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      US banking system 'remains sound' despite bank collapses, says Janet Yellen – video

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      Janet Yellen, the US treasury secretary, told Congress that the recent collapses of two US banks, Silicon Valley Bank and Signature Bank, does not reflect on the overall strength of the US banking system. She told Congress the US banking system ‘remains sound’, claiming that the government’s swift response to the failures helped to restore public confidence in the banking system. ‘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,’ she said More

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      US banks launch $30bn rescue of First Republic to stem spiraling crisis

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      Wall Street’s giants moved to end the US’s spiraling banking crisis on Thursday by agreeing to prop up troubled First Republic, a mid-sized bank whose shares have been pummeled amid a wider banking turmoil.Bank of America, Goldman Sachs, JP Morgan and others will deposit $30bn in First Republic, which has seen customers yank their money following the collapse of Silicon Valley Bank (SVB) and fears that First Republic could be next.“The actions of America’s largest banks reflect their confidence in the country’s banking system. Together, we are deploying our financial strength and liquidity into the larger system, where it is needed the most,” the banks said in a joint statement on Thursday.The big banks have received billions in deposits from smaller, regional banks as the banking crisis has spooked their customers. US authorities swooped in to take control of SVB and New York’s Signature bank last weekend after frightened customers pulled their deposits.Banks and regulators are hoping that the action will act as a firewall by protecting First Republic and stopping the crisis spreading to other smaller banks.Shares in First Republic – a San Francisco-based bank that largely caters to wealthier clients including Facebook co-founder Mark Zuckerberg – had fallen about 70% since the news of SVB’s collapse. They fell another 22% on Thursday before the bailout but ended the day up nearly 10%.In a joint statement, US treasury secretary Janet Yellen, Federal Reserve chair Jay Powell and senior regulators said: “This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system.”Ahead of the news Yellen assured Congress on Thursday that the US banking system was “sound”.“I can reassure the members of the committee that our banking system is sound, and that Americans can feel confident that their deposits will be there when they need them,” she told the Senate finance committee.SVB had a high percentage of “uninsured” deposits – deposits above the $250,000 government insured limit. SVB’s uninsured deposits accounted for 94% of its total. First Republic’s percentage of uninsured deposits was far lower – at 68% according to S&P Global – but was high enough to worry investors and depositors with more than $250,000 in accounts at the bank.The unprecedented rescue plan will see most of the US’s largest banks making uninsured deposits into First Republic. Bank of America, Citigroup, JP Morgan Chase and Wells Fargo are each making a $5bn deposit into First Republic. Goldman Sachs and Morgan Stanley are each making deposits of $2.5bn, and BNY Mellon, PNC Bank, State Street, Truist and US Bank are each making a deposit of $1bn, for a total deposit from the eleven banks of $30bn.The news came as the Swiss central bank issued a $53.7bn loan to Credit Suisse to stem its own crisis of confidence. The long-troubled bank’s share price had collapsed after its largest shareholder, Saudi National Bank, said it was unable to provide more financing to Credit Suisse. More

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      Biggest US banks weigh rescuing First Republic as its shares tumble – report

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      Some of the US’s biggest banks are weighing a rescue bid for First Republic, a mid-sized bank whose shares have been pummeled amid a wider banking turmoil.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.The Journal also reported that top executives at the bank had sold millions of dollars in shares in the bank in the two months leading up to its share price collapse. In total insiders have sold $11.8m worth of stock so far this year.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.Any deal would need to be passed by regulators and the Journal said the situation was highly uncertain.First Republic, known for its affluent customer base, has been hit hard following the collapse of SVB, which was seized by federal regulators over the weekend.First Republic, like some other regional banks, has a large amounts of uninsured deposits above the $250,000 government insured limit. SVB’s uninsured deposits accounted for 94% of its total. Some 68% of First Republic deposits are uninsured, according to S&P Global, far lower than SVB but high enough to worry investors and depositors.Customers have pulled billions in deposits from the bank and S&P Global Rating downgraded the bank’s credit rating to junk on Tuesday.Over the weekend the bank announced it had secured another $70bn in financing from the Federal Reserve and JP Morgan.“First Republic’s capital and liquidity positions are very strong, and its capital remains well above the regulatory threshold for well-capitalized banks,” Jim Herbert, founder and executive chairman, and Mike Roffler, CEO and president of First Republic, said in a statement.But the announcement appears to have done little to assuage investor and customer fears.SVB’s collapse was the second largest since the collapse of Washington Mutual in 2008, at the height of the global financial crisis. It was accompanied by the failure of New York-based Signature, which also failed after fears about its finances led customers to yank their funds.Speaking to Congress on Thursday, the treasury secretary, Janet Yellen, said the US banking system remained “sound”.“I can reassure the members of the committee that our banking system is sound, and that Americans can feel confident that their deposits will be there when they need them,” she said.The Fed’s intervention has drawn parallels to the unpopular bailout of Wall Street banks after the 2008 financial crisis. Yellen said the latest rescue efforts were markedly different.“Shareholders and debt holders are not being protected by the government,” she said. “Importantly, no taxpayer money is being used or put at risk with this action.” More

