Tag Archives: Banks

$98.4 billion gone in a week; officials call banking system safe

Dollars Falling

Revelations 18:9-11 “The kings of the earth who committed fornication and lived luxuriously with her will weep and lament for her, when they see the smoke of her burning, 10 standing at a distance for fear of her torment, saying, ‘Alas, alas, that great city Babylon, that mighty city! For in one hour your judgment has come.’ 11 “And the merchants of the earth will weep and mourn over her, for no one buys their merchandise anymore

Important Takeaways:

  • Nearly $100 billion in deposits pulled from banks; officials call system ‘sound and resilient’
  • The readout, released shortly after the market closed Friday, came around the same time as new Fed data showed that bank customers collectively pulled $98.4 billion from accounts for the week ended March 15.
  • That would have covered the period when the sudden failures of Silicon Valley Bank and Signature Bank rocked the industry.

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Banks are on the brink of a real disaster

Revelations 18:9-11 “The kings of the earth who committed fornication and lived luxuriously with her will weep and lament for her, when they see the smoke of her burning, 10 standing at a distance for fear of her torment, saying, ‘Alas, alas, that great city Babylon, that mighty city! For in one hour your judgment has come.’ 11 “And the merchants of the earth will weep and mourn over her, for no one buys their merchandise anymore

Important Takeaways:

  • CNN’s Quest: ‘More Banks Are Going to Go out of Business’ — They’re ‘Stuffed’ with Bonds
  • On Wednesday’s broadcast of CNN International’s “One World,” CNN host, International Business Correspondent, and CNN Business Editor-at-Large Richard Quest stated that the Federal Reserve’s interest rate hike will make things “worse” for banks because “all the banks are stuffed to the gills with these government bonds” that will be devalued by the rate hikes. And predicted that there will be more banks going out of business, particularly state and regional banks.

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Janet Yellen says there’s no plan to insure every bank deposit

Janet Yellen

Revelations 18:9-11 “The kings of the earth who committed fornication and lived luxuriously with her will weep and lament for her, when they see the smoke of her burning, 10 standing at a distance for fear of her torment, saying, ‘Alas, alas, that great city Babylon, that mighty city! For in one hour your judgment has come.’ 11 “And the merchants of the earth will weep and mourn over her, for no one buys their merchandise anymore

Important Takeaways:

  • ‘Blanket insurance’ of bank deposits is not being discussed, Yellen tells senators
  • Federal bank regulators are not considering any plans to insure all U.S. bank deposits without congressional approval, Treasury Secretary Janet Yellen told members of a Senate Appropriations subcommittee on Wednesday.
  • Several banking groups and consumer advocates have called for some kind of a universal deposit guarantee after the government refunded most of the uninsured deposits at two banks that collapsed earlier this month, California-based Silicon Valley Bank and New York-based Signature Bank
  • “I have not considered or discussed anything having to do with blanket insurance or guarantees of all deposits.”
  • In Washington, the emergency deposit guarantees made for SVB and Signature have set off a fierce debate over whether big banks that took excessive risks got a special bailout, while smaller institutions are being forced to confront a rush of withdrawals… without any special help.

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Michael Snyder points out: In days ahead, bureaucrats will decide if uninsured deposits at your bank are important enough to protect

Janet Yellen

Revelations 18:9-11 “The kings of the earth who committed fornication and lived luxuriously with her will weep and lament for her, when they see the smoke of her burning, 10 standing at a distance for fear of her torment, saying, ‘Alas, alas, that great city Babylon, that mighty city! For in one hour your judgment has come.’ 11 “And the merchants of the earth will weep and mourn over her, for no one buys their merchandise anymore

Important Takeaways:

