What we’re reading (3/13)
“Biden Team Scrambles To Contain Financial And Political Contagion” (CNN Business). “The Treasury Department and federal regulators insisted there was no systemic risk to the banking system as a whole that could cause a repeat of the cataclysmic 2008 meltdown as they raced against the opening of Asian markets with measures to head off a run on small or regional US banks.”
“Bank Shares Tumble in Wake of Failures” (New York Times). “The stocks of U.S. regional banks plummeted on Monday as investors reassessed how much such lenders were worth following the recent sudden collapses of Signature Bank and Silicon Valley Bank.”
“Investors Are Searching for Safe Spaces in Banking” (Wall Street Journal). “The megabanks aren’t totally free from worry about the interest-rate risk that was central to fears about Silicon Valley Bank. Many big banks have taken hits to their capital ratios due to rising interest rates and have their own unrealized investment securities losses. But investors appear to feel these banks—having the most resources, the most diverse business units and being the most regulated—are going to emerge as winners.”
“Signature Bank’s Collapse Spells Trouble For Cryptocurrency Industry” (Wall Street Journal). “The bank has long been an integral financial institution for the industry, hosting tools for facilitating digital transactions and counting notable crypto companies, such as the cryptocurrency exchange Coinbase, as its clients. It’s part of a slim group of mainstream banks catering to the needs of cryptocurrency firms and their clients, an area that was upended after the closing of another crypto-friendly bank, Silvergate Capital, last Wednesday.”
“SVB Doesn’t Deserve a Taxpayer Bailout” (Vivek Ramaswamy in WSJ). “Some claim that SVB’s failure would bring down other worthy startups and leave the U.S. less competitive. That’s wrong too. Presumably, these startups’ business models are the same today as they were last week. That means investors could infuse fresh equity capital to make up for any balance-sheet losses. That involves painful equity dilution for founders and venture capitalists, but that’s no justification for a public bailout.”