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      Be serious, conservatives. ‘Wokeness’ didn’t cause Silicon Valley Bank’s demise | Tayo Bero

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      You’d think that witnessing the second-biggest bank failure in US history would be a sobering moment. Since Silicon Valley Bank collapsed on Friday amid a bank run, however, Republicans have instead been twisting themselves into inelegant pretzels to blame “wokeness” for the financial disaster.For context, SVB – which before it collapsed was the 16th largest bank in the US and worth more than $200bn in assets – proudly reported that aside from 45% of its board being women, it also had “1 Black”, “1 LGBTQ+” and “2 Veterans”. According to Republicans, the bank’s focus on “woke” ideals is what led to its ultimate demise.“This bank, they’re so concerned with DEI and politics and all kinds of stuff, I think that really diverted from them focusing on their core mission,” the Florida governor Ron DeSantis told Fox News’s Maria Bartiromo.And according to Donald Trump, Jr: “SVB is what happens when you push a leftist/woke ideology and have that take precedent over common sense business practices. This won’t be the last failure of this nature so long as people are rewarded for pushing this bs.”This is a ridiculous and senseless leap, even for the right. “Wokeness” has gone from being a hamfisted shorthand for progressive overreach to a convenient – if lazy and illogical – explanation for every catastrophe.Of course, the actual circumstances that led to the collapse of SVB are of no importance here. Republicans have said little about the higher interest rates brought on by inflation anxiety and bad government bonds that helped SVB speed toward collapse.They’ve also refused to acknowledge that, as James Downie writes in MSNBC, “SVB might still be around today but for deregulation signed by former President Donald Trump that was supported almost unanimously by Republicans (and even some Democrats).”Look, it’s not easy to decide who deserves sympathy, or the opposite, in this moment. Nobody wants to “side” with a sinking Silicon Valley institution – we’re supposed to be eating the rich, remember? Still, it’s important to remember that while politicians spin this disaster, workers suffer. Americans will probably go without paychecks; some won’t have have jobs when this shakes out.According to The Verge, “Some people already know their paychecks will be [disrupted]; a payroll service company called Rippling had to tell its customers that some paychecks weren’t coming on time because of the SVB collapse.”Most of those people aren’t high-flying Silicon Valley tech founders. For some of these workers, money for rent, groceries, mortgage payments, childcare and other essentials simply isn’t coming.The right has always been contemptuous of corporate solidarity with marginalized people, so their disdain for SVB’s messaging is unsurprising. In a line that truly sounds like something out of an SNL sketch, Home Depot co-founder Bernie Marcus recently claimed on Fox News that SVB collapsed because the bank was overly concerned with global warming.“I feel bad for all of these people that lost all their money in this woke bank,” he said. “It’s depressing to me. Who knows whether the justice department would go after them? They’re a woke company, so I guess not. And they’ll probably get away with it.”The New York Post is also toeing the party line, accusing the bank’s head of risk management of wasting time in “spearheading multiple ‘woke’ LGBTQ+ programs, including a ‘safe space’ for coming-out stories”, even as “the firm raced toward collapse”.God forbid a financial institution be concerned with anything that even remotely falls outside their mandate of self-enrichment.SVB was a part of a Silicon Valley economic machine that has helped drive the tech industry’s success for decades. Initial reporting suggests that shoddy practices at the bank brought about its collapse; either way, that doesn’t change the essentially sad story here.As institutions continue to crumble under the weight of shaky policy and a volatile economy, it’s the people at the very bottom of that food chain who will suffer the most. That’s not because of “wokeness”. It’s just called capitalism.
      Tayo Bero is a Guardian US contributing writer More

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      The Guardian view on Biden’s risky gamble: betting on lowering oil prices | Editorial

