US Politics Thread 2021-24

[em2nought]

There goes a bank in the second-largest failure of a financial institution in US history https://www.cnn.com/2023/03/10/inves...ank/index.html

[Rockstar]

Bill Ackman, the billionaire hedge fund manager, called on his cronies in US government to step in and bail out Silicon Valley Bank.

Who are Ackerman’s cronies?

Bill Ackman endorsed Michael Bloomberg as a prospective candidate for President of the United States in the 2016 presidential election. He is a longtime donor to Democratic candidates and organizations, including Richard Blumenthal, Chuck Schumer, Robert Menendez, the Democratic National Committee, and the Democratic Senatorial Campaign Committee.

[Rockstar]

The Silicon Valley Bank crisis will force the Fed to slash rates by 100 basis points to prevent contagion, market guru says

Filip De Mott
Fri, March 10, 2023 at 11:18 AM EST·2 min read

https://finance.yahoo.com/news/silic...161835121.html

The Silicon Valley Bank crisis may force the Fed to slash rates this year, Larry McDonald said.

The market guru told CNBC on Friday he expects 100 basis points of easing by December.

"In essence, the Fed is causing this bank run," he said, referring to earlier steep rate hikes.

The Silicon Valley Bank meltdown may incite the Federal Reserve to cut rates by 100 basis points by December to prevent contagion in the financial system, Larry McDonald said.

That would mark a sharp reversal from the central bank's current course of aggressive tightening to rein in inflation.

Rate hikes totaling 450 basis points over the past year have made returns on short-term Treasurys more attractive, draining deposits from banks like SVB, the founder of "The Bear Traps Report" told CNBC on Friday.

"In essence, the Fed is causing this bank run," he said.

Shares of Silicon Valley Bank crashed another 68% on Friday, extending its two-day dive to as much as 87%, with several venture capital firms advising their portfolio companies to pull money from the bank.

Meanwhile, shares of Wall Street banking giants are falling, and regional lenders like First Republic, Signature Bank and PacWest are also plunging.

"Within the next couple of months, as the contagion brews up this channel — up to high yield, leveraged loans, across the entire ecosystem — that's when the Feds gonna have to bring out the other firehose and cut rates, probably within six to nine months," McDonald said.

The SVB Financial Group's crisis began after it announced a $1.8 billion loss from the sale of its $21 billion bond portfolio, which was hit by the Fed's rate hikes. After failing to raise more capital, SVB is reportedly looking to sell itself.

While bigger banks may have the staff and expertise to manage interest rate risks, McDonald said, regional banks like SVB are unaccustomed to this sort of rate environment.

And the Fed is expected to continue raising rates later this month. Earlier this week, Fed Chairman Jerome Powell opened the door to bigger increases as economic data point to sticky inflation.

Read the original article on Business Insider

Comments:

ukchucktown

5 minutes ago

Don't hold your breath for interest rates to go down. They stayed too low for too long. The day of reckoning is upon us now. A couple banks failing will not change immediate policy, especially banks focused on silicon valley startups and crypto. Until inflation is under control the Fed is not going to lower interest rates.

[MaDef]

Originally Posted by Rockstar

Bill Ackman, the billionaire hedge fund manager, called on his cronies in US government to step in and bail out Silicon Valley Bank.

That precedent was set back in 79'-80' with the Chrysler bailout, and turned into a regular occurrence with the following bail outs:

1989 Savings and loan bailouts
2001 Airlines
2008 Automobile aka TARP
2020-2021 Corona virus relief

This is part of the reason the current deficit is so high (1.6 trillion). and if Washington doesn't address it, it will eventually crash the economy.

[Kptlt. Neuerburg]

Originally Posted by MaDef

This is part of the reason the current deficit is so high (1.6 trillion). and if Washington doesn't address it, it will eventually crash the economy.

That's easier said then done though. This country is spending money faster then it's taking it in and it's nothing new and while there are ways lower it namely cutting spending and raising taxes. The ultimate question is where to cut the spending and where to raise the taxes?


Also the only time in this nations history where there was no deficit at all was from 1835 to 1837 when Andrew Jackson was president. Just thought I'd throw that out there.

