Fed says it will review supervision of Silicon Valley Bank
New York (AP): The Federal Reserve will review its supervision of Silicon Valley Bank after it collapsed in the second-largest US bank failure on record, the Fed announced Monday.
Michael Barr, the Fed's vice chair for supervision, will lead the effort, the Fed said in a brief statement.
Chair Jerome Powell said the central bank would conduct a "thorough, transparent, and swift review."
In a statement, Barr said: "We need to have humility, and conduct a careful and thorough review of how we supervised and regulated this firm, and what we should learn from this experience."
Depositors withdrew savings and investors broadly sold off bank shares Monday as the federal government raced to reassure Americans that the banking system was secure after two bank failures fed fears that more financial institutions could fall.
President Joe Biden insisted that the system was safe after the second- and third-largest bank failures in the nation's history happened in the span of 48 hours. In response to the crisis, regulators guaranteed all deposits at the two banks and created a program that effectively thew a lifeline to other banks to shield them from a run on deposits.
"Your deposits will be there when you need them," Biden told the public, seeking to project calm. He also said the banking executives responsible for the failures would be held accountable.
Regulators closed the Silicon Valley Bank on Friday after depositors rushed to withdraw their funds all at once. The only larger failure in U.S. banking history was the 2008 collapse of Washington Mutual. New York-based Signature Bank also collapsed in the third-largest failure in the U.S.
In both cases, the government agreed to cover deposits, even those that exceeded the federally insured limit of USD 250,000.
Despite the message from the White House, investors broadly dumped shares in bank stocks. Shares of First Republic Bank plunged more than 70 per cent even after the bank said it was taking emergency funding from the Federal Reserve and additional money from JPMorgan Chase.
First Republic wasn't alone. Shares of well-known franchises like Charles Schwab, Fifth Third Bank, Truist, Comercia and Ally Financial all fell sharply.
The selloff happened in part because the country woke up to a new banking system and investors had to find the winners and losers, banking experts said.
There was no guarantee that the anxiety would not spread. Customers at other banks with deposits over the USD 250,000 limit remained at risk of losing access to their money for a time.
Just because the government covered for Silicon Valley Bank and Signature Bank "doesn't mean they are going to cover for these smaller banks," said Chris Caulfield, a senior partner at West Monroe.
But the government's actions suggested it would stand behind all deposits if doing so prevents damage to the broader economy.
"Everything is now covered. That's a fact. No matter how specialized or isolated your bank is, if there's a risk of contagion, regulators have made it clear that they are going to intervene," said Norbert Michel, a banking policy expert at the libertarian-leaning Cato Institute.
Ian Brandt, who had an account at Signature Bank, visited a branch in New York City down the street from the law firm where he is attorney. After being unable to reach someone by phone, he walked to the bank to see if it was open.
Asked if he felt any assurance after the bank's deposits were secured by the government, Brandt said, "For the moment."
Amid the selloff of midsize banks, investors kept relatively calm over the health of the nation's biggest banking bulwarks, such as JPMorgan Chase, Citigroup, Bank of America and Wells Fargo. Investors apparently concluded that the only place to be safe in banking was with the nation's most strictly regulated institutions.
Regional banks were seen as the riskiest, since they do not have the scale to compete against larger competitors. Large account balances once seen as a positive sign that a bank's clients are well off were a liability since they could be withdrawn at the first sign of trouble.
"I wouldn't want to be running a regional bank right now where my services are no different from my competition," Caulfield said.
International regulators also had to step in to ease fears. The Bank of England and U.K. Treasury said they facilitated the sale of a Silicon Valley Bank subsidiary in London to HSBC, Europe's biggest bank. The deal protected 6.7 billion pounds (USD 8.1 billion) of deposits.
Under the plan announced by U.S. regulators, depositors at Silicon Valley Bank and Signature Bank were able to access their money. A new Fed program will allow banks to post those securities as collateral and borrow from the emergency facility.
The Treasury has set aside USD 25 billion to offset any losses. However, Fed officials said they do not expect to have to use that money, given that the securities posted as collateral have a very low risk of default.