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      The Guardian view on Biden’s risky gamble: betting on lowering oil pricesEditorialThe climate agenda risks being derailed by energy market disruptions caused by Russia’s war in Ukraine Joe Biden’s trip to Saudi Arabia this month highlights the paradox of American power. The US has the economic heft to punish an opponent – but not enough to alter the behaviour of a determined adversary. Sanctions will see Russia’s economy contract by 9% next year. But Washington needs more nations to join its camp to halt Moscow’s brutal invasion of Ukraine. Mr Biden has been forced to prioritise war objectives over ethics in meeting Crown Prince Mohammed bin Salman, who the CIA says ordered the barbaric murder of the prominent journalist Jamal Khashoggi.The havoc that Russia’s war has caused on the world’s energy markets is contributing to an economic crisis that is playing into the hands of Mr Biden’s domestic opponents. This highlights the west’s failure to confront the climate emergency with a less carbon-intensive economic model. The green agenda risks being derailed by sky-high hydrocarbon prices. This scenario could have been averted if western nations had accelerated their net zero agendas by driving down energy demand – the lack of UK home insulation is one glaring failure – and spending on renewables to achieve energy security. Instead, this week the G7 watered down pledges to halt fossil fuel investment over fears of winter energy shortages as Moscow squeezes supplies.Boycotts and bans against Russia, even as they take a toll on the global economy, will cause ordinary Russians hardship. But this has not moved Vladimir Putin. Soaring crude prices fuel Moscow’s war machine. A price cap on Russia’s petroleum exports might choke off the cash. But a concern is that China and India will buy Mr Putin’s oil at a price that still lets the Kremlin profit. Clever technical solutions mask hard choices. Sanctions drive up energy prices for consumers unless there are alternative supplies available. Right now, to bring down oil prices means producing more planet-destroying energy. That requires US engagement with Saudi Arabia and the United Arab Emirates, both of which bear responsibility for the disastrous Yemen war. Washington might have to woo Venezuela and Iran, nations which will play Moscow off against the west.The US is pursuing a three-pronged strategy: increasing pressure on Russia; getting more oil into markets to bring prices down; and allowing central banks to raise interest rates to levels that look as if they might cause a recession. The latter is designed to signal to oil producers that energy prices will collapse. The painful recessions of the 1970s and early 1980s played a part in bringing down oil prices after energy shocks – and contributed to the Soviet Union’s disintegration. But this took 15 years. Mr Putin’s Russia may not be as powerful as its forerunner. It might be more brittle than the Soviet Union. But there are few signs of imminent collapse.As the west seeks to reduce its reliance on Russian hydrocarbons, there seems to be a global “gold rush” for new fossil fuel projects defended as temporary supply measures. The risk, with the US as the largest hydrocarbon producer, is that the world becomes locked into an irreversible climate catastrophe. Europe might become as reliant on US gas as it once was on Russian gas. Donald Trump proved America could be an unreliable ally. Rightwing supreme court justices have hobbled Mr Biden’s power to limit harmful emissions. Meanwhile, China has emerged as a world leader in renewable energy as well as the metals on which it depends. Mr Biden had wanted to transition the US away from oil. Yet during his time in office the sector’s market value has doubled because prices have risen. Jarringly, as the climate emergency grows ever more urgent, fossil fuel appears the pivot on which the war in Ukraine will turn.TopicsUkraineOpinionClimate crisisJoe BidenUS politicsSaudi ArabiaMohammed bin SalmanOileditorialsReuse this content More

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      Corporate America buckles down for culture war on Roe v Wade