[Rockstar]

If they want to raise taxes they would then have to explain why and where it’s going. So instead they keep borrowing and coming up with slogans for the useful idiots like ‘make the rich pay their fair share’ or ‘they don’t care’ and whataboutisms up the wazoo. Still, nobody knows why or where our taxes are going it’s simply packaged in one massive omnibus spending bill nobody reads. Meanwhile we just gleefully keep hopping on the bandwagon speeding down a big hill with no brakes. Weeeeee

[em2nought]

Another one bites the dust! Signature Bank. Hurray for build back better! https://www.nytimes.com/2023/03/12/b...lley-bank.html

[Buddahaid]

It was during the Trump administration in 2018 that Kevin McCarthy pushed for the repeal of Dodd Frank (2010) with S2155 The Economic Growth Regulatory Relief and Consumer Protection Act that removed policies that would have prevented SVB from getting into the situation it has found itself in. Another shining example of America first.

[Rockstar]

Originally Posted by Buddahaid

It was during the Trump administration in 2018 that Kevin McCarthy pushed for the repeal of Dodd Frank (2010) with S2155 The Economic Growth Regulatory Relief and Consumer Protection Act that removed policies that would have prevented SVB from getting into the situation it has found itself in. Another shining example of America first.

So what you’re saying is the current administration is admitting they knew Trump did this, but didn’t do anything and allowed it to happen anyway. Or they’re admitting that like their predecessor they’re too stupid and naive to prevent this from happening. Which one are you trying to get me to believe?

what I do believe is no mystery crypto and tech start ups are tanking and not something anyone should be investing in right now. Venture capitalists took their money out and caused the run not poor book keeping. That’s only ONE reason why the banks in California are failing. The Democrats who voted with Republicans that made it possible to push the roll back through are from Alabama, Colorado, Delaware, Indiana, Michigan, Missouri, Montana, North Dakota, Virginia, and West Virginia. No problems there, just California.

Maybe you can ask that scheming crook you call Governor and his wife to explain their hand in it.

https://californiaglobe.com/articles...nnifer-newsom/

Silicon Valley Bank Ties to California First Partner Jennifer Newsom
‘What did they know and when did they know it?’
By Katy Grimes, March 12, 2023 10:14 am

Silicon Valley Bank was closed Friday by the California Department of Financial Protection and Innovation, with the FDIC in charge of liquidation. SVB was one of the largest banks in the country and one of the premier banks of Venture Capital firms and start-up companies.

In looking at the SVB board and executive team bios, there is an interesting tie to California’s First Partner Jennifer Siebel Newsom – one of the SVB Executives sits on the board of Jennifer Siebel Newsom’s California Partners Project.

California Governor Gavin Newsom issued a statement Saturday morning in response to the appointment of the Federal Deposit Insurance Corporation (FDIC) as receiver of Silicon Valley Bank:

“Over the last 48 hours, I have been in touch with the highest levels of leadership at the White House and Treasury. Everyone is working with FDIC to stabilize the situation as quickly as possible, to protect jobs, people’s livelihoods, and the entire innovation ecosystem that has served as a tent pole for our economy.”

Shortly thereafter, Gov. Newsom was excoriated on Twitter.

The Globe reached out to Grenell for a comment:

“Gavin has always been a secretive politician,” Grenell said. “He never gives the full story and the Sacramento media is largely afraid to take him on. The lack of transparency in State government is a dangerous situation because California is currently a one party controlled dictatorship and Gavin is the boss.”

Grenell fairly asks, “@GavinNewsom should be transparent about California’s First Lady’s relationship to the SVB leadership. Did she get involved at all? What did they say to her in the lead up to the collapse?”

Indeed. As Forbes notes, this meltdown did not happen overnight. “Silicon Valley Bank Proxy Shows Board’s Secret Yearlong Risk Panic,” the Forbes headline says. “The sudden freefall is likely not a surprise to the SVB board. In the past 15 months, as top insiders cashed options and sold shares, SVB operated without a full-time chief risk officer and the number of board risk committee meetings more than doubled.”

Notably, Silicon Valley Bank had no official chief risk officer for 8 months while the Venture Capital market was spiraling, Fortune reported. “It is unclear how the bank managed risks in the interim period between the departure of one CRO and appointment of another.”

