Financial Brief: Banking Developments
BLUF: Federal Government feeds banks $2 trillion in funds that are "not a bailout", Credit Suisse and other banks near collapse but get $50 billion loan, contagion fears seem more justified.
Investment analysts now predict Credit Suisse will be the next bank to collapse after record decline (22%). Shares did go back up after it secured a $53 billion loan from the Swiss National Bank (which only stokes additional insecurities). First Republic, PacWest, and KeyBank also saw "major" declines. First Republic Bank will be "rescued" by a group of larger banks who will deposit $30 billion into it.
The Department of Justice (DOJ) and the Securities and Exchanges Commission (SEC) are now investigating the collapse of the Silicon Valley Bank.
Moody’s Investors Service have updated the outlook for the U.S. banking system from "stable" to "negative". Some analysts do not expect a "contagion" effect (collapse if multiple additional banks) to occur due to the low exposure of major banks JP Morgan Chase, Wells Fargo, Bank of America, and Morgan Stanley.
The Biden Administration announced the Bank Term Funding Program (BTFP) which will make "funding available to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors." According to JP Morgan Chase, this will see the Federal Government administer ~$2 trillion in taxpayer funds into the U.S. banking system.
》Sources: https://finance.yahoo.com/news/how-credit-suisse-just-unleashed-a-nightmare-decision-for-the-fed-and-the-ecb-093016411.html | https://www.bloomberg.com/news/live-blog/2023-03-15/credit-suisse-in-crisis#xj4y7vzkg | https://m.investