From 8h ago
When she appears before the Senate finance committee this morning, Janet Yellen’s job will be to tell lawmakers that, despite the dramatic bank collapses of the past week, the America financial system is in good shape.
“I can reassure the members of the Committee that our banking system remains sound, and that Americans can feel confident that their deposits will be there when they need them,” the secretary will say, according to prepared testimony published by the Associated Press.
Senators have their own job, and that’s to get as much information out of Yellen as possible. Democratic senator Elizabeth Warren is one of Wall Street’s biggest foes in Congress, and will likely demand the secretary’s opinions on whether regulations that were repealed in 2018 would have prevented the collapses.
“It’s time to put those regulations back in place,” she told Boston’s WBZ yesterday, adding that it was time to “send a very strong message to bank CEOs – you’re not going to be able to load up on risk in order to juice your profits.”
Senator James Lankford, meanwhile, epitomized the concerns of many Republicans earlier this week when he complained that the US government’s actions to help the California bank appear to be a bailout funded by a fee on other financial institutions.
“Banks in Oklahoma in rural towns are about to pay a special fee to be able to bail out millionaires in San Francisco. Now, what Oklahoma banks and bankers had to do with that bank failure in San Francisco, I have no idea,” he said on the Senate floor.
It’s worth noting that the hearing itself is not specifically about the bank collapse, but rather Joe Biden’s 2024 budget proposal, which contains his administration’s priorities but has no chance of being enacted as written.
The United States came close to a financial crisis caused by the collapse of Silicon Valley Bank, Treasury secretary Janet Yellen told senators today during testimony where she outlined the government’s response to the institution’s sudden insolvency. Elsewhere in the Senate, lawmakers began the process of repealing the legal authorizations for America’s wars with Iraq, including the invasion that toppled Saddam Hussein 20 years ago. Joe Biden says he supports the repeal effort, as do some Republicans, but it’s still unclear if the measure has enough support to make it through the House.
Here’s what else happened today so far:
First Republic Bank is the latest US financial institution in trouble, prompting a rescue effort by the federal government and other banks.
House Republicans are creating a committee to investigate the committee that investigated the January 6 insurrection.
Marianne Williamson, who is again running for president as a Democrat, is all about love and compassion publicly, but is “terrifying” behind the scenes, her former staffers say.
Donald Trump and Ron DeSantis’s looming showdown might not be so great for Republicans, some lawmakers fear.
Sorry, conservatives: “woke” policies are not to blame for the recent bank failures, a fact check says.
At the start of the week, some Republicans reacted to the failure of Silicon Valley Bank (SVB) by claiming it was a consequence of “woke” policies gone wrong, and pointing to the bank’s public sustainability goals and support for progressive causes as fueling its insolvency.
There’s no evidence the bank’s efforts had anything to do with its failure, the Associated Press reports. In a fact check, the AP says that SVB’s failure to invest properly as interest rates rose, along with increasing cash demands from the tech and venture capital firms that made up its deposit base, caused its collapse last week.
As for conservatives’ claims of death by wokeness, the AP says they don’t hold water:
The institution’s fall had all the hallmarks of a “classic run on the bank,” Peter Cohan, a professor of management practice at Babson College in Wellesley, Massachusetts, said in an email. “A focus on DEI had nothing to do with the collapse of SVB.”
Rodney Ramcharan, a finance professor at the University of Southern California’s Marshall School of Business, agreed, dismissing criticism that the bank reportedly donated millions to BLM and similar groups over the years as “trivial and irrelevant,” given the bank had more than $200 billion in assets before it failed.
It’s not even clear the bank donated more than $70 million to those causes, as social media users and conservative news outlets claim. Many cite a database maintained by the Claremont Institute, a California-based conservative think tank, that purports to track donations to the “BLM movement and related causes.”
The institute database links to several SVB company reports and press releases to support its tally, but an Associated Press review shows none of the documents actually mention Black Lives Matter or BLM. In fact, the majority of the documents deal with the bank’s environmental and sustainability efforts.
Spokespersons for the institute and BLM didn’t respond to emails seeking comment Thursday.
The Guardian’s Victoria Bekiempis reports that federal attorneys are warning courts to expect many, many more prosecutions related to the January 6 insurrection:
Federal prosecutors in Washington have reportedly told court officials a thousand more people could be charged in relation to the deadly January 6 Capitol attack.
Matthew Graves, the US attorney in Washington DC, sent a one-page letter to the chief judge of Washington DC federal court, apprising her of the potential deluge of defendants, Bloomberg News reported.
The correspondence provides details on what the US attorney general, Merrick Garland, has described as “one of the largest, most complex and most resource-intensive investigations in our history”.
Graves said in the letter that justice department officials estimated that another 700 to 1,200 defendants could face charges. That would nearly double the number of criminal cases relating to January 6, Bloomberg noted.
Donald Trump may have it out for Ron DeSantis, but there’s also no love lost between him and his former vice-president Mike Pence.
And if such political squabbling is your kind of thing, you’ll be pleased to learn the Washington Examiner reports both men are scheduled to speak at the Republican National Committee’s upcoming spring retreat:
Meanwhile, House Democrats are looking into the recent spate of bank failures and the government’s efforts to stabilize the financial sector.
The party’s leader in the House, Hakeem Jeffries, said he met today with the officials at the Federal Reserve Bank of San Francisco “to discuss the latest developments in the banking situation”.
“House Democrats, under the leadership of House Financial Services Committee Ranking Member Maxine Waters, await the findings of the ongoing Federal Reserve review into the matter and look forward to working on a bipartisan basis to strengthen guardrails to further protect consumers,” Jeffries said in a statement. The San Francisco Fed was in charge of overseeing Silicon Valley Bank, the largest of the three financial institutions to shut down in recent days.
There was no sign of emergency in Jeffries statement, which added that “the banking system remains resilient and Americans can have faith their deposits will be there when they need them.”
“Nerves are certainly frayed at this moment.” So said Senate finance committee chairman Ron Wyden earlier today when treasury secretary Janet Yellen was the first administration official to face lawmakers over the decision to protect uninsured money at two failed regional banks, a move that some Republicans have criticized as a bank “bailout”, the Associated Press reports.
“One of the most important steps the Congress can take now is make sure there are no questions about the full faith and credit of the United States,” the senior senator from Oregon, a Democrat, said this morning, referring to raising the debt ceiling.
To recap a little further, Yellen faced fierce questioning by lawmakers on how Federal Reserve interest rates contributed to the bank failures so far and whether taxpayers would bear the brunt of the commitment to make depositors at the banks whole. Yellen stressed the need for the federal government to act to assure stability in the market.
“We certainly need to analyze carefully what happened to trigger these bank failures and examine our rules and supervision” to prevent failures from happening again, Yellen told the committee.
California-based First Republic Bank is the latest name in the spotlight as reports emerge that the mid-size bank is seeking a lifeline and some of the US’s biggest banks are weighing a rescue bid orchestrated by the government.
This on the day that treasury secretary Janet Yellen told congress that the US banking system “remains sound” but that the government stepped in in the case of Silicon Valley Bank when it collapsed because they “recognized a serious risk of contagion that could have brought down and triggered runs on many banks”.
Citigroup, Goldman Sachs, JP Morgan and Wells Fargo are among the banks discussing a lifeline for the San Francisco-based lender, according to the Wall Street Journal.
First Republic’s shares fell 22% on Thursday morning but bounced back after the news of a possible deal broke. They are down close to 70% over the last five trading days and the bank’s market capitalization has fallen from $21bn on 8 March, when the Silicon Valley Bank ( SVB) crisis began, to less than $5bn, my colleague Dominic Rushe reports more fully here.
The US Senate has taken the initial vote to repeal the 1991 and 2002 authorizations for use of military force against Iraq.
The action at those times greenlit America’s involvement in the Gulf war and the later invasion that toppled Saddam Hussein 20 years ago as part of the US counteroffensive in the region following the al-Qaida terrorist attacks on home soil on September 11, 2001.
The measure has attracted support from both Republicans and Democrats, but it is currently unclear whether it has enough support to pass both chambers of Congress.
“President Biden remains committed to working with the Congress to ensure that outdated authorizations for the use of military force are replaced with a narrow and specific framework more appropriate to protecting Americans from modern terrorist threats,” the White House said earlier today.
“Toward that end, the Administration will ensure that Congress has a clear and thorough understanding of the effect of any such action and of the threats facing US forces, personnel, and interests around the world. As the Administration works with Congress, it will be will be critical to maintain the clear authority to address threats to the United States’ national interests with appropriately decisive and effective military action.”
The United States came close to a financial crisis caused by the collapse of Silicon Valley Bank, Treasury secretary Janet Yellen told senators today during testimony where she outlined the government’s response to the institution’s sudden insolvency. Elsewhere in the Senate, lawmakers are starting the process of approving the repeal of the legal authorizations for America’s wars with Iraq, including the invasion that toppled Saddam Hussein 20 years ago. Joe Biden says he supports the repeal effort, as do some Republicans, but it’s still unclear if the measure has enough support to make it through both chambers of Congress.
Here’s what else happened today so far:
House Republicans are creating a committee to investigate the committee that investigated the January 6 insurrection.
Marianne Williamson, who is running for president as a Democrat again, is all about love and compassion publicly, but is “terrifying” behind the scenes, her former staffers say.
Donald Trump and Ron DeSantis’s looming showdown might not be so great for Republicans, some lawmakers fear.