Another question that has not been asked by anyone in the media yet was asked almost immediately by Vivek Ramaswamy, American entrepreneur, author, and conservative political activist now running for President: Was Silicon Valley Bank using Environmental, Social and Governance (ESG), and Diversity and Equity and Inclusion (DEI) to make economic decisions? “A key cause of the 2008 financial crisis was the use of social factors to make loans (back then, fostering home ownership),” Ramaswamy said. “When we don’t learn lessons, history repeats itself: did Silicon Valley Bank use ESG factors to price its loans? Roll that log over & see what crawls out.”

Did Silicon Valley Bank use ESG social factors to make financial decisions, Ramaswamy asks. “Why were they worrying about a healthy planet and not about a healthy financial sheet?”

Why was a bank focused on environmental and climate change issues, and not the bottom line? How does a focus on Diversity and Equity and Inclusion improve the return on investment? Quick answer: It doesn’t.

This is relevant because it is also First Partner Jennifer Siebel Newsom’s primary focus in her creepy gender justice films for school kids, featuring her “genderbread person,” who aims to show children how biological sex, “gender expression,” “sexual attraction,” and “gender identity” exist on a spectrum. As the Globe reported in January:

California Governor Gavin Newsom and his wife, “First Partner” Jennifer Siebel Newsom, have quite a money-making scheme going on: “While her husband attends to state business, Siebel Newsom engages in her passion: advancing ‘gender justice’ through her charitable nonprofit The Representation Project. According to tax documents the organization is ‘committed to building a thriving and inclusive society through films, education, and social activism,’” Open the Books reports.

The Globe sent the governor’s office an inquiry and will report back with his reply.

Forbes asks the only important question: “The board now faces the classic Watergate questions — what did they know and when did they know it? Their 2023 proxy holds some initial clues of a silent panic.”

[Rockstar]

Meanwhile as Blue Anon and the usual suspects blame Trump.

Barney Frank blames crypto panic for his bank’s collapse.

The rift between Frank and Warren is just a preview of what’s to come as Democrats sort out positions on how to respond to the latest banking crisis.

https://www.politico.com/news/2023/0...trump-00086765

By ZACHARY WARMBRODT
03/13/2023 01:15 PM EDT

Former Rep. Barney Frank and Sen. Elizabeth Warren — two key architects of the post-2008 system of Wall Street regulation — are at odds over what’s dragging down banks once again.

Frank, who chaired the House Financial Services Committee in the wake of the global financial crisis and wrote sweeping new rules enacted in 2010, most recently served on the board of New York’s Signature Bank, which regulators shut down Sunday.

From his front-row seat, he blames Signature’s failure on a panic that began with last year’s cryptocurrency collapse — his bank was one of few that served the industry — compounded by a run triggered by the failure of tech-focused Silicon Valley Bank late last week. Frank disputes that a bipartisan regulatory rollback signed into law by former President Donald Trump in 2018 had anything to do with it, even if it was driven by a desire to ease regulation of mid-size and regional banks like his own.

“I don’t think that had any impact,” Frank said in an interview. “They hadn’t stopped examining banks.”

But Warren, a fellow Massachusetts Democrat who designed landmark consumer safeguards that ended up in Frank’s 2010 banking law, is placing the blame firmly on the Trump-era changes that relaxed oversight of some banks and says Signature is a prime example of the fallout.

“Had Congress and the Federal Reserve not rolled back the stricter oversight, SVB and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks,” Warren wrote Monday in a New York Times op-ed.

The rift between Frank and Warren is just a preview of what’s to come as Democrats sort out positions on how to respond to the latest banking crisis, which led to a weekend bailout of depositors at Silicon Valley Bank and Signature. Some like Warren want Washington restore the tougher regulations that were rolled back in 2018. Some Democrats, like Frank, say the 2018 law isn’t the problem. A number of moderate Democrats still in Congress helped write the 2018 legislation, including those facing reelection in 2024.

Frank, who served on Signature’s board since 2015, said his bank was in “good shape” but was hit with a run generated by “the nervousness and beyond nervousness from SVB and crypto.” The bank’s digital assets business made it the “unfortunate victim of the panic that really goes back to FTX,” the cryptocurrency exchange that failed last year.

