappointment came on the congress’s penultimate day, which also saw Xi loyalists appointed as finance minister and head of the Cabinet planning agency to carry out a program to tighten control over entrepreneurs, reduce debt risks and promote state-led technology development. Incumbent Wang Wentao was reappointed minister of commerce.
The congress also named four vice premiers, individuals who may be in line for higher office. They include sixth-ranking member of the party’s all-powerful Politburo Standing Committee Ding Xuexiang as vice premier overseeing administrative matters. Veteran bureaucrats He Lifeng, Zhang Guoqing and Liu Guozhong were also named to the post. Liu and Zhang were incumbents.
Foreign Minister Qin Gang was also appointed to the position of state councilor, a position also held by Wang Yi, his predecessor and current superior as director of the party’s Office of the Central Foreign Affairs Commission.
Defense Minister Li Shangfu, an aerospace engineer by training, was also named one of the five state councilors, along with Minister of Public Security Wang Xiaohong and Secretary General of China’s Cabinet, known as the State Council, Wu Zhenglong. Shen Yiqin was the only woman named to the position and is China’s highest-ranking female politician.
No women sit on the 24-member Politburo or its standing Committee, and the party’s more-than-200-member Central Committee is 95% male.
A priority for finance officials will be to manage corporate and household debt that Beijing worries has risen to dangerous levels. Tighter debt controls triggered a slump in China’s vast real estate industry in 2021, adding to the COVID-19 pandemic’s downward pressure on the economy.
At the same time, the ruling party is trying to shift money into technology development and other strategic plans. That has prompted warnings too much political control over emerging industries could waste money and hamper growth.
Xi has favored promoting officials who sometimes lack the experience of their predecessors and exposure to global industry and finance markets. That reflects Xi’s effort to purge the Chinese system of Western influence and promote homegrown strategies.
___
AP writer Joe McDonald contributed to this report.
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Silicon Valley Bank has failed following a run on deposits, after its parent company’s share price crashed a record 60% on Thursday.
Trading of SVB Financial Group’s
SIVB,
stock was halted early Friday, after the shares plunged again in premarket trading. Treasury Secretary Janet Yellen said SVB was one of a few banks she was “monitoring very carefully.” Reaction poured in from several analysts who discussed the bank’s liquidity risk.
California regulators closed Silicon Valley Bank and handed the wreckage over to the Federal Deposit Insurance Administration later on Friday.
Below is the same list of 10 banks we highlighted on Thursday that showed similar red flags to those shown by SVB Financial through the fourth quarter. This time, we will show how much they reported in unrealized losses on securities — an item that played an important role in SVB’s crisis.
Below that is a screen of U.S. banks with at least $10 billion in total assets, showing those that appeared to have the greatest exposure to unrealized securities losses, as a percentage of total capital, as of Dec. 31.
Some media reports have referred to SVB of Santa Clara, Calif., as a small bank, but it had $212 billion in total assets as of Dec. 31, making it the 17th largest bank in the Russell 3000 Index
RUA,
as of Dec. 31. That makes it the largest U.S. bank failure since Washington Mutual in 2008.
One unique aspect of SVB was its decades-long focus on the venture capital industry. The bank’s loan growth had been slowing as interest rates rose. Meanwhile, when announcing its $21 billion dollars in securities sales on Thursday, SVB said it had taken the action not only to lower its interest-rate risk, but because “client cash burn has remained elevated and increased further in February, resulting in lower deposits than forecasted.”
SVB estimated it would book a $1.8 billion loss on the securities sale and said it would raise $2.25 billion in capital through two offerings of new shares and a convertible bond offering. That offering wasn’t completed.
So this appears to be an example of what can go wrong with a bank focused on a particular industry. The combination of a balance sheet heavy with securities and relatively light on loans, in a rising-rate environment in which bond prices have declined and in which depositors specific to that industry are themselves suffering from a decline in cash, led to a liquidity problem.
Banks leverage their capital by gathering deposits or borrowing money either to lend the money out or purchase securities. They earn the spread between their average yield on loans and investments and their average cost for funds.
The securities investments are held in two buckets:
In its regulatory Consolidated Financial Statements for Holding Companies—FR Y-9C, filed with the Federal Reserve, SVB Financial, reported a negative $1.911 billion in accumulated other comprehensive income as of Dec. 31. That is line 26.b on Schedule HC of the report, for those keeping score at home. You can look up regulatory reports for any U.S. bank holding company, savings and loan holding company or subsidiary institution at the Federal Financial Institution Examination Council’s National Information Center. Be sure to get the name of the company or institution right — or you may be looking at the wrong entity.
Here’s how accumulated other comprehensive income (AOCI) is defined in the report: “Includes, but is not limited to, net unrealized holding gains (losses) on available-for-sale securities, accumulated net gains (losses) on cash flow hedges, cumulative foreign currency translation adjustments, and accumulated defined benefit pension and other postretirement plan adjustments.”
