When federal regulators stepped in to backstop all of Silicon Valley Bank’s deposits, they saved thousands of small tech startups and prevented what could have been a catastrophic blow to a sector that relied heavily on the lender.
Update (10:50am): Moments after the FT report which sent WAL shared plunging to $11 (after closing at $30 yesterday), the company rushed out a press release to announce that the FT article is "absolutely false"
WASHINGTON, D.C. -- Amid turbulence in the U.S. banking system, nearly half of Americans are anxious about the safety of the money they have in accounts at banks or other financial institutions. A total of 48% of U.S. adults say they are concerned about their money, including 19% who are “very” and 29% who are “moderately” worried. At the same time, 30% are “not too worried” and 20% are “not worried at all.”
Deutsche Bank shares fell by more than 11% on Friday following a spike in credit default swaps Thursday night, as concerns about the stability of European banks persisted.
After repeated laments by the likes of Bill Ackman, who most recently said that "I continue to believe that the best course of action is a temporary @FDICgov deposit guarantee until an updated insurance regime is introduced" (and who just flip-flopped on his "Fed must hike with shock and awe" call from 2022 and is now urging for a Fed hiking pause), and following a Bloomberg weekend report that US mid-sized banks demanded a two-year total deposit insurance scheme from the FDIC, and warned if it doesn't arrive, there may lots more shotgun weddings (or shotguns), moments ago Bloomberg reported that "US officials are studying ways they might temporarily expand Federal Deposit Insurance Corp.
Bank of America, Citigroup,. JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, BNY-Mellon, PNC Bank, State Street, Truist and U.S. Bank to make uninsured deposits totaling $30 billion into First Republic Bank
Banks borrowed a combined $164.8 billion from two Federal Reserve backstop facilities in the most recent week, a sign of escalated funding strains in the aftermath of Silicon Valley Bank’s failure.
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.
And so, the "bailout" arrives just a few hours before the Europe open, Credit Suisse said it’s planning to borrow from the Swiss National Bank up to CHF50 billion ($54 billion) under a covered loan facility which is "fully collateralized by high quality assets". It wasn't immediately clear what high quality assets CS has left to pledge but in a time of BTFP, we are confident they found something.