  • Janet Yellen Just Poured Lighter Fluid On Every Small Bank In America
  • When a bailout was hastily arranged for uninsured depositors at Silicon Valley Bank and Signature Bank, the implication was that the same thing would be done for uninsured depositors at any other banks that failed. But now U.S. Treasury Secretary Janet Yellen is telling us that is not actually what will happen.  She just admitted that depositors at a failed bank will only be protected if officials determine that a “failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences”.  So that means that depositors at big banks are likely to be protected and that depositors at small banks are much less likely to be protected.  In other words, Janet Yellen just poured lighter fluid on every small bank in America.
  • Why would anyone keep more than $250,000 in a small bank at this point when there is a very real risk of losing all of the uninsured money if the bank suddenly fails?
  • Wealthy people are not stupid. They are going to move billions of dollars from small banks to large banks in the days ahead, and that is going to cause a tsunami of stress on those small banks.
  • [Last] Friday, Senator James Lankford asked Yellen the sort of question that many of us have been hoping that someone would ask…
    • Republican Sen. James Lankford of Oklahoma pressed Yellen about how widely the uninsured deposit backstops will apply across the banking industry.
    • “Will the deposits in every community bank in Oklahoma, regardless of their size, be fully insured now?” asked Lankford. “Will they get the same treatment that SVB just got, or Signature Bank just got?”
    • Yellen acknowledged they would not.
    • Uninsured deposits, she said, would only be covered in the event that a “failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences.”
  • Needless to say, that means that wealthy individuals with very large balances at very small banks are at great risk.

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Bank of America, Wells Fargo, Citigroup and others will bail out First Republic Bank

New York Stock Exchange

Revelations 18:9-11 “The kings of the earth who committed fornication and lived luxuriously with her will weep and lament for her, when they see the smoke of her burning, 10 standing at a distance for fear of her torment, saying, ‘Alas, alas, that great city Babylon, that mighty city! For in one hour your judgment has come.’ 11 “And the merchants of the earth will weep and mourn over her, for no one buys their merchandise anymore

Important Takeaways:

  • Wall Street rides to the rescue as 11 banks pledge $30 billion to First Republic Bank
  • A group of financial institutions has agreed to deposit $30 billion in First Republic Bank in what’s meant to be a sign of confidence in the banking system, the banks announced Thursday afternoon.
  • Bank of America, Wells Fargo, Citigroup and JPMorgan Chase will contribute about $5 billion apiece, while Goldman Sachs and Morgan Stanley will deposit around $2.5 billion, the banks said in a news release. Truist, PNC, U.S. Bancorp, State Street and Bank of New York Mellon will deposit about $1 billion each.
  • The deposits would be obligated to stay at First Republic for at least 120 days, sources told CNBC’s David Faber.
  • First Republic’s stock, which closed at $115 per share on March 8, traded below $20 at one point Thursday.
  • First Republic typically caters to high-end clients and firms, and its business includes wealth management and residential real estate loans. The company reported more than $212 billion assets at the end of December and generated more than $1.6 billion in net income last year.

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Dow loses over 600 points at its opening on Wednesday leaving many to wonder if crisis can be contained

Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.

Important Takeaways:

  • Dow dives over 600 points as Credit Suisse selloff injects fresh unease into markets
  • US stock futures sank Wednesday as worries about Credit Suisse’s financial health revived fears over banks.
  • The Swiss bank’s shares plunged 22% in Zurich after its top investor ruled out further support.
  • Dow futures fell as much as 600 points premarket as the worries dented US investor sentiment.
  • “Investors are now trying to guess which might be the next domino to fall, both in the US and outside it,” IG Group’s chief market analyst Chris Beauchamp said.
  • “Contagion is on everyone’s lips, and at present it is too tough to say whether the crisis can be contained effectively,” he added.