In other words, it was mostly unrealized losses on SVB’s available-for-sale securities. The bank booked an estimated $1.8 billion loss when selling “substantially all” of these securities on March 8.
On the regulatory call reports, AOCI is added to regulatory capital. Since SVB’s AOCI was negative (because of its unrealized losses on AFS securities) as of Dec. 31, it lowered the company’s total equity capital. So a fair way to gauge the negative AOCI to the bank’s total equity capital would be to divide the negative AOCI by total equity capital less AOCI — effectively adding the unrealized losses back to total equity capital for the calculation.
Getting back to our list of 10 banks that raised similar red margin flags to those of SVB, here’s the same group, in the same order, showing negative AOCI as a percentage of total equity capital as of Dec. 31. We have added SVB to the bottom of the list. The data was provided by FactSet:
| Bank | Ticker | City | AOCI ($mil) | Total equity capital ($mil) | AOCI/ TEC – AOCI | Total assets ($mil) |
| Customers Bancorp Inc. |
CUBI, |
West Reading, Pa. | -$163 | $1,403 | -10.4% | $20,896 |
| First Republic Bank |
FRC, |
San Francisco | -$331 | $17,446 | -1.9% | $213,358 |
| Sandy Spring Bancorp Inc. |
SASR, |
Olney, Md. | -$132 | $1,484 | -8.2% | $13,833 |
| New York Community Bancorp Inc. |
NYCB, |
Hicksville, N.Y. | -$620 | $8,824 | -6.6% | $90,616 |
| First Foundation Inc. |
FFWM, |
Dallas | -$12 | $1,134 | -1.0% | $13,014 |
| Ally Financial Inc. |
ALLY, |
Detroit | -$4,059 | $12,859 | -24.0% | $191,826 |
| Dime Community Bancshares Inc. |
DCOM, |
Hauppauge, N.Y. | -$94 | $1,170 | -7.5% | $13,228 |
| Pacific Premier Bancorp Inc. |
PPBI, |
Irvine, Calif. | -$265 | $2,798 | -8.7% | $21,729 |
| Prosperity Bancshare Inc. |
PB, |
Houston | -$3 | $6,699 | -0.1% | $37,751 |
| Columbia Financial, Inc. |
CLBK, |
Fair Lawn, N.J. | -$179 | $1,054 | -14.5% | $10,408 |
| SVB Financial Group |
SIVB, |
Santa Clara, Calif. | -$1,911 | $16,295 | -10.5% | $211,793 |
| Source: FactSet | ||||||
Click on the tickers for more about each bank.
Read Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.
Ally Financial Inc.
ALLY,
— the third largest bank on the list by Dec. 31 total assets — stands out as having the largest percentage of negative accumulated comprehensive income relative to total equity capital as of Dec. 31.
To be sure, these numbers don’t mean that a bank is in trouble, or that it will be forced to sell securities for big losses. But SVB had both a troubling pattern for its interest margins and what appeared to be a relatively high percentage of securities losses relative to capital as of Dec. 31.
There are 108 banks in the Russell 3000 Index
RUA,
that had total assets of at least $10.0 billion as of Dec. 31. FactSet provided AOCI and total equity capital data for 105 of them. Here are the 20 which had the highest ratios of negative AOCI to total equity capital less AOCI (as explained above) as of Dec. 31:
| Bank | Ticker | City | AOCI ($mil) | Total equity capital ($mil) | AOCI/ (TEC – AOCI) | Total assets ($mil) |
| Comerica Inc. |
CMA, |
Dallas | -$3,742 | $5,181 | -41.9% | $85,406 |
| Zions Bancorporation N.A. |
ZION, |
Salt Lake City | -$3,112 | $4,893 | -38.9% | $89,545 |
| Popular Inc. |
BPOP, |
San Juan, Puerto Rico | -$2,525 | $4,093 | -38.2% | $67,638 |
| KeyCorp |
KEY, |
Cleveland | -$6,295 | $13,454 | -31.9% | $189,813 |
| Community Bank System Inc. |
CBU, |
DeWitt, N.Y. | -$686 | $1,555 | -30.6% | $15,911 |
| Commerce Bancshares Inc. |
CBSH, |
Kansas City, Mo. | -$1,087 | $2,482 | -30.5% | $31,876 |
| Cullen/Frost Bankers Inc. |
CFR, |
San Antonio | -$1,348 | $3,137 | -30.1% | $52,892 |
| First Financial Bankshares Inc. |
FFIN, |
Abilene, Texas | -$535 | $1,266 | -29.7% | $12,974 |
| Eastern Bankshares Inc. |
EBC, |
Boston | -$923 | $2,472 | -27.2% | $22,686 |
| Heartland Financial USA Inc. |
HTLF, |
Denver | -$620 | $1,735 | -26.3% | $20,244 |
| First Bancorp |
FBNC, |
Southern Pines, N.C. | -$342 | $1,032 | -24.9% | $10,644 |
| Silvergate Capital Corp. Class A |
SI, |
La Jolla, Calif. | -$199 | $603 | -24.8% | $11,356 |
| Bank of Hawaii Corp |
BOH, |
Honolulu | -$435 | $1,317 | -24.8% | $23,607 |
| Synovus Financial Corp. |
SNV, |
Columbus, Ga. | -$1,442 | $4,476 | -24.4% | $59,911 |
| Ally Financial Inc |
ALLY, |
Detroit | -$4,059 | $12,859 | -24.0% | $191,826 |
| WSFS Financial Corp. |
WSFS, |
Wilmington, Del. | -$676 | $2,202 | -23.5% | $19,915 |
| Fifth Third Bancorp |
FITB, |
Cincinnati | -$5,110 | $17,327 | -22.8% | $207,452 |
| First Hawaiian Inc. |
FHB, |
Honolulu | -$639 | $2,269 | -22.0% | $24,666 |
| UMB Financial Corp. |
UMBF, |
Kansas City, Mo. | -$703 | $2,667 | -20.9% | $38,854 |
| Signature Bank |
SBNY, |
New York | -$1,997 | $8,013 | -20.0% | $110,635 |
Again, this is not to suggest that any particular bank on this list based on Dec. 31 data is facing the type of perfect storm that has hurt SVB Financial. A bank sitting on large paper losses on its AFS securities may not need to sell them. In fact Comerica Inc.