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      Corporate America buckles down for culture war on Roe v WadeRepublicans are mulling retaliation against firms providing benefits such as travel assistance for employees seeking abortion After a supreme court decision that overturns Roe v Wade was leaked and signaled the impending end of federal constitutional protection for abortions, a trickle of companies have slowly started to announce policies that provide abortion access for their employees. But while the protections may keep employees and consumers happy, the threat of retaliation from conservative lawmakers looms.Abortion surveillance: in a post-Roe world, could an internet search lead to an arrest? Read moreCitigroup, one of the biggest banks in the US, quietly started covering the travel expenses of employees who want to get an abortion but are banned from getting one in their home state.The benefit was not announced publicly. Instead, the company mentioned the change in benefits in a March filing for shareholders. Once news outlets began to report on the new benefit, the Republican ire began.Conservatives in Congress asked House and Senate administrators to cancel its contract with the company, which issues credit cards to lawmakers to use for work-related flights, office supplies and other goods. A state lawmaker in Texas, infuriated by Citigroup, introduced a bill that would prevent companies from doing business with local governments in Texas if they provide abortion-related benefits to their employees.“Citigroup decided to pander to the woke ideologues in its C-suite instead of obeying the laws of Texas,” said Briscoe Cain, the Texas state representative who introduced the bill, in a statement. “We will enact laws necessary to prevent this misuse of shareholder money and hold Citigroup accountable for its violation of our state’s abortion laws”.Citigroup has now been joined by Amazon, Apple, Yelp, Match Group, Tesla and Levi Strauss & Company, all which have said they will offer travel assistance to employees who are in states that restrict abortions. Insiders at JP Morgan and Goldman Sachs have told news outlets they too are considering similar policies.“I expect there will be a significant shift and the most leading companies are going to recognize that they need to protect the healthcare of their employees,” said Shelley Alpern, director of shareholder advocacy at Rhia Ventures. “Most companies would like to avoid taking a public stance on this issue because it’s so controversial, but there are higher risks for companies when they don’t protect their employees’ healthcare access.”In today’s heated political climate – and with midterm elections looming – corporate America can expect a fiery response to any stance it takes on Roe’s fall. But given the widespread impact the end of Roe v Wade will have on much of the country – 26 states will restrict abortion access if the decision is overturned – it is unlikely that companies can get away with not responding to the issue once the supreme court makes its final decision.Neeru Paharia, an associate professor at Georgetown University McDonough School of Business, said that people expect more out of companies as trust in government has fallen.“People are enacting their political will in the marketplace,” she said. For consumers, a purchase from a company can be a symbolic sign of support. For employees, their identities can be tied to the ethical positions of the company they work for.Over the last few years, corporate America has started to become more vocal on various issues that have gotten the attention of conservative lawmakers, including voting rights and LGBTQ+ issues. But conservative politicians have gotten bolder at fighting back against what they consider to be “woke capitalism”.While the GOP has historically positioned itself as the business-friendly, tax-cutting political party, conservative lawmakers have been emboldened to threaten and punish companies who speak out on controversial issues.Last month, Florida’s governor, Ron DeSantis, revoked special land use privileges the state gave to Disney for its Disney World theme park in Orlando after the company – responding to backlash from employees and consumers – spoke out against the state’s “don’t say gay” law. The move appeared to catch people by surprise. Lloyd Blankfein, former Goldman Sachs CEO, tweeted that the move “smacks of government retaliation for exercising free speech. Bad look for a conservative.”“That was really shocking,” Paharia said. “Now you have a situation where consumers and employees want companies to take a political stance, but then you have governments that are possibly retaliating against them.”When it comes to abortion, “even though it might not be [explicitly] taking a side … [companies] are taking a position based on the kind of benefits they are going to offer their employees”.The threats lawmakers have made have so far not come to fruition, but the party seems serious on trying to penalize companies in some way. The Republican senator Marco Rubio introduced a bill this week that would not allow companies to deduct abortion-related travel benefits as regular employee benefits when a company files its taxes.“Our tax code should be pro-family and promote a culture of life,” he said in a statement.With these warnings, companies may try to keep the introduction of abortion-related quiet or downplay their significance. When Citigroup’s CEO, Jane Fraser – the first woman to lead a major American bank – was asked in a shareholders meeting about the company’s new abortion travel benefit, she said the benefit “isn’t intended to be a statement about a very sensitive issue”.“What we did here was follow our past practices,” she said, adding that the company had “covered reproductive healthcare benefits for over 20 years. And our practice has also been to make sure our employees have the same health coverage, no matter where in the US they live.”Jen Stark, senior director of corporate strategy at Tara Health Foundation, who helped coordinate the signatures of over 180 executives in a statement against abortion bans in 2019, said the potential backlash from conservative lawmakers proves that companies need to act on abortion restrictions beyond mitigating effects for their employees.“They can buy all the plane tickets their workers need, and that addresses the immediate harm, but the structural deficiency is the collateral damage,” she said. “The supreme court case didn’t happen in a bubble … you’re kind of walking over the rubble.”Beyond benefits for employees, Stark has been advocating for companies to use their lobbying powers and scrutinize political donations as state lawmakers prepare to restrict abortions.“We are at the moment everyone’s cried wolf about. It’s here, but there was also a lot of headwind,” she said. “What companies can do with a stroke of a pen to mitigate some of the harm is important, but the larger issue is getting out of this structural whirlpool that we’re in.”TopicsRoe v WadeCitigroupBankingGoldman SachsAppleUS politicsfeaturesReuse this content More

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      Cancelling student debt was always the right thing to do. Now it's imperative | Astra Taylor

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      Cancelling student debt was always the right thing to do. Now it’s imperative Astra Taylor With a global pandemic and economic depression looming, we can’t settle for half-measures. Cancel all student debt Coronavirus – latest US updates Coronavirus – latest global updates See all our coronavirus coverage ‘The economy is entering freefall and millions are […] More