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Who Else Is Ready For The Banking Crash And Ensuing Bailouts?

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  • #61
    The idea is just complete BS. No US regulatory body was going to claim SVB needed more capital to back the government bonds they were sitting on because they were too risky. And no one could have predicted a coordinated bank run, nor predicted what the Fed would do. The fact the Dems are pushing this and trying to blame Trump is proof alone it's a bunch of political malarkey.

    Comment


    • #62
      Originally posted by seanD View Post

      If any skirting of regulation had anything to do with this (and it probably didn't), it was because they were a bunch of woke suck-ups to ESG that influenced regulation leniency.

      Just as I had suspected. If this had anything to do with lax risk standards, it was related to ESG. This is why regulation won't work when companies can get ESG favoritism by hiding behind wokeism...

      Top Audit Firm Defends Giving Clean Bill of Health to SVB, Signature Bank Weeks Before Failure

      Audit giant KPMG is standing by its audits of Silicon Valley Bank (SVB) and Signature Bank, which collapsed when customers rushed to withdraw their savings in panic-fueled bank runs.

      The two banks failed not long after their respective annual reports were certified by KPMG, one of the so-called “Big Four” accounting firms, a list that also includes Deloitte, Ernst & Young, and PricewaterhouseCoopers.

      Paul Knopp, CEO of KPMG’s U.S. operations, defended the firm’s audit work on SVB and Signature in an interview with Financial Times during a Tuesday event at the NYU Stern Center for Sustainable Business.

      He pointed to “market-driven events” and “unpredictable” customer reactions to such events as examples of factors behind bank failures that audit work is powerless to address.

      “As we take into account everything we know today … we stand behind the reports we issued and we think we followed all professional standards,” Knopp told the outlet.

      Knopp insisted that KPMG “absolutely” considered all the facts that were known up until the day the audits were issued, adding that it’s impossible to know with certainty what will happen after the reports are released.

      He didn’t go into the specifics of the causes of the twin bank failures, speaking only in general terms about “actions” and “reactions” in the context of bank runs.

      The SVB collapse came as depositors rushed for the exits as word spread that the bank had booked huge losses on its bond portfolios, which eroded in value due to rising interest rates.

      Signature’s failure came as panic spread from the collapse of SVB and as Signature’s connections with the crypto space seemed to spook depositors, who rushed to withdraw their money.

      Both banks had above average amounts of uninsured deposits, meaning amounts above the Federal Deposit Insurance Corporation’s (FDIC) deposit guarantee of $250,000 per depositor per account category. Uninsured amounts are subject to losses in case of bank failure.
      ‘Going Concern’ Warnings

      KPMG signed its audit of SVB on Feb. 24, two weeks before the bank failed. The Signature audit was signed off on by KMPG on March 1, a little over a week before its collapse.

      Questions have been raised as to why neither of KPMG’s two audits included a so-called “going concern” warning, which would be a requirement if the audit firm had substantial doubt as to whether the banks could survive over the next 12 months.

      KPMG did not immediately respond to a request for comment by The Epoch Times nor to a question about why the two audits didn’t include such a warning.

      Experts say it’s likely that KPMG will face regulatory scrutiny over the audits.

      “Common sense tells you that an auditor issuing a clean report, a clean bill of health, on the 16th-largest bank in the United States that within two weeks fails without any warning, is trouble for the auditor,” Lynn Turner, former chief accountant of the Securities and Exchange Commission(SEC), said in remarks to the Wall Street Journal.


      When you explore KPMG's website, you see they're all about ESG and woke. Btw, US government regulatory agencies are also fully on board the ESG train.

      Comment


      • #63
        Originally posted by seanD View Post


        Just as I had suspected. If this had anything to do with lax risk standards, it was related to ESG. This is why regulation won't work when companies can get ESG favoritism by hiding behind wokeism...

        Top Audit Firm Defends Giving Clean Bill of Health to SVB, Signature Bank Weeks Before Failure

        Audit giant KPMG is standing by its audits of Silicon Valley Bank (SVB) and Signature Bank, which collapsed when customers rushed to withdraw their savings in panic-fueled bank runs.

        The two banks failed not long after their respective annual reports were certified by KPMG, one of the so-called “Big Four” accounting firms, a list that also includes Deloitte, Ernst & Young, and PricewaterhouseCoopers.

        Paul Knopp, CEO of KPMG’s U.S. operations, defended the firm’s audit work on SVB and Signature in an interview with Financial Times during a Tuesday event at the NYU Stern Center for Sustainable Business.

        He pointed to “market-driven events” and “unpredictable” customer reactions to such events as examples of factors behind bank failures that audit work is powerless to address.

        “As we take into account everything we know today … we stand behind the reports we issued and we think we followed all professional standards,” Knopp told the outlet.