CMA,
which tops the list, also improved its interest margin the most over the past four quarters, as shown here.
But it is interesting to note that Silvergate Capital Corp.
SI,
which focused on serving clients in the virtual currency industry, made the list. It is shuttering its bank subsidiary voluntarily.
Another bank on the list facing concern among depositors is Signature Bank
SBNY,
of New York, which has a diverse business model, but has also faced a backlash related to the services it provides to the virtual currency industry. The bank’s shares fell 12% on Thursday and were down another 24% in afternoon trading on Friday.
Signature Bank said in a statement that it was in a “strong, well-diversified financial position.”
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Heavy trading in SVB Financial Group’s
SIVB,
debt pulled its BBB-rated 10-year bonds as low as 31 cents on the dollar on Friday after subsidiary Silicon Valley Bank was closed by regulators, marking the biggest bank failure since the financial crisis.
The Santa Clara, Calif.–based financial-services company has been reeling in recent days, with both its stock and bond prices hit hard, after it on Thursday disclosed a $1.8 billion loss from a sale of about $21 billion in securities.
Its bond prices lost further ground Friday after the California Department of Financial Protection and Innovation closed Silicon Valley Bank, placing the Federal Deposit Insurance Corp. in control of its assets.
Silicon Valley Bank had an estimated $209 billion in total assets and about $175.4 billion in deposits as of Dec. 31, according to the FDIC.
SVB Financial’s 4.57% bonds due April 2023 traded as low as 31 cents on the dollar on Friday in heavy trading, according to BondCliq. Since the low, the debt traded up to 38.50 cents. A week ago it was fetching 90 cents. Prices on U.S. corporate bonds below 70 cents on the dollar are broadly considered distressed.
Worries about distress at Silicon Valley Bank, and potential risks in the broader distress in the banking system, have weighed on shares and the debt of financial companies.
Bonds in the financial sector were broadly under pressure Friday, including debt issued by Bank of America Corp.
BAC,
JPMorgan Chase and Co.
JPM,
Goldman Sachs Group Inc.
GS,
Morgan Stanley
MS,
and other major banks, according to BondCliq.
Shares of the Invesco KBW Bank ETF
KBWB,
were down 16% on the week through midday Friday, with some investors expressing concern about potential cracks in the financial system following a year of aggressive interest-rate hikes by the Federal Reserve.
Barclays analysts said Friday that they viewed the collapse of Silicon Valley Bank as an “isolated event, but that it still “raises risks of broader distress within the banking system” that could throw cold water on talk of a Fed interest-rate hike in March of 50 basis points vs. 25 basis points.
“Indeed, the possibility of capital losses at other institutions cannot be completely dismissed, with rising policy rates raising banks’ funding costs, more elevated longer-term rates exerting pressure on asset valuations, and potential loan losses related to idiosyncratic credit exposures.”
Shares of SBV Financial were halted Friday, but they are down about 54% on the year, according to FactSet. The S&P 500 index
SPX,
was down about 1.2% Friday afternoon, while the Dow Jones Industrial Average
DJIA,
fell 0.8% and the Nasdaq Composite
COMP,
was 1.7% lower.
Deep Dive: 10 banks that may face trouble in the wake of the SVB Financial Group debacle
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There’s a very real possibility the government will stop issuing Social Security payments after the debt limit is hit.
Scary as that prospect is, however, the alternative might be even worse: A little-known provision of a 1996 law could be interpreted to allow the Social Security trust fund to be used not only to pay Social Security’s monthly checks but also to circumvent the debt limit and pay all the government’s otherwise overdue bills.
