America’s largest banks are in talks to rescue First Republic
From CNN’s Matt Egan
First Republic Bank, facing a crisis of confidence from investors and customers, is actively discussing options for a lifeline, people familiar with the matter said.
Some of America’s largest banks are in talks to inject billions of dollars into the struggling San Francisco lender, giving it additional financial firepower to meet customer withdrawals and boost confidence.
The consortium of big banks involved in providing the lifeline includes JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Truist, the people told CNN.
The lifeline is expected to total roughly $30 billion, one of the people said.
A First Republic spokesman declined to comment.
US officials appear to be pleased with the prospect of an industry-led rescue of First Republic. The fact that America’s largest banks are discussing a lifeline for the San Francisco-based lender is a welcome sign of confidence in the strength of the banking system, a US official told CNN.
The official said such a rescue would complement actions that regulators have taken in recent days to safeguard deposits across the country.
First Republic stock surges as it talks with major banks about a rescue plan
From CNN’s Allison Morrow and Matt Egan
First Republic Bank, facing a crisis of confidence from investors and customers, is actively discussing options for a lifeline, a person familiar with the matter told CNN.
Participating in the discussions Thursday are massive Wall Street banks, including JPMorgan Chase, Bank of America, Wells Fargo and Citigroup, the source said. A deal to prop up First Republic with much-needed access to cash could be announced as soon as Thursday.
A First Republic spokesman declined to comment to CNN. The talks were first reported by the Wall Street Journal.
First Republic’s shares were halted several times for volatility Thursday. The stock was last up 22% after plunging more than 30% earlier in the day.
Europe’s markets close on a high after volatile day
From CNN’s Anna Cooban
European stocks rebounded strongly Thursday afternoon, after falling back earlier in the day following an announcement by Europe’s central bank that it would hike its main interest rate by half a percentage point.
Europe’s benchmark Stoxx Europe 600 Banks index, which tracks 42 big EU and UK banks, closed 1.2% up, while London’s bank-heavy FTSE 100 index finished the day 0.9% higher.
Both indexes had fallen back almost 1% and 0.16% respectively following the European Central Bank’s decision to press ahead with rate hikes to help bring down inflation.
Germany’s DAX also closed up 1.6%, and France’s CAC 40 finished 2% higher.
The increases tracked a similar rebound across the pond. The S&P 500 bounced 1.7% by early afternoon ET following reports that ailing regional bank First Republic is considering a takeover by larger lenders.
US Tech Investor calls on social media firms to help prevent bank runs
From CNN’s Rob North
US tech investor Bradley Tusk told CNN that financial regulators are unprepared for bank runs in the age of social media.
Tusk, who was an early investor in Uber and Coinbase, says social media companies should work with regulators if they see sudden surges in online posts and mentions of banks. He told Julia Chatterley that this was a “no brainer.”
“Perhaps by finding out a little sooner, they can act faster, and that may help save a bank run,” he said.
Speaking more broadly about the impact of SVB’s collapse, Tusk said his venture capital business had its money stored at SVB, but insisted it was crucial to save the tech focused bank for wider economic reasons.
“If the Fed had let Silicon Valley Bank go down, half the start-ups in this country might have gone out of business,” he said. “Talk about a hit to the innovation economy.”
He added that his firm “had not written a check to a start-up since all of this happened” because they were dealing with the SVB crisis.
Yellen grilled on whether smaller banks could get the same government help as SVB
From CNN’s Krystal Hur
Republican Senator James Lankford grilled Treasury Secretary Janet Yellen Thursday on how the US government’s intervention in Silicon Valley Bank’s and Signature Bank’s collapses could encourage depositors to move their funds into large banks.
“What is your plan to keep large depositors from moving their funds out of community banks into the big banks? We have seen the mergers of banks over the past decade. I’m concerned you’re about to accelerate that,” the senator from Oklahoma said.
“That’sRewritten Article:
Banking Meltdown Could Make It Tougher to Buy a Home
The recent turmoil in the financial market could make it harder to purchase a home, especially if government regulators like the Federal Reserve tighten their grip on banks following the collapse of Silicon Valley Bank (SVB). The Fed has been on a historic rate-hiking regime to keep inflation in check, and most economists expect that to continue. Treasury Secretary Janet Yellen said in testimony to the Senate Finance Committee that “if banks are under stress, they might be reluctant to lend. We could see credit become more expensive and less available. That could turn this into a source of significant downside economic risk.”
The banking meltdown over the past week has left more questions than answers. The stunning collapse of two American banks and the loss of investor confidence in Credit Suisse led to wild market swings and put Wall Street on edge. During CNN’s primetime special, “Bank Bust: Inside the Collapse of SVB,” experts weighed in on how to best understand what’s happening in a rapidly developing and confusing environment for financial institutions.
