2 min readOn Friday afternoon, the FDIC took the failed Republic First Bank into receivership and the majority of the bank’s assets and liabilities were sold to Fulton Bank on the same day. We do not expect this bank failure to create systemwide turmoil similar to what we experienced in March of 2023 due to Republic First…
10 min readDuring the weekend following Silicon Valley Bank’s collapse, it became apparent that the bank run which drove SVB to insolvency was spreading, placing extreme liquidity pressures on a few regional lenders. Bank balance sheets remained fundamentally stable, although, the volume and speed of deposit outflows at some banks was overwhelming available liquid resources. Many banks…
7 min readMacroeconomic Conditions The post-pandemic economy has had to contend with a rarely seen number of short-term disruptions and fundamental shifts to which it has mostly taken in stride. So far, we have avoided a widely broadcast recession, helped initially by huge amounts of pandemic related financial aid, and followed by a historically strong labor market…
5 min readFollowing the collapse of Silicon Valley Bank, Signature Bank, and the sale of First Republic, there’s been an increasing interest by regulators to reform the US deposit insurance scheme to fully protect the banking system from future bank runs. The Perfect Storm for Bank Runs Panic among deposit holders lit the initial spark that led…
6 min readWhat happened with Credit Suisse and what cash investors may be able to take away from the experience. Amidst the recent turmoil in the banking system, investors have taken a renewed interest in their bank debt holdings, particularly in the case of Credit Suisse. In a highly unusual move, regulators flipped the established creditor hierarchy…
11 min readIntroduction The acquisition of Silicon Valley Bridge Bank’s (SVBB) loans and deposits from the FDIC by First Citizens Bank (FCB) resolved a major uncertainty for customers and depositors of the failed Silicon Valley Bank (SVB). The transaction allowed the FDIC to move on from the second largest bank failure in US history. SVB customers and…
2 min readIntroduction The single biggest credit risk for institutional cash investors lies in the large uninsured deposits they leave at their operating banks. Particularly at risk are uninsured balances at banks with less diversified business profiles and aggressive risk cultures that expose depositors to the risk of a bank run, which is difficult to predict and…
6 min readIn a speech given in April 2022, Acting Comptroller of the Currency Michael Hsu recalled the ‘chaos’ driven by a series of bank failures during the Global Financial Crisis (GFC) . This resulted in a flurry of acquisitions and unorderly liquidations thrown together to prevent further disruption to the financial system. This experience eventually led…
6 min readStepping into office with leading and supporting roles open across the government’s top financial regulators, the Biden administration was given a unique opportunity to reshape the financial regulatory landscape. Nominating four members to the seven-member Federal Reserve Board and promoting another to a key position, the Biden Administration has already made an outsized impact on…
5 min readThe COVID-19 pandemic produced the first major test for the U.S. banking system since the 2008 global financial crisis. At the start of the pandemic, questions were posed about how bank balance sheets would hold up amidst a period of social isolation, lockdowns, elevated job losses and a severe contraction in output. Would the banks’…