If that happens, any short-term relief to Social Security recipients would come with a potentially huge long-term price tag: The Social Security trust fund could be exhausted much sooner than currently projected—in just a couple of years, in fact.
These dire possibilities emerge from an analysis conducted by Steve Robinson, the chief economist for The Concord Coalition, a group that describes itself as “a nonpartisan organization dedicated to educating the public and finding common sense solutions to our nation’s fiscal policy challenges.”
An issue brief he wrote, entitled “Social Security’s Debt Limit Escape Clause,” is available on the group’s website.
Let me hasten to add that Robinson is not advocating that the Social Security trust fund be used in this way. In an interview, he instead stressed that he wrote his issue brief because we need to be aware not only that this “escape clause” exists but that its use could have unintended consequences. Though hardly anyone outside Washington knows that it even exists, and relatively few on Capitol Hill, the Treasury Department and the Social Security Administration are very much aware of it.
Read: ChatGPT is about to make the business of retirement planning and financial advice profoundly human
Before reviewing the details of this escape clause, it’s worth focusing on the political dynamics that surround it. Because the escape clause lessens the pressure on Congress and the president to come up with a solution to the debt crisis, neither side has an incentive to publicize its existence. But if the government is otherwise pushed to the edge of the fiscal cliff, and it’s facing the potentially huge consequences of an outright default (including the nonpayment of monthly Social Security checks), the political pressure to use the escape clause could be intense.
The 1996 law that creates the escape clause was passed in the wake of the government hitting its debt limit in 1995 and 1996. Ironically, the intent of that law was to prevent the Social Security trust fund from being used for anything other than paying Social Security benefits. But, Robinson explains, that’s unworkable in the real world. That’s because Social Security checks are sent out by the Treasury’s general account, and if that account is in default the checks would bounce.
Read: These 3 things will bring you happiness in retirement — and life
If and when the debt limit is hit, therefore, the only way—in practice—for Social Security checks to continue being issued and cleared through the banking system would be for the Social Security trust fund to “lend” the Treasury sufficient funds that it could pay all the government’s unmet obligations. (I put “lend” in quotes because that’s not exactly how it works; the key is that the “loan” can be structured in ways that don’t count against the debt limit. If you’re interested in reading more about the complex logistics involved, you should read Robinson’s issue brief.)
Therefore, if the debt limit is hit, which it is projected to do perhaps as early as June, Congress and the president will be on the horns of a huge dilemma:
You can appreciate why Congress and the president don’t want us to know that this escape clause exists. Once we are aware of it, they are put in a no-win situation.
So fasten your seat belts for a wild ride in coming months as both parties play political brinkmanship over the debt limit and, by extension, Social Security. With both sides by the day hardening their stances, there’s a very real possibility that the debt limit will be hit.
If that happens, we’ll be hearing a lot more about the little-known provision of a nearly 30-year-old law.
Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com.
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Silicon Valley Bank has been closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (FDIC) has been appointed receiver, becoming the first FDIC-backed institution to fail this year.
The news comes amid a crisis at parent SVB Financial Group
SIVB,
which lost a record 60% of its value on Thursday, after it disclosed large losses from securities sales and announced a dilutive stock offering along with a profit warning. The stock was halted premarket Friday amid reports the company was seeking a buyer.
The FDIC, which insures deposits of up to $250,000 at eligible banks, said all insured depositors will have full access to their accounts no later than Monday morning. Uninsured depositors will get a receivership certificate and may be entitled to dividends once the FDIC sells the bank’s assets.
The bank had 13 branches in California and Massachusetts and will reopen on Monday. As of Dec. 31, it had about $209 billion in total assets, and about $175.4 billion in deposits.
That makes it the biggest bank failure since Washington Mutual Inc. was brought down during the financial crisis of 2008.
See now: 10 banks that may face trouble in the wake of the SVB Financial Group debacle
“At the time of closing, the amount of deposits in excess of the insurance limits was undetermined,” said the FDIC. “The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.”
Read: Treasury monitoring a few banks ‘very carefully’ amid Silicon Valley Bank’s woes, Yellen says
Related: Silicon Valley Bank collapse a cautionary tale, says New Constructs
Customers with more than $250,000 in their accounts should contact the FDIC at 1-866-799-0959.
The last FDIC-backed bank to close was Almena State Bank, Almena, Kansas, back in October of 2020, said the FDIC.
The bank’s collapse has come swiftly just days after the parent announced a huge loss on bondholdings after it was caught out by interest rate increases. Some venture-capital firms reportedly told their startup clients to pull their money from the bank, triggering a classic run on the bank.
On Friday, employees were told to “work from home today and until further notice,” the Wall Street Journal reported, citing an email it had obtained.
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A leading infectious-disease expert said this week that data is showing the coronavirus has moved to the endemic phase, meaning that COVID-19 is still with us but no longer causing huge waves of illness or clogging up healthcare systems.