New York bank regulators took possession of Signature Bank on Sunday, ousting its leaders and handing day-to-day control over to the Federal Deposit Insurance Corp.
New York Gov. Kathy Hochul said the decision by the state Department of Financial Services was aimed at holding off a bigger crisis involving more banks.
"Our view was to make sure that the entire banking community here in New York was stable, that we can project calm," Hochul said Monday at a news conference.
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Phase four: Voting underway in 96 LS seats in 10 states, UTs; 175 assembly seats in Andhra Pradesh
New Delhi (PTI): Polling commenced in 96 constituencies across 10 states and Union Territories for the fourth phase of the Lok Sabha elections on Monday, with Prime Minister Narendra Modi and Congress leaders Mallikarjun Kharge and Rahul Gandhi urging people to cast their votes in large numbers.
Voting was also underway in all 175 Assembly seats in Andhra Pradesh and 28 legislative assembly seats of Odisha.
Prominent among the early voters were former Vice President M Venkaiah Naidu, BJP chief in Telangana G Kishan Reddy, AIMIM president Asaduddin Owaisi, popular Telugu actors Chiranjeevi, Allu Arjun, Andhra Pradesh Chief Minister YS Jagan Mohan Reddy and TDP supremo N Chandrababu Naidu.
"Several voters including some senior citizens cast their votes. People, in large numbers, are coming out to vote. I am requesting the people to come and exercise their franchise for democracy and the country's security," Kishan Reddy told reporters after casting his vote.
Owaisi said the country is bigger than any individual and people should vote for the country.
"The country is bigger than any individual. Don't vote for an individual and vote for the country and vote for a party," the AIMIM leader said.
Speaking to mediapersons after casting his vote, Jagan Mohan Reddy said the people have seen the best governance during the past five years.
"You have seen the governance and if you think you have benefited from this governance then vote for that governance which would lead to a brighter future," he told reporters.
Former Air Force chief Air Chief Marshal Pradeep Vasant Naik was among the early voters in Maharashtra's Pune. However, the name of his wife Madhubala was found deleted from the voters list.
ACM Naik, 75, along with his wife and son Vineet, 43, went to exercise their franchise at polling booth 26 at Sapling School Baner Road in Pune on Monday morning as soon as voting began.
“While I and my son were able to vote, my 72-year-old wife’s name was found deleted from the voters list. When we brought this to the attention of the official there, he said that there was nothing he could do to help,” ACM Naik told PTI.
Polling was progressing peacefully across the country barring an instance of three TDP polling agents being allegedly kidnapped from Chittoor district. They were subsequently rescued by the Election Commission.
A total of 1,717 candidates are in the fray in the Lok Sabha seats and more than 19 lakh polling officials have been deployed at 1.92 lakh polling stations for the over 17.70 crore eligible voters, including 8.73 women, in this round of the seven-phase polls.
Polling is being held in all 17 Lok Sabha seats in Telangana, all 25 seats in Andhra Pradesh, 13 in Uttar Pradesh, five in Bihar, four in Jharkhand, eight in Madhya Pradesh, 11 in Maharashtra, four in Odisha, eight in West Bengal and one in Jammu and Kashmir.
Nearly 17.48 lakh electorate are eligible to vote in the election to the prestigious Srinagar Lok Sabha constituency and 24 candidates are in the fray. It is the first major election in Kashmir after the abrogation of Article 370 in August 2019.
The voter turnout in the first three phases of the Lok Sabha elections was 66.14 per cent, 66.71 per cent and 65.68 per cent, respectively.
The EC believes that the heatwave conditions are one of the reasons for lower voter turnout in the last three phases as compared to the 2019 parliamentary polls.
Citing an India Meteorological Department (IMD) forecast, the poll authority had said on Sunday hat "there is no significant concern regarding hot weather conditions for the polling in Phase 4."
Keeping in mind the hot weather conditions and people's reluctance to step out in the afternoon, the Election Commission has increased poll timing in some Telangana seats.
While the usual hours of voting are from 7 am to 6 pm, they are curtailed keeping in mind the terrain, time of sunset and security situation.
Polling for the next three phases in the country is on May 20, May 25 and June 1. The counting of votes is on June 4.
