Banking Crisis 2023

The president of the Federal Reserve Bank of New York said the performance of office loans is a top supervisory issue, but not an immediate threat to financial stability.

The California Department of Financial Protection and Innovation says in a new report that it failed to keep pace with Silicon Valley Bank's rapid growth. But it placed blame on the Federal Reserve, too.

The Federal Reserve chair said he holds himself accountable for ensuring proper regulatory and supervisory changes are enacted in response to recent bank failures.

Treasury two-year yields slumped as much as 21 basis points and approaching the 4% threshold. Bonds also climbed after data showing JOLTS jobs opening figures.

First Republic Bank was shuttered by regulators early Monday, and all its deposits and most of its assets were acquired by JPMorgan. San Francisco-based First Republic was undone by low-rate mortgages it made to its wealthy customers as well as by the fallout from last month's banking crisis.

The Federal Deposit Insurance Corp. said in a report released Friday that Signature's rapid, unrestrained growth and inadequate risk management practices outpaced supervisors' ratings and responses, even though the issues were known to the agency.

On Friday, Federal Reserve Vice Chair for Supervision Michael Barr will share findings from his review of the supervision of Silicon Valley Bank before its failure last month.

The California bank, which endured large deposit outflows in March, anticipates selling its $2.7 billion lender finance portfolio in the coming months. It's also looking at cutting facilities, employee headcount and vendor costs.

Federal Reserve Vice Chair for Supervision Michael Barr had promised to share findings from his review of the Fed's oversight efforts for the failed bank by May 1.

Deposits sank to $104.5 billion as of March 31, down 41% from the end of 2022, even after the country's largest lenders parked $30 billion of their own cash with the San Francisco-based bank in an effort to shore up its finances.

First-quarter results on Monday showed that its key units continued to lose money and shed clients, and the firm borrowed far more from a central bank liquidity backstop than previously known.

"Crisis is too strong a word, and words like that get used a lot," though there was "a fair amount of disruption for a few weeks there," Moynihan said.

The decrease in long-term interest rates this year has helped banks' bond portfolios recover a bit. Some of them may consider restructuring their securities portfolios in the short run, and longer-term changes are also possible as the fallout from last month's crisis continues.

In wide-ranging remarks on the recent banking crisis, the head of the Consumer Financial Protection Bureau said other regulators aren't using enough of their powers to supervise banks.

The American Bankers Association's latest Credit Conditions Index points to a drop in lending and a rise in loan delinquencies through the second and third quarters.

Only a handful of lenders have the problems that toppled Silicon Valley Bank, and when the industry starts reporting quarterly earnings next week, the numbers will probably be good, Dimon told CNN.

Some concerns linger over the sector after Silicon Valley Bank's collapse last month. The most pressing worry now, analysts say, is not whether banks will survive but how much money they'll make in the coming months.

Executive compensation legislation could be one of the few areas of bipartisan agreement in Congress in the wake of the Silicon Valley Bank and Signature Bank failures.

As FDIC seeks a buyer for the remaining assets left after its sale of most of Signature Bank to Flagstar Bank, the agency has announced $60 billion in deposits — including some New York City commercial real-estate loans — will be on the market by this summer.

More congressional scrutiny is being directed at the San Francisco Federal Reserve bank and its role in supervising Silicon Valley Bank.