Eric Topol, the chair of innovative medicine at Scripps Research in La Jolla, Calif., said all indications from genomic surveillance of the virus, wastewater and clinical outcomes that are still being tracked point to an endemic phase. The caveat is that monitoring is more limited now and tracking is happening at lower frequency.
Nonetheless, “there are no new SARS-CoV-2 variants that have yet cropped up with a growth advantage over XBB.1.5 (the recombinant with two significant mutations added on), which is dominant throughout much of the world, or its cousin, XBB.1.91.1,” Topol wrote in his Ground Truths Substack column.
“For all the talk about the convergent ‘variant soup’ that preceded the most recent wave, the XBBs took hold and are not giving way to a long list of omicron family sub-variants,” he added.
The New York Times daily tracker shows that cases are now averaging around 29,558 a day, down 15% from two weeks ago and at a level last seen around April 2022.
Hospitalizations are down 11% at 24,965 a day. But the daily average death toll stands at 401, up 21% from two weeks ago and an undesirably high number.
The Johns Hopkins University global tracker will stop collecting data on Saturday, which marks the third anniversary of the World Health Organization’s declaration of a global state of emergency.
The tracker shows there have been 676.6 million cases of COVID and 6.8 million deaths globally since the start of the crisis. The U.S. leads the world with 103.8 million cases and 1.12 million deaths.
The WHO counted nearly 4.5 million new COVID cases globally in the 28-day period through March 5, down 58% from the previous period, according to its weekly epidemiological update. The agency said some 32,000 deaths were reported, down 65% from the previous 28-day period.
As has become its practice, it cautioned that an overall pullback in testing means those numbers are likely an undercount as prevalence surveys show higher ones.
The WHO is now monitoring one variant of concern, namely omicron, and seven of its subvariants. The following table shows the weekly prevalence of those subvariants over time:
A new Gallup poll, meanwhile, shows Americans are evenly divided over whether or not the pandemic is over: Some 49% say it is, while 51% say it’s not.
Gallup first started asking the American public its views on the topic in June 2021, a time when many states were lifting restrictions on movement as the vaccine rollout was underway. At the time, just 29% of those polled said they thought the pandemic was over, giving way to a less upbeat 18% by fall of that year.
“Since then, optimism has mostly only inched higher, rising to 34% last spring and to 44% in October before reaching 49% today,” said Gallup.
A quarter of those polled said they are very or somewhat worried about contracting COVID. That was split between 3% who are very worried and 22% who are somewhat worried. Concerns spiked at 50% in January 2022, when omicron first started to circulate.
The Gallup survey also found that many Americans are still at least partially isolating to protect themselves from the virus. Some 23% of those polled said they are still avoiding crowds, 18% are avoiding travel by air or public transportation and 14% are avoiding public places such as stores and restaurants. Just 10% are even avoiding small gatherings.
But most people are no longer wearing face masks, with just 31% saying they still use one.
A small majority of those surveyed, or 52%, said they have tested positive for COVID. Another 13% said they had not, but believed they have had the virus.
As many as 83% of Americans may have some immunity against the virus due to the higher number that have had it and the 63% who are vaccinated, the survey found.
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U.S. Treasury Secretary Janet Yellen said Friday she’s tracking a number of banks as Silicon Valley Bank has faced major problems.
“You mentioned Silicon Valley Bank,” Yellen said, as she responded to a lawmaker while testifying before a House Ways and Means Committee hearing.
“There are recent developments that concern a few banks that I’m monitoring very carefully, and when banks experience financial losses, it is and it should be a matter of concern.”
The stock of Silicon Valley Bank parent company SVB Financial Group
SIVB,
had plunged after the company disclosed large losses from securities sales.
Later Friday, as the committee hearing still was underway, the Federal Deposit Insurance Corporation said Silicon Valley Bank had been closed by a California regulator.
SVB has been seeking a buyer after scrapping a plan to shore up its finances through a stock offering, and as it faced widespread customer withdrawals, according to a Wall Street Journal report published earlier Friday.
Related: SVB Financial is trying to sell itself: CNBC
Sen. Sherrod Brown, the Ohio Democrat who heads the Senate Banking Committee, is “monitoring the situation closely,” a spokeswoman said Friday.
“The FDIC and other banking regulators are on the job to protect insured depositors and our banking system,” she added.
Billionaire hedge fund manager Bill Ackman had suggested that government intervention could be needed.
“If private capital can’t provide a solution, a highly dilutive government preferred bailout should be considered,” Ackman said on Twitter late Thursday.
COMP,
were lower Friday, as investors struggled to parse mixed signals in the latest jobs report and monitored Silicon Valley Bank’s troubles.
