marketsClosed Mar 14, 2023
Wild Swings in Bank Stocks Create Opportunity for Brave Investors
- Fed to probe its supervision of SVB, release review by May 1
- Biden vows to hold banks accountable, urges stronger rules
- Traders scrap bets for Fed rate hikes amid banking turmoil
- Bonds rally in rush for havens; US regional bank stocks sink
Silicon Valley Bank headquarters in Santa Clara, California.
Photographer: David Paul Morris/BloombergThank you for joining us for today’s coverage of the aftermath of Silicon Valley Bank’s failure. Here are five key takeaways from the past day -- a news-packed 24 hours for the financial world:
- US government officials had a busy weekend, with the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. taking extraordinary measures to shore up confidence in the financial system after SVB’s collapse, introducing a new backstop for banks that Fed officials said was big enough to protect the entire nation’s deposits.
- President Joe Biden sought to reassure consumers and markets that the US financial system is on solid footing, promising to hold responsible those behind the collapse of SVB and Signature Bank and saying he would urge Congress to strengthen regulation of the banking system.
- While depositors are protected under regulators’ backstop plan, investors aren’t -- and stocks took a beating. Regional banks were among the hardest hit, with the KBW Regional Banking Index sinking by almost 12%, its sharpest intraday plunge since March 2020. First Republic Bank, Western Alliance Bancorp and PacWest Bancorp all plummeted, and Charles Schwab Corp. suffered a record decline in intraday trading as the online brokerage sought to reassure investors that it has sufficient liquidity to handle any volatility.
- The US system of Federal Home Loan Banks is ramping up the amount of cash it has available to deploy as the failure of lenders including Signature and SVB stokes expectations that more regional lenders will need to tap it for funds.
- Two-year Treasury yields were on track for their biggest drop in years Monday as bond traders scrapped bets on additional Federal Reserve rate hikes amid the turmoil in the US banking system. Demand for Treasuries of all maturities surged as investors continued to flee US bank shares.