        Knopp insisted that KPMG “absolutely” considered all the facts that were known up until the day the audits were issued, adding that it’s impossible to know with certainty what will happen after the reports are released.

        He didn’t go into the specifics of the causes of the twin bank failures, speaking only in general terms about “actions” and “reactions” in the context of bank runs.

        The SVB collapse came as depositors rushed for the exits as word spread that the bank had booked huge losses on its bond portfolios, which eroded in value due to rising interest rates.

        Signature’s failure came as panic spread from the collapse of SVB and as Signature’s connections with the crypto space seemed to spook depositors, who rushed to withdraw their money.

        Both banks had above average amounts of uninsured deposits, meaning amounts above the Federal Deposit Insurance Corporation’s (FDIC) deposit guarantee of $250,000 per depositor per account category. Uninsured amounts are subject to losses in case of bank failure.
        ‘Going Concern’ Warnings

        KPMG signed its audit of SVB on Feb. 24, two weeks before the bank failed. The Signature audit was signed off on by KMPG on March 1, a little over a week before its collapse.

        Questions have been raised as to why neither of KPMG’s two audits included a so-called “going concern” warning, which would be a requirement if the audit firm had substantial doubt as to whether the banks could survive over the next 12 months.

        KPMG did not immediately respond to a request for comment by The Epoch Times nor to a question about why the two audits didn’t include such a warning.

        Experts say it’s likely that KPMG will face regulatory scrutiny over the audits.

        “Common sense tells you that an auditor issuing a clean report, a clean bill of health, on the 16th-largest bank in the United States that within two weeks fails without any warning, is trouble for the auditor,” Lynn Turner, former chief accountant of the Securities and Exchange Commission(SEC), said in remarks to the Wall Street Journal.


        When you explore KPMG's website, you see they're all about ESG and woke. Btw, US government regulatory agencies are also fully on board the ESG train.
        I'm sure our resident Bernie Bro will deny the existence of the ESG push in regard to investing and the say it has nothing to do with the failure and that it's all a conspiracy.
        P1) If , then I win.

        P2)

        C) I win.

        Comment


        • #64
          Originally posted by CivilDiscourse View Post

          Here's my take. All those people NOW blaming Trump for this. Why didn't they try to fix it before hand? If these de-regulations were so bad, why didn't Bernie introduce legislation to fix it? Why didn't Warren? Same with the Train Regs....why didn't Biden's admin reverse that deregulation if they thought it was bad? They could have easily ATTEMPTED to fix these issues anytime in the past two years, but have not even tried.

          Officer, I had my car for two years, but the last guy who owned it wore the brakes down. It's his fault I rear-ended the car in front of me, not mine.

          ​​​​​​​
          Seems Starlight doesn't care to answer.

          Comment


          • #65
            Originally posted by CivilDiscourse View Post

            He'd have an excuse if a bill was introduced but failed a vote. He can't make congress pass legislation, but fir dems to not have tried given how bad they said things were is inexcusable.
            Biden, much like Obama, shows he doesn't really care if a bill is proposed or passed as long as they have a pen and phone they'll just sign executive orders that they will frankly acknowledge are illegal but simply don't care.

            I'm always still in trouble again

            "You're by far the worst poster on TWeb" and "TWeb's biggest liar" --starlight (the guy who says Stalin was a right-winger)
            "Overall I would rate the withdrawal from Afghanistan as by far the best thing Biden's done" --Starlight
            "Of course, human life begins at fertilization that’s not the argument." --Tassman

            Comment


            • #66
              Originally posted by CivilDiscourse View Post
              Here's my take. All those people NOW blaming Trump for this.
              The more that's coming out about this, the more they seem right to do so. It appears it was precisely Trump's 2018 deregulation that was the key thing that allowed this to happen in the first place. It seems pretty clear now that had that not passed, this would not have occurred.

              Trump deregulated the trains. Now we've had a giant train derailment.
              Trump deregulated the banks. Now we've had serious bank failures.

              Tucker Carlson appears to have been right in saying Trump destroys everything he touches and is the master of failing at business and breaking things.

              Why didn't they try to fix it before hand? If these de-regulations were so bad, why didn't Bernie introduce legislation to fix it? Why didn't Warren?
              In the first two years of Biden's Presidency, the Dems had only a 1-vote majority in the Senate. Bernie and Warren were in the Senate when the deregulation passed with 100% of the Republicans voting for it and a handful of Dems. So both of them would be aware that the votes weren't available to correct the situation, because if 100% of Republicans voted against the re-regulation and 95% of Dems voted for it, it wouldn't pass.

              So your question amounts to "why didn't they waste more time virtue-signaling on issues that would never pass rather than bringing forward legislation that had a serious shot of passing?" I kind of think that question answers itself. Also in Biden's first 2 years, Bernie was pretty seriously tied up in fight to pass a version of Biden's Build Back Better policy.