Now read: Financial-system risks put a smaller March rate hike by Federal Reserve back in play
Also see: SVB extends swoons on bank-run fears and analyst downgrades as it triggers bank-stock losses
Plus: 10 banks that may face trouble in the wake of the SVB Financial Group debacle
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WASHINGTON — For President Joe Biden, his federal budget is a statement of values — the dollars and cents of a governing philosophy that believes the wealthy and large corporations should pay more taxes to help stem deficits and lift Americans toward middle class stability
In the view of his chief congressional critics led by House Speaker Kevin McCarthy, the budget is also the arena where they intend to challenge the president with values of their own — slashing the social safety net, trimming support for Ukraine and ending the so-called “woke” policies rejected by Republicans.
It’s the blueprint for a summer showdown as Biden confronts Republicans over the raising the debt ceiling to pay off the nation’s accrued balances, a familiar battle that will define the president and the political parties ahead of the 2024 election.
“I’m ready to meet with the speaker any time — tomorrow, if he has his budget,” Biden said while rolling out his own $6.8 trillion spending proposal Thursday in Philadelphia.
“Lay it down. Tell me what you want to do. I’ll show you what I want to do. See what we can agree on,” said Biden, the Democratic president egging on the Republican leader.
But McCarthy, in his first term as House speaker, is nowhere near being ready to present a GOP proposal at the negotiating table to start talks in earnest with the White House.
While Republicans newly empowered in the House have bold ideas about rolling back government spending to fiscal 2022 levels and putting the federal budget on a path to balance within the next decade, they have no easy ideas for how to meet those goals.
McCarthy declined this week to say when House Republicans intend to produce their own proposal, blaming their delays on Biden’s own tardiness in rolling out his plan.
“We want to analyze his budget based upon the question as to where can we find common ground,” McCarthy said. “So we’ll analyze his budget and then we’ll get to work.”
Squaring off, it’s a fresh take on the budget battles of a decade ago when Biden, as vice president, confronted an earlier generation of “tea party” House Republicans eager to cut the debt load and balance budgets.
What’s changed in the decade since the last big budget showdown in Washington is the solidifying of the GOP’s MAGA wing, inspired by the Trump-era Make American Great Again slogan, to turn the fiscal battles into cultural wars. The nation’s total debt load has almost doubled during that time to $31 trillion.
Beyond the dollars and cents, the new era of House Republicans see the coming debt ceiling fight as a battle for their very existence — a test of their mandate in the new House majority to push back against liberals in Washington.
“There’s going to be a whole bunch of noise, and then everybody will push up to the brink and then someone’s gonna blink — I don’t intend to,” said Rep. Chip Roy, R-Texas, an influential member of the hard-right Freedom Caucus.
As pressure mounts on McCarthy, the president is trying to steal some thunder as he rolled out a proposal this week that spotlights deficit reductions that are a centerpiece of GOP goals.
Biden’s approach is a turn-around from the start of the year when he refused to negotiate with Republicans, demanding Congress send him a straightforward bill to raise the debt limit. At the time, the president wouldn’t entertain a conversation about spending changes McCarthy committed to as part of his campaign to become speaker.
The White House’s budget plan would cut the deficit by $2.9 trillion over 10 years, a rebuttal to GOP criticism that Biden’s deficit spending to address the pandemic has fueled inflation and hurt the economy.
Speaking to union members in Philadelphia, Biden said McCarthy needed to follow his lead and publicly release his own numbers so that they can negotiate “line by line.”
With his budget, Biden showed the math of how he would lower the trajectory of the national debt. Yet his approach to fiscal responsibility is unacceptable to Republicans, since it would require $4.7 trillion in higher taxes on corporations and people making more than $400,000.
The president also wants an additional $2.5 trillion in spending on programs such as an expanded child tax credit that would improve family finances.
“When the middle class does well, the poor have a way up and the wealthy still do very well,” the president said as he framed the showdown as a difference of principles.
By refusing to raise taxes, the Republicans in the House are relying almost exclusively on reductions to bring budgets into balance. It’s a painful, potentially devastating endeavor, inflicting cuts on programs Americans depend on in their communities. Republicans cannot say when their budget will be ready.
“We’re getting close,” said Rep. Jody Arrington, R-Texas, the new chairman of the House Budget Committee.
Because McCarthy has yet to release his budget, Biden has toured the country and talked to audiences about past Republican plans to cut Social Security and Medicare.
McCarthy insists reductions to the Medicare and Social Security entitlement programs that millions of America’s seniors and others depend on are off the table — and Republicans howled in protest during Biden’s State of the Union address to Congress last month when the president claimed otherwise.
But by shielding those programs from cuts and opposing any tax increases, GOP lawmakers would need crippling slashes to the rest of government spending that could offend voters going into the 2024 elections.
The chamber’s Freedom Caucus is eyeing reductions to supplemental disability insurance, food stamps and fresh work requirements on some people receiving government aid.
Roy, the Freedom Caucus member, outlined some $700 billion in reductions that could be banked by reversing Biden’s student loan forgiveness program, clawing back almost $100 billion in unspent COVID-19 relief and rolling back spending to fiscal 2022 levels.