The collapse of SVB has sparked backlash from those who saw the government’s move to insure deposits at the bank as a bailout. Senator James Lankford questioned whether smaller community banks would receive the same help as SVB. Yellen responded that the bank only gets that treatment if a majority of the FDIC board, a super majority of the Fed board, and she in consultation with the president determine that the failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences.
The 30-year fixed-rate mortgage averaged 6.73% in the week ending March 9. A year ago, it was 3.85%. Freddie Mac is set to release its average weekly mortgage rates at 12 p.m. ET on Thursday.
Banking Committee to Hold Oversight Hearings in the Next Month
The Senate Banking Committee will hold oversight hearings in the next month to investigate the recent banking meltdown. Chairman Sherrod Brown praised the administration’s actions after SVB collapsed, but there are still concerns about the impact on smaller community banks. Lankford questioned whether these banks would receive the same help as SVB, and Yellen responded that the bank only gets that treatment if it meets certain criteria.
Conclusion
The recent banking meltdown has left many questions unanswered, and the impact on the housing market remains to be seen. With the Fed tightening its grip on banks and credit becoming more expensive and less available, it could become tougher to purchase a home. The Senate Banking Committee will hold oversight hearings in the next month to investigate the recent collapse of SVB and its impact on the banking industry.Crypto Firms Struggle to Access Banking System
The Blockchain Association, a nonprofit crypto advocacy group, is investigating allegations that crypto firms are being unfairly shut out from the mainstream banking system. The allegations include instances of accounts being closed and banks refusing to open new accounts. The group is looking into alleged “actions by regulators that may have improperly contributed to the failures of Signature, Silicon Valley Bank, and Silvergate.”
Although crypto aspires to bring about a world without centralized banking authorities, the nascent industry still relies heavily on traditional lenders to bridge the gap between crypto platforms and fiat currency. Two of the three US banks that collapsed last week, Silvergate and Signature, catered heavily to crypto firms, leaving digital asset companies with far fewer friendly banks to turn to.
“These are lawful businesses in the United States and should be treated like any other law-abiding business,” said Blockchain Association CEO Kristin Smith. The group has submitted requests to the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency, requesting documents and communications under the Freedom of Information Act.
As the current meltdown in regional and global banks plays out, the S&P 500 rebounded in midday trading on Thursday, as reports of potential support for ailing regional bank First Republic cheered weary investors. However, markets have been volatile, with the Volatility Index sitting at an elevated 24.2, indicating increased fear in the market and large swings.
Senator Sherrod Brown, the chairman of the Senate Banking Committee, insisted that the assistance provided to banks was not a bailout. He added that his committee plans to hold oversight hearings as soon as next month, focusing on “not just what happened, but what the Federal Reserve is going to do, what Michael Barr is going to do, what the FDIC is going to do, what OCC and the other regulators are going to do at Treasury.”
Crypto firms are facing a challenging time accessing the banking system, and the Blockchain Association is investigating allegations of unfair treatment. As the market remains volatile, investors are looking for potential support for ailing banks. Meanwhile, Senator Sherrod Brown plans to hold oversight hearings to ensure that regulators are taking appropriate action.
Extreme Fear Continues to Drive the Market, Says Fear & Greed Index
The Fear & Greed index by CNN is signaling that extreme fear is still driving the market. This volatile churn has investors worried, and they are keeping a close eye on the S&P 500. Wells Fargo economists have identified a key number to watch out for – 3,783. If the S&P 500 falls below this level, it would match the lowest point the index hit in December.
Breaking the Lower Threshold of the Trading Range
Major indexes typically trade up and down within a relative range, and investors don’t like when they break the lower threshold of that band. According to Wells Fargo economists, if the S&P 500 sells below the December low, it would probably trigger another round of selling by trend-following and momentum-driven strategies.
Good News for Investors
Despite the current market conditions, there is some good news for investors. The S&P 500 is currently trading around 3,936, which is more than 200 points away from the key number of 3,783. This means that there is still some room for the index to move before triggering another round of selling.
The above article discusses the current state of the market, which is being driven by extreme fear, according to the Fear & Greed index by CNN. Investors are worried about the volatile churn and are keeping a close eye on the S&P 500. Wells Fargo economists have identified a key number to watch out for – 3,783. If the S&P 500 falls below this level, it would match the lowest point the index hit in December.
Major indexes typically trade up and down within a relative range, and investors don’t like when they break the lower threshold of that band. According to Wells Fargo economists, if the S&P 500 sells below the December low, it would probably trigger another round of selling by trend-following and momentum-driven strategies.
Despite the current market conditions, there is some good news for investors. The S&P 500 is currently trading around 3,936, which is more than 200 points away from the key number of 3,783. This means that there is still some room for the index to move before triggering another round of selling.