              Same with the Train Regs....why didn't Biden's admin reverse that deregulation if they thought it was bad?
              There's indeed some reasonable blame there. If I had been in Pete's position, for example, on day 1 I'd have said to my team "get me a list of all the changes Trump's people made over the past 4 years, and I'll want to have in-depth meetings on whether we should repeal those changes." Pete, however, is infamously big-business-friendly and lax on regulations, so it's in his defective character not to do that.

              Officer, I had my car for two years, but the last guy who owned it wore the brakes down. It's his fault I rear-ended the car in front of me, not mine.
              There are enough different laws and regulations that it's impossible to review all of them all of the time, so unless you specifically have a review of what the previous administration did and review those decisions, it's easy to assume that all's well. Secretaries who come into the office with their own topics of interest are often going to want to focus on those and explore regulations on those topics, rather than assuming they ought to start by undoing stuff done previously. It's a mistake, but it's an easy mistake to make.
              "I hate him passionately", he's "a demonic force" - Tucker Carlson, in private, on Donald Trump
              "Every line of serious work that I have written since 1936 has been written, directly or indirectly, against totalitarianism and for democratic socialism" - George Orwell
              "[Capitalism] as it exists today is, in my opinion, the real source of evils. I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy" - Albert Einstein

              Comment


              • #67
                Originally posted by CivilDiscourse View Post
                Seems Starlight doesn't care to answer.
                I was busy for a couple of days, get over yourself, it's not like you were making good or unanswerable points.
                "I hate him passionately", he's "a demonic force" - Tucker Carlson, in private, on Donald Trump
                "Every line of serious work that I have written since 1936 has been written, directly or indirectly, against totalitarianism and for democratic socialism" - George Orwell
                "[Capitalism] as it exists today is, in my opinion, the real source of evils. I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy" - Albert Einstein

                Comment


                • #68
                  Originally posted by Gondwanaland View Post
                  Anyone else been watching the SVB disaster? History continues to rhyme.
                  https://www.reuters.com/business/fin...ut-2023-03-12/


                  And it ain't the only one:
                  https://www.cnn.com/2023/03/12/inves...ead/index.html

                  SP7IcRb.png
                  And so it continues:
                  https://www.washingtonpost.com/busin...lic-bank-fdic/
                  https://archive.is/cLywo

                  FDIC likely to seize First Republic Bank


                  Regulators are expected to sell wounded bank’s assets to a larger institution. It would be the third lender to fail since March.


                  Federal regulators are likely this weekend to seizeFirst Republic Bank, a once high-flying lender that was humbled by its inability to adjust to rising interest rates, and sell it to a larger financial institution, according to two people familiar with the matter who spoke on the condition of anonymity to describe confidential talks.







                  Under the emergingplan, the Federal Deposit Insurance Corporation, the bank’s principal federal regulator, would place First Republic in receivership before quickly selling it. As the “receiver” for a failed bank, the FDIC temporarily manages its affairs and seeks to obtain the greatest value possible for its remaining assets.


                  Regulators in recent days have solicited bids from interested banks, with JPMorgan Chase having emerged as the high bidder so far, one of the people said. The nation’s largest bank last month led an 11-bank coalition that deposited $30 billion in First Republic as a show of confidence.






                  First Republic’s shareholders would be wiped out as a consequence of the government’s takeover-and-sale plan.


                  It is not clear whether the government will guarantee all First Republic deposits, including those above the $250,000-per-account federal limit, as it did for the two banks that failed last month. Officials want to discourage any potential outflow of funds from other midsize banks, but they fear that solution might be perceived as benefiting whichever Wall Street giant acquires the troubled bank, the people said.


                  Despite its current travails, First Republic remains attractive to potential owners. The bank has been profitable every year since its founding in 1985 and retains a lucrative wealth management business, which caters to affluent individuals. It also is known for careful loan underwriting.






                  “The reputation is quite strong,” said David Chiaverini, an analyst with Wedbush Securities.


                  First Republic, however, also comes with tens of billions of dollars in unrecognized losses from the securities and loans on its balance sheet. It is not clear whether the new owner is expected to hold those assets until they mature or whether it will receive some other consideration to sweeten the pot.


                  First Republic would be the third U.S. bank to fail since March 10, when Silicon Valley Bank collapsed, igniting fears of broader financial distress. Since last month’s dramatic events, Treasury Secretary Janet L. Yellen and Federal Reserve Chair Jerome H. Powell have repeatedly said the nation’s banks are sound.




                  That assessment was bolstered earlier this week, when another regional bank that drew scrutiny last month, PacWest Bancorp, said it had received an influx of deposits in recent weeks, a sign of good health. And even as First Republic neared collapse Friday, an index of regional bank stocks rose.