But the conservative caucus with its few dozen members is just one constituency McCarthy must balance as he tries to cobble together his ranks. The much larger Republican Study Committee is expected to roll out its ideas in April and other GOP caucuses have their own priorities.
McCarthy believes he has won a first round in the budget battles by pushing Biden to negotiate over the debt ceiling. But now the speaker faces the daunting challenge of bringing his own GOP plan to the table.
“The House Republican budget plan is in the witness protection program,” said Rep. Hakeem Jeffries, the chamber’s Democratic leader. “It’s in hiding.”
__
Associated Press writer Kevin Freking contributed to this report.
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LONDON — As a soccer player, Gary Lineker was one of England’s top scorers. The British government thinks his political opinions miss the mark.
Conservative lawmakers in the U.K. are calling on the BBC to discipline Lineker, now a pundit and the network’s highest-paid star, for comparing the government’s language about migrants to that used in Nazi Germany.
In a tweet on Tuesday, the former England team captain described the government’s plan to detain and deport migrants arriving by boat as “an immeasurably cruel policy directed at the most vulnerable people in language that is not dissimilar to that used by Germany in the 30s.”
Home Secretary Suella Braverman, Britain’s immigration minister, has called people arriving in small boats an “invasion,” and said “the law-abiding patriotic majority have said: ‘Enough is enough.’”
The Conservative government called Lineker’s Nazi comparison inappropriate and unacceptable, and some lawmakers said he should be fired.
“As somebody whose grandmother escaped Nazi Germany in the 1930s, I think it’s really disappointing and inappropriate to compare government policy on immigration to events in Germany in the 1930s,” Culture and Media Secretary Lucy Frazer said Thursday.
“It’s important for the BBC to maintain impartiality, if it is to retain the trust of the public,” she added.
As right-leaning newspapers — long critical of the BBC — expressed outrage, the broadcaster said Lineker would be “reminded of his responsibilities.”
Lineker, 62, is a household name in Britain, a stylish player turned fluent broadcaster. He was the leading scorer at the 1986 World Cup — where he scored England’s only goal in its 2-1 quarter final loss against Argentina — and finished his international career with 48 goals in 80 matches for England.
After retiring from a career that included stints with Leicester City, Barcelona and Tottenham, he has become one of the U.K.’s most influential media figures. He hosts the BBC’s “Match of the Day” soccer highlights show and helms the broadcaster’s coverage of international tournaments — duties for which he was paid 1.35 million pounds ($1.6 million) last year.
An enthusiastic social media user with 8.7 million Twitter followers, Lineker has long irked conservatives with his liberal views, including criticism of Britain’s decision to leave the European Union.
The latest furor reflects the distinctive nature of U.K. media, where newspapers are highly opinionated and news broadcasters are required to be balanced — especially the publicly funded BBC, which has a duty to be impartial.
BBC news staff are barred from expressing political opinions. But Lineker, as a freelancer who doesn’t work in news or current affairs, isn’t bound by the same rules. Even so, he has sometimes gone too far. Last year, the BBC found Lineker had breached impartiality rules with a tweet about the Conservatives’ alleged Russian donations.
The 100-year-old BBC, which is funded by a license fee paid by all households with a television, is accustomed to facing political pressure. Some members of the Conservative government see a leftist slant in the broadcaster’s news output, while some liberals accuse it of having a conservative bias.
Its neutrality has come under recent scrutiny over revelations that its chairman, Richard Sharp — a Conservative Party donor — helped arrange a loan for then Prime Minister Boris Johnson in 2021, weeks before he was appointed to the BBC post on the government’s recommendation.
Former BBC television news chief Roger Mosey said that he sympathized with Lineker’s views, but thought he shouldn’t have shared them.
“What if he was tweeting ‘Brexit is working, Suella Braverman is right, refugees should go back to Calais’?” Mosey told Times Radio. “Impartiality … the problem is, it can be tough sometimes, but it’s the best policy in difficult circumstances for the BBC.”
Lineker said Thursday that he had no regrets and stood by his tweet. And he responded to news that the furor over his comments — rather than the government’s migration policy — was the lead story on the BBC night-time news.
“World’s gone mad,” he tweeted. ___
AP Sports Writer Chris Lehourites contributed to this report.
___
Follow AP’s coverage of migration issues at https://apnews.com/hub/migration
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Credit Suisse Group AG said Thursday that it will delay the publication of its 2022 report after a late call from U.S. market regulators over 2019 and 2020 cash-flow statements, adding a further headache as the lender attempts to woo back clients amid a costly turnaround effort.
The Swiss bank
CSGN,
CS,
said it received a call from the U.S. Securities and Exchange Commission on Wednesday in relation to certain open SEC comments about the technical assessment of previously disclosed revisions to its consolidated cash-flow statements in the 2020 and 2019 fiscal years as well as related controls.
“Management believes it is prudent to briefly delay the publication of its accounts in order to understand more thoroughly the comments received,” Credit Suisse said.
The company said it wouldn’t affect its 2022 financial results released early in February.