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J.P. Morgan Chase Bank wants to know who gives money to the Religious Freedom Committee, closes their account

Matthew 5:10 “Blessed are those who are persecuted for righteousness’ sake, for theirs is the kingdom of heaven

Important Takeaways:

  • Account Closed: Banks and Businesses Cancel Christians
  • When the National Committee for Religious Freedom, headed by former U.S. Senator and Religious Freedom Ambassador Sam Brownback, needed a bank account, they went to JPMorgan Chase. After only a few weeks they learned their account had been closed.
  • “I went in to make a deposit at a branch here in Kansas about three or four weeks after we’d opened up the account,” Brownback told us,” And the teller there said ‘That account’s been closed.’ And I go, ‘What?’ and they said, ‘That account’s been closed. Your funds will be sent to you in a couple of weeks.’ And then later they came back and said, ‘Well, if you’ll disclose who gives more than 10% of your funds to you and your criteria for supporting candidates as a 501c4 we’ll consider re-opening up the account.’
  • Wondering whether it was discrimination, The National Committee for Religious Freedom has set up a website called “Chased Away.” The group is encouraging people of faith to come forward if they’ve been denied service by a company or bank.
  • This year the Canadian government weaponized its financial system against citizens protesting COVID-19 restrictions, freezing their bank accounts.

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A Cyber-Attack on Any Critical Infrastructure could be Serious

Important Takeaways:

  • On the heels of sanctions, threats of cyber-attacks loom
  • Officials have been warning Americans of potential Russian cyber -attacks in retaliation to US imposed sanctions.
  • Cyber-attacks could include the targeting of critical infrastructure, pointing to the 2021 Colonial pipeline hack.
  • Brown said other crucial sectors that could also be targeted are those such as the financial sector, as banks have been preparing for cyber-attacks.
  • Mark Kleene, owner of MVK Financial Planning agreed, saying that having a cash [on hand] position wouldn’t hurt…

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Democrats scrap bank reporting requirement from U.S. spending package

By Pete Schroeder

WASHINGTON (Reuters) – U.S. banks will not be required to report additional information about certain accounts to the Internal Revenue Service after Democrats removed the proposal from a sweeping government spending package.

The exclusion of the provision, originally sought by some Democratic lawmakers as a way to identify people underreporting income on their taxes, marks a major victory for banks and credit unions that had vigorously opposed the provision.

U.S. President Joe Biden unveiled the framework for a $1.75 trillion economic and climate change plan on Thursday, his latest attempt to unify Democrats in Congress behind a comprehensive bill pursuing many of his top policy priorities.

Earlier versions of the package, which reached as high as $3 trillion in new investments, also included language requiring banks to report to the IRS any bank accounts that had $600 in money in or out every year. That proposal was not included in the framework outlined by the White House on Thursday.

Proponents, including Treasury Secretary Janet Yellen, argued that the information would make it easier for tax collectors to identify accounts that experienced significantly higher activity than reported on taxes, and also raise large amounts of revenue to help pay for the new spending proposals.

The banking industry, calling the provision onerous and intrusive, launched an all-out lobbying battle against it. Democrats attempted to temper the provision by raising the reporting threshold to $10,000, but intense industry opposition, alongside concerns from moderate Democrats, helped push it out of the revamped package.

“The last thing Americans want right now is the government snooping on their accounts,” said Jim Nussle, head of the Credit Union National Association. “Safeguarding consumer privacy and data security is a key part of promoting financial well-being for all, and it’s encouraging that Congress recognizes this credit union priority.”

(Reporting by Pete Schroeder; Editing by Will Dunham)

Afghanistan’s banks brace for bedlam after Taliban takeover

By Tom Arnold and Karin Strohecker

LONDON (Reuters) – Afghanistan’s banks, critical to the country’s recovery from crisis, are facing an uncertain future say its bankers, with doubts over everything from liquidity to employment of female staff after the Taliban swept to power.

Banks were expected to reopen imminently, a Taliban spokesman said on Tuesday, after they were closed for some ten days and the financial system ground to a halt as the Western-backed government collapsed amid the pullout of U.S. and allied troops.

Yet there has been scant evidence so far of a reopening or of banking services returning to normal, with large crowds thronging the streets outside banks in Kabul on Wednesday.

“The banks continue to be closed – with no clear signs of reopening, they have run out of money,” said Gazal Gailani, trade and economic adviser at the Afghan embassy in London.