Frank said other lenders were in trouble the last few days, with the Federal Home Loan Bank telling Signature when it applied for money on Friday that “they didn’t have enough to go around because they were getting so many requests.”

Frank said Signature, now in the hands of regulators, will probably sell for close to what the bank’s leaders believed it’s worth.

“The FDIC and the state of New York looked at things and made their decision,” Frank said. “Frankly, I was surprised by it. They apparently had a more negative view of our solvency.”

A Signature spokesperson declined to comment on what happened with the bank. New York Gov. Kathy Hochul said Monday that federal and state regulators “saw that a run on a regional bank could pose a great risk to our stability.”

The 2018 law that eased banking regulations advanced with a degree of encouragement from Frank, who was on Signature’s board at the time. He was a proponent of raising a $50 billion asset threshold in his 2010 law that triggered stricter oversight.

Congress ended up changing the framework so that banks would be eligible for greater regulatory scrutiny once they reached $100 billion in assets and then automatically face the toughest regulation at $250 billion.

Signature was poised to be a major beneficiary of the change, with assets of about $44 billion in 2018. It had $110 billion in assets as of this weekend.

Frank said Sunday that he didn’t think changing the threshold to $250 billion from $50 billion “had any impact.”

“I think, if it hadn’t been for FTX and the extreme nervousness about crypto, that this wouldn’t have happened — even to SVB or to us,” he said. “And that wasn’t something that could have been anticipated by regulators.”

Warren is now holding up Signature — and SVB — as a reason why Congress and the regulators should reverse any light-touch bank supervision triggered by the 2018 law. Silicon Valley Bank had assets of about $209 billion when it failed, up from about $57 billion at the end of 2018.

“SVB and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks,” she said in the New York Times. “They would have been required to conduct regular stress tests to expose their vulnerabilities and shore up their businesses. But because those requirements were repealed, when an old-fashioned bank run hit SVB‌, the‌ bank couldn’t withstand the pressure — and Signature’s collapse was close behind.”

Frank and Warren appear to be converging on one issue — support for greater depositor protections. Federal deposit insurance is capped at $250,000, but the Biden administration and regulators have essentially pledged to back all deposits at the failed banks.

Warren said in her New York Times op-ed that regulators should reform deposit insurance so that during this crisis and in the future “businesses that are trying to make payroll and otherwise conduct ordinary financial transactions are fully covered — while ensuring the cost of protecting outsized depositors is borne by those financial institutions that pose the greatest risk.”

Frank said he felt vindicated by the government’s decision to guarantee all deposits because, when served in the House, he wanted to pass legislation that would expand deposit insurance, especially for businesses.

He wants Congress to revive that idea and look at what’s a reasonable amount to help cover payrolls — in his view tens of millions of dollars.

Had the government announced its deposit backstop on Friday, “we wouldn’t have had the problem.”

[Buddahaid]

Originally Posted by Rockstar

So what you’re saying is the current administration is admitting they knew Trump did this, but didn’t do anything and allowed it to happen anyway. Or they’re admitting that like their predecessor they’re too stupid and naive to prevent this from happening. Which one are you trying to get me to believe?

That in 2018 when Republicans were in control of Congress, they gutted protections that were put in place after the 2008 financial crisis.
https://www.forbes.com/advisor/inves...odd-frank-act/

[August]

Originally Posted by Buddahaid

That in 2018 when Republicans were in control of Congress, they gutted protections that were put in place after the 2008 financial crisis.
https://www.forbes.com/advisor/inves...odd-frank-act/

And the Dems held both houses of Congress and the White House for two entire years and failed to correct this so called deficiency.

[Buddahaid]

Originally Posted by August

And the Dems held both houses of Congress and the White House for two entire years and failed to correct this so called deficiency.

Can't argue with that save for also having to deal with the pile of crap handed to them by little man.

[August]

Originally Posted by Buddahaid

Can't argue with that save for also having to deal with the pile of crap handed to them by little man.

Who had piles of crap thrown at him for his entire term in office, by both sides. And the beat goes on.

[Buddahaid]

Originally Posted by August

Who had piles of crap thrown at him for his entire term in office, by both sides. And the beat goes on.

I guess you are talking about little man, and he deserved it. Even the Republican party is slowly moving away from his failed brand now seeing it for the poison everything thing he touches becomes.