Credit Suisse’s share price hit a low in the weeks since the 2022 results on uncertainty about its future, with analysts fearing that recent large outflows from customers will hinder a recovery.
Write to Ed Frankl at edward.frankl@wsj.com
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SAO PAULO — Brazil’s President Luiz Inácio Lula da Silva announced measures Wednesday seeking to promote and protect women after years of setbacks in their causes blamed in part on a rise in far-right forces.
At a ceremony in the capital, Brasilia, Lula presented a package of over 25 measures, the most significant of which is a bill that would guarantee equal pay for women and men who perform the same jobs.
He also announced plans to spend 372 million reais ($72 million) to build domestic violence shelters and 100 million reais ($19 million ) for science projects led by women.
The president has expressed his indebtedness for the votes of women who helped him beat incumbent Jair Bolsonaro in the 2022 election. And on Wednesday he blamed his predecessor for policy decisions that harmed Brazilian women.
“The previous government lacked respect when it opted for the destruction of public policies, cut essential budgetary resources and tacitly motivated violence against women,” said the president, flanked by his female ministers, for the ceremony on International Women’s Day.
Of Lula’s 37 ministers, a record-high 11 are women. During most of his administration, Bolsonaro had just two female ministers.
Several of Lula’s announced measures, including the spending on shelters and science projects, are by decree. However, others require congressional approval and given that Lula’s legislative base has yet to be consolidated it is difficult to gauge whether he will have enough votes, said Beatriz Rey, a senior researcher at the Center for Studies on the Brazilian Congress at the State University of Rio de Janeiro.
“It is possible that some support beyond party lines will help the administration on this specific issue of salary equality,” Rey said in a telephone interview.
Advocates say the policies of Bolsonaro’s administration dovetailed with the spread of extremism in Brazil, which together contributed to the deterioration of gender equality.
“Bolsonaro was not the cause of this; he was the symptom of something bigger, which is the consolidation and rise of the far-right in Brazilian society,” said Samira Bueno, executive director of Brazilian Forum on Public Security, a non-profit that last week published a report showing an 18.4% rise in all forms of gender-based violence in 2022.
Bueno told The Associated Press that such forces have been gathering over the past decade, as an example pointing to the School Without Party movement that encouraged parents and children to report teachers attempting to teach sexual education and women’s rights.
And Bolsonaro’s loosening of gun controls spurred domestic violence, Bueno said. In 2022, 5.1% of women said they were threatened with knives or firearms, as opposed to 3.1% in 2021, according to her group’s recent report.
“This uptick didn’t happen randomly. It happened because you had a federal government policy to allow more civilians to own and carry firearms,” Bueno said.
On Jan. 1, Lula’s first day on the job, he rolled back some of Bolsonaro’s decrees to loosen gun control. His government also required civilians to register their guns with the Federal Police by a deadline later this month; as of mid-February just a fraction had done so as the pro-gun lobby aligned with Bolsonaro pushes back on the registration effort.
Among campaigners and civil society, there is also an expectation that Lula will restart policies and programs that worked in the past but were affected by budget cuts. That includes revitalization of the national hotline for domestic violence victims, which lost funding during the Bolsonaro government.
A study published in March 2022 by the Institute of Socioeconomic Studies, a Brasilia-based non-profit, showed funding for the hotline fell 42% to 25.8 million reais from 2019 to 2021. The same study found that the amount budgeted for the Ministry of Women and Human Rights to fight gender violence in 2022 was the least in four years.
And, in 2021, only 0.01% of the Justice Ministry’s National Public Security Fund went towards programs to fight gender violence; a law passed last year established a 5% minimum.
Speaking to the AP on Wednesday in Paraisopolis, Sao Paulo’s second-largest favela, or slum, Juliana da Costa Gomes lamented the impact of Bolsonaro’s government in increasing domestic violence and diminishing the cause for women.
“But I think we are living in another moment,” said Gomes, 37, who in 2017 founded a program to provide professional training to women in vulnerable situations, roughly a decade after helping to establish the favela’s womens’ association. “It’s a moment of hope, for a new Brazil that can be better for women.”
At the ceremony on Wednesday, Lula also issued a decree to guarantee distribution of free menstrual pads for all poor and vulnerable women; Bolsonaro in 2021 vetoed a bill that had sought to do the same.
Lula was joined by first lady Rosângela da Silva, known as Janja, who has been a constant presence at both his private meetings and public events. She recently took an official position within his government, liaising with ministries as well as advising the president.
By contrast, Bolsonaro’s wife, Michelle, remained out of view during the first three years of his administration, emerging during the 2022 campaign in an effort to drum up votes from women and evangelicals.
“If it depended on this government, inequality would end today by decree. But it is necessary to change policies, mentalities and an entire system built to perpetuate male privileges. And this, my friends, is only possible with a lot of fight,” Lula said.
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AP videojournalist Tatiana Pollastri and writer Mauricio Savarese contributed
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