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Bank Runs

All articles tagged with #bank runs

finance2 years ago

"ECB Urges Banks to Monitor Social Media for Early Bank Run Warnings"

The European Central Bank has reportedly asked some banks to monitor social media for signs of worsening sentiment that could lead to a deposit run, following the collapse of Silicon Valley Bank and Credit Suisse in 2023. Regulators are also considering revising liquidity coverage ratio (LCR) assumptions and assessing the impact of social media on deposit dynamics. The move comes after a social media post led to a run on Credit Suisse, prompting a global debate on whether institutions can withstand sudden liquidity shocks and whether new rules might be needed.

via Reuters|
#bank-runs#ecb#european-banking
banking2 years ago

Bank Executives Blame Social Media for Fueling Runs and Collapse.

Former CEOs of Silicon Valley Bank, Signature Bank, and First Republic Bank testified before House Financial Services subcommittees that social media played a significant role in fueling the "panic" that caused depositors to pull funds from the institutions, leading to unprecedented outflows of funds that appeared unstoppable. They warned that social media could indirectly impact or crash the U.S. banking system and called for measures to protect against it.

via Fox Business|
#bank-runs#banking#first-republic-bank
business2 years ago

FDIC Proposes Reforms to Strengthen Business Banking Insurance

The Federal Deposit Insurance Corporation (FDIC) has recommended that Congress consider expanding its regulatory powers to backstop certain deposits to prevent bank runs. Currently, the FDIC insures bank deposits only up to $250,000, leaving banks with a large share of uninsured deposits vulnerable to runs. The FDIC estimates that as of the end of last year, banks held $7.7 trillion of uninsured deposits, about 43 percent of total deposits in the United States. The regulator has been studying ways to improve the system, including raising the existing insurance cap, expanding it so that deposit insurance is unlimited, and creating a more targeted approach that would provide higher levels of deposit insurance to business accounts that are used for payroll processing.

via The New York Times|
#bank-insurance#bank-runs#business
finance2 years ago

FDIC suggests increasing deposit insurance limits for businesses and payroll accounts.

The Federal Deposit Insurance Corp. (FDIC) has recommended raising the insured deposit limit for US businesses to more than $250,000 in an effort to ease industry turmoil and prevent bank failures. The proposed change would allow the FDIC to cover higher deposits on a "targeted" basis, specifically for business accounts that pay for company operations such as payroll. The FDIC is seeking more flexibility to cover higher deposits to shore up accounts that pose the most risk to financial stability.

via The Associated Press|
#bank-deposit-insurance#bank-runs#business-accounts
finance2 years ago

FDIC Proposes Changes to Deposit Insurance Limits for Businesses.

The Federal Deposit Insurance Corp. (FDIC) has suggested that lawmakers could reduce the risk of bank runs by raising deposit-insurance protection for accounts used for payroll and other business payments. The FDIC report stated that a targeted move to ensure businesses can recover money intended for such payments if a bank fails was the best of three options considered for overhauling the deposit-insurance system. Lawmakers have discussed potentially raising the deposit-insurance limit from the current $250,000 per depositor.

via The Wall Street Journal|
#bank-runs#business-payments#deposit-insurance
finance2 years ago

Fed lending to banks fluctuates as borrowing habits shift.

Bank borrowing from the Federal Reserve's primary lending window has declined, indicating that pressures banks faced are receding. Borrowing from the window is meant to help banks deal with short-term liquidity crunches and is generally seen as a sign of weakness. The trend lower supports the narrative that bank runs, or fear that they could happen, aren’t forcing lenders to borrow from the Fed. The resurgence in mid-March from the discount window indicated that banks were under pressure.

via Barron's|
#bank-borrowing#bank-runs#discount-window
finance2 years ago

Lawmakers consider TikTok and Twitter monitoring after SVB collapse.

Lawmakers and federal officials are considering the idea of having bank regulators monitor social media platforms such as TikTok and Twitter for signs of possible bank runs or financial panics. This comes after the recent collapse of Silicon Valley Bank (SVB), which was hastened by online panic and ease of digital banking. Rep. Ritchie Torres has introduced legislation that would require the Financial Stability Oversight Council to monitor social media for any indicators of potential bank runs or financial panics that could threaten the financial stability of the United States. Bank regulators have acknowledged that social media played a role in SVB's failure and that new risks need to be considered and addressed.

via NBC News|
#bank-regulation#bank-runs#finance
finance2 years ago

The Risks and Realities of Investing in Banks Today.