“Afghanistan’s banking system is now in a state of collapse, and people are running out of money.”

Many rural areas get by largely without banks. But in the cities, where government worker salaries are often paid into bank accounts, closures are causing hardship in a mostly cash-based economy.

The outlook for lenders looks precarious, with looming questions about the Taliban’s grasp of finance and its ability to restart an economy shattered by 40 years of war.

With no significant exports apart from illegal narcotics bringing in cash, one immediate obstacle is liquidity in a country that is heavily dollarized and relies on regular physical dollar-shipments that have been halted, according to former central bank chief Ajmal Ahmady.

The Afghanistan Banks Association (ABA) had reached out to the central bank to coordinate steps on a return to normality, said Syed Moosa Kaleem Al-Falahi, chief executive and president of Islamic Bank of Afghanistan (IBA), one of Afghanistan’s three largest banks.

Commercial banks had collectively decided to suspend services until the central bank confirmed liquidity and security arrangements, he said.

“It would be rather difficult to control the rush if banks reopen immediately,” he added.

Liquidity had already been an issue in the run-up to the bank closures as people scrambled to withdraw cash.

Da Afghanistan Bank (DAB), the central bank, provided financial support to banks during last week’s cash squeeze, said a banker at one of Afghanistan’s largest lenders, speaking on condition of anonymity.

But its ability to continue to do so appears uncertain, with DAB’s roughly $9 billion in foreign reserves looking largely out of Taliban reach.

“Banks will face major liquidity challenges as central bank officials have not had access to reserves yet,” the banker said.

“They will face foreign currency liquidity issues which will cause huge fluctuations in the exchange rates.”

SCARCE DOLLARS

The afghani plunged on the expectation of dollar scarcity and further volatility is expected, with Afghanistan’s import coverage reportedly collapsing from more than 15 months to a couple of days.

Bankers in Afghanistan are also waiting for clarity from foreign-based correspondent banks, which provide services such as currency exchange and money transfers, on whether ties will continue after the Taliban takeover. Any new sanctions could see many links cut.

A senior Afghan banker said their bank’s correspondent banks in Turkey, Russia, Spain, United Arab Emirates, Qatar, Pakistan and India were still showing support.

Faith in the banking system was severely damaged by the 2010 collapse of Kabul Bank, in one of the biggest corruption scandals of the 20-year Western presence in Afghanistan.

Banks emerged in generally good health from the COVID-19 pandemic, said DAB in its 2020 report, noticing no liquidity shortfall, while capital positions met regulatory thresholds and assets swelled 4% to 327 billion afghanis ($3.8 billion).

But the current crisis will further set back confidence in a sector which has struggled to expand services in a thinly banked country.

According to the International Monetary Fund, only 183 of every 1,000 people hold a deposit account; there are less than two bank branches or cash machines for every 100,000 adults.

FEMALE STAFF WORRIES

This week, the Taliban said it had named Haji Mohammad Idris, a loyalist with no formal financial training, as DAB’s acting governor. A senior Taliban leader defended the appointment, saying Idris was respected for his expertise.

It is so far unclear whether Afghanistan’s less than a dozen banks, all but one of which are conventional, will have to convert to Islamic banking, a lengthy and costly procedure.

More uncertainty surrounds the future employment of female staff.

“So far there is no official communication from them (the Taliban) with respect to female staff,” said IBA’s Al-Falahi. “Our female staff will return to work when we reopen.”

But given the Taliban’s track record, their assurances that women would be allowed to work consistent with Islamic law have been met with skepticism.

The banker at one of Afghanistan’s largest lenders said their bank had a plan to ensure it could continue operations in the event of it having to dismiss its roughly 20% of female staff.

“We expect we will face challenges such as losing qualified and high-skilled staff as most of them are planning to flee the country at the first opportunity,” the banker said.

($1 = 85.9000 afghanis)

(Reporting by Tom Arnold and Karin Strohecker in London, Editing by Rosalba O’Brien)