Earlier today, the Senate’s Democratic leader Chuck Schumer acknowledged that lawmakers will vote on amendments to the proposal repealing the authorizations for the Iraq invasion and Gulf War.
Amendments can be a risky prospect for legislation, because they allow lawmakers to insert provisions that others might find unpalatable enough to drop their support. Politico spoke to Democratic senator Tim Kaine, who said he wasn’t worried about the overall effort to repeal the war authorizations, and offered a preview of what amendments might be proposed:
He expects amendments to come in “two flavors” :
Some will be focused on Iran-backed militia groups in Iraq and he anticipates proposals to spell out that the U.S. maintains the right to defend against those groups, which have attacked U.S. troops in the past. “We’re doing that now. We’re defending ourselves,” Kaine said.
Other amendments could state that nothing in the measure would interfere with the president’s Article II authority, or “the President has the power to do X, Y or Z,” as Kaine explained.
Republican senator Rand Paul also wants to repeal the 2001 military authorization that has provided the legal underpinnings for America’s broader “war on terror”. Kaine is partially on board with that, saying the authorization should be “dramatically revised,” according to Politico. But he acknowledged such an effort would have less support than the current attempt to undo the authorizations concerning Iraq.
“You’d get a lot fewer votes for that than you would for the Iraq repeal,” Kaine said.
Donald Trump and his allies have made little secret of their plans to attack Florida governor Ron DeSantis if he decides to run for the GOP’s presidential nomination in 2024 – but some in the party are worried about what a protracted showdown between the two leading candidates could mean.
The Hill reports that several Republican lawmakers in Congress worry the blowback from Trump and DeSantis’s hostilities could turn voters off and potentially harm the party’s chances in next year’s elections.
“I winced in 2016 and I’m wincing now,” Wyoming’s Republican senator Cynthia Lummis said.
Senator Lisa Murkowski of Alaska also frowned at Trump’s strategy to dump on DeSantis, who has yet to formally announce a run for president. “Why anyone feels it’s necessary as part of a campaign to be nasty and personal is beyond me. It doesn’t have to be. Talk about the issues.”
Senator John Thune of South Dakota said the two men would be better off pointing out the ways that they are different from Democrats. “I would like to keep it focused on the issues. I think there’s plenty to talk about, lots of contrasts you can draw with Democrats. I’d rather [they] keep their fire focused on them instead of each other,” he told the Hill.
However, he acknowledged that relentlessly attacking his opponents appears to be a core part of Trump’s character. “That’s his style. If you’re going to be in the arena, you should expect that.”
An update from Ed Helmore, who is reporting Janet Yellen’s appearance before the Senate banking committee in Washington …
Republicans on the committee questioned whether “backstops” for banks will become a new normal and implications that could have on the concept of moral hazard.
“I’m concerned about the precedent of guaranteeing all deposits and the market expectation moving forward,” said Mike Crapo, of Idaho.
Yellen said the Federal Reserve, the treasury and government insurers had stepped in in this instance because they “recognized a serious risk of contagion that could have brought down and triggered runs on many banks”.
“Shareholders and debt-holders are not being protected by the government,” she added. “Importantly, no taxpayer money is being used or put at risk with this action. Deposit protection is provided by the Deposit Insurance Fund, which is funded by fees on banks.”
Yellen also addressed high inflation, the issue that underscores a sharp, year-long rise in Fed interest rates that triggered the bank collapses. While there had been some improvement in headline inflation, Yellen said, “more work needs to be done”.
In response to senators’ questions, Yellen said: “I consider inflation the number one economic problem that all of us need to face and and address.”
She said high inflation was Joe Biden’s “top priority”. While “many factors” had contributed to it, she said, it was “critical” for the Fed to address it.
Benjamin Lee, our arts editor, takes a look at how late-night TV has responded to the Silicon Valley Bank-fueled crisis – and in particular to how Republicans including Ron DeSantis, the Florida governor and presumed challenger for the presidential nomination, have tried to say the bank’s failure is all the fault of diversity and, yes, wokeness …
On Late Night with Seth Meyers on Wednesday, the host spoke about the right continually “grasping for some new culture war issue”, the latest somehow being washing machines, given attempts to make them eco-friendly.
Republicans, Meyers said, have “no discernible policy agenda aside from whining about wokeness, a term they can’t even define”.
Ron DeSantis has even tried to create a new term, complaining about an “oppressive woke-ocracy”. Meyers said he was “pretty sure saying that gives you step throat”, before suggesting the reason DeSantis made it up is because it’s “such a mouthful that Donald Trump can’t pronounce it”.
Meyers called the Republican party “a thoroughly unserious political movement” before moving on to attempts to link the fall of Silicon Valley Bank to diversity, AKA wokeness.
Meyers joked that he was “tired of all these radical leftist banks” and that “if a bank can be woke then literally anything can be woke”.
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Source: US Politics - theguardian.com