US banks are sitting on $1.7tn in unrealized losses caused by rising interest rates that have slashed the value of the US Treasuries and mortgage-backed securities that make up a large portion of many banks’ assets. Nearly $7tn of the $17tn in total US bank deposits are currently not insured by the FDIC, according to a new paper by researchers at New York University. If half of these uninsured depositors decide to withdraw their funds after the recent bank instability, it could put hundreds of billions of dollars of deposits in jeopardy. Multiple politicians have argued the Fed should backstop every type of depositor at all banks to prevent further bank runs from the public.

via Yahoo Finance|
#bank-runs#fdic#finance
finance2 years ago

The Risky Reality of U.S. Banks' Unrealized Losses and Potential Collapse.

U.S. banks had unrealized losses of $1.7 trillion at the end of 2022, nearly equal to banks’ total equity of $2.1 trillion, due to rising interest rates that have slashed the value of their assets. Nearly $7 trillion of the $17 trillion in total U.S. bank deposits are currently not insured by the FDIC, and if half of these uninsured depositors decide to withdraw their funds after the recent bank instability, it could put hundreds of billions of dollars of deposits in jeopardy. Multiple politicians have argued the Fed should backstop every type of depositor at all banks to prevent further bank runs from the public.

via Fortune|
#bank-runs#fdic#finance
finance2 years ago

Yellen pledges to protect bank deposits and prevent contagion.

Treasury Secretary Janet Yellen expressed confidence in the US banking system but said she was prepared to take additional action to safeguard smaller financial institutions as the Biden administration and federal regulators worked to contain fallout from fears over the stability of the banking system. Yellen said the steps the administration and federal regulators had taken so far had helped restore confidence, but policymakers were focused on making sure that the broader banking system remained secure.

via The New York Times|
#bank-runs#biden-administration#finance
finance2 years ago

Nelson Peltz proposes government-backed bank deposit insurance.

Hedge fund manager Nelson Peltz has suggested that the US government should expand its guarantee to all bank deposits regardless of size in order to slow bank runs, but it should charge customers for that insurance. Peltz's idea comes in the aftermath of massive deposit outflows from US regional banks in recent weeks. The change would involve paying insurance premiums to the Federal Reserve.

via CNBC|
#bank-deposits#bank-runs#federal-reserve
finance2 years ago

"Warren Buffett's Impact on Banking and Stock Market"

Three banks have recently folded, raising concerns about a banking crisis. Warren Buffett, who has been investing in banks for over five decades, has shared his insights on bank runs, bailouts, and deposit insurance. Some of his quotes are relevant to the current situation, including the need for responsible risk management and avoiding doing things that are "ungodly dumb." He also highlights the importance of having someone who can be believed to do whatever it takes during a panic and the benefits of government guarantees for financial institutions.

via Markets Insider|
#bailouts#bank-runs#banking-crisis
finance2 years ago

Nobel Economist Paul Krugman Analyzes SVB's Collapse and Warns of Future Risks.

Douglas Diamond, the Nobel Prize-winning economist who specializes in bank runs, breaks down the collapse of Silicon Valley Bank (SVB) and identifies its risky policies on both the assets and liabilities sides of its balance sheet as the main cause. SVB's failure to diversify its deposit base and match its investments' maturities to its depositors' demands increased the risk of a run. While the Fed's policy of raising rates hurt, it wasn't the main reason for the implosion. Diamond warns that the Fed's super-tough policies put banks in a difficult position and calls for more sound management practices and regulation to make banks safe.

via Yahoo Finance|
#bank-runs#douglas-diamond#federal-reserve
finance2 years ago

Unpacking Economic Myths and Fears Amidst SVB's Collapse and Fed's Oversight

Douglas Diamond, the Nobel Prize-winning economist, breaks down the collapse of Silicon Valley Bank (SVB) and its failure to follow sound management practices and regulation. SVB's strategy to "go out on the yield curve" to garner an extra 0.5% was a mistake, and its deposit base was extremely unstable. The rise in rates hit SVB's bonds and cut its capital down, and it was close to insolvent before the meltdown. Diamond warns that the Federal Reserve's oversight of regional banks is too light to prevent further blowups, and the Fed's super-tough policies have put banks in a difficult position.

via Fortune|
#bank-regulation#bank-runs#douglas-diamond