                  “At this point, it does seem that we’re through the worst of it,” said David Smith, a banking analyst with Autonomous Research. “It’s not the risk of broader contagion to the banking system we were all worried about a month ago. This should be the end of it.”


                  Talks over the bank’s fate hurtled toward a conclusion one day after regulators released a pair of reports that blistered government supervisors and bank executives for the failures last month of two midsize institutions in California and New York.




                  “Silicon Valley Bank failed because of a textbook case of mismanagement by the bank. Its senior leadership failed to manage basic interest rate and liquidity risk. Its board of directors failed to oversee senior leadership and hold them accountable. And Federal Reserve supervisors failed to take forceful enough action,” concluded Michael Barr, the Fed’s vice chair for supervision.




                  A separate FDIC report on the collapse of Signature Bank of New York blamed that bank’s management for ignoring risks — and also faulted the agency itself for not pushing executives to improve their operations.


                  March shock waves


                  The two bank failures last month spooked investors and sent shock waves throughout the global financial system. Within days of SVB’s collapse, Credit Suisse, a global giant that first opened its doors in 1856, was absorbed by UBS, its Swiss rival.




                  Investors also grew skittish about the survival of other regional U.S. banks, including First Republic.


                  Shares of First Republic were in free fall all week. The stock price, which peaked in early February at $147, began the week around $14 and closed Friday at $3.51.





                  Like SVB, First Republic placed financial bets during a period of ultralow interest rates that soured once the Federal Reserve began raising the cost of credit. Over the past 14 months, the central bank has raised its benchmark lending rate by about 5 percentage points, the fastest pace in roughly 40 years.




                  Higher rates have become a money-losing proposition for the San Francisco-based bank.




                  It is earning a return of around 3 percent on the government securities it owns and on more than $100 billion in residential mortgages, which were issued when rates were lower. But now it must pay almost 5 percent for fresh funds from the Fed and the Federal Home Loan Banks.


                  So the bank is locked into long-term bets that generate limited returns while having to pay ever increasing amounts to obtain new money for its business.


                  Moreover, First Republic catered to a wealthy customer base, which meant many of its accounts exceeded the federal deposit insurance limit of $250,000 per account. Almost half of the bank’s $104 billion in deposits was uninsured.




                  So when the rapid-fire failures last month of SVB and Signature Bank of New York raised concerns about the industry’s soundness, rattled depositors fled First Republic. Bank executives said earlier this week they had lost more than $100 billion in deposits in recent weeks.




                  It’s a steep fall for First Republic, which was well-regarded in the banking industry and enjoyed rapid growth in recent years. Over the past four years, its total assets more than doubled to $212 billion, and its workforce grew to more than 7,200 employees from around 4,500.


                  But the combination of low-yielding assets and a large uninsured deposit base made the bank vulnerable, analysts said.




                  Some other regional banks might also stumble under the pressure of higher interest rates. But unlike in the 2008 financial crisis, there is little danger of First Republic’s ills infecting the nation’s largest banks. Tighter regulations, including a requirement to hold much more capital in reserve to absorb any losses, makes them safer today than 15 years ago, analysts said.


                  “This is the last major wobble from a run on all the banks that looked like SVB,” said Steven Kelly, a senior researcher at the Yale Program on Financial Stability. “This is not a run up the food chain of banks that are even bigger.”


                  Comment


                  • #69
                    Since I work in the financial services industry, I've been following in multiple news sources the three bank (SVB, Signature, and First Republic) failures. Here's what I've concluded.

                    First, all three banks had executive management that could not properly react to changing times. Capitalisms fix for incompetence is failure. In this case, the failure has hurt many people.

                    Second, as a continuation of the first point, all three banks focused too much on serving wealthy clients. Once they lost confidence in the bank, they knew how to get their money out quickly. In other words, their deposit base wasn't diversified enough. Sadly, the rich still get bailed out. Somethings don't change.

                    Third, for those who think government regulation is the answer, the report on SVB and Signature has examples of the regulating body failing to properly do their job. I'm wary of regulation. However, in the case of where I place my money, I'm all for it. However, it's looking like you can't count on the regulators to do their job right. You more and more have to learn to take care of yourself because the government is increasingly looking unable to do it.

                    Fourth, the big get bigger. Hail Choam!
                    "For I desire mercy, not sacrifice, and acknowledgment of God rather than burnt offerings." Hosea 6:6

                    "Theology can be an intellectual entertainment." Metropolitan Anthony Bloom

                    Comment


                    • #70
                      Originally posted by Thoughtful Monk View Post
                      You more and more have to learn to take care of yourself because the government is increasingly looking unable to do it.
                      Government shouldn't be in the business of trying to take care of people in the first place. That is invariably where the problems start.
                      Some may call me foolish, and some may call me odd
                      But I'd rather be a fool in the eyes of man
                      Than a fool in the eyes of God


                      From "Fools Gold" by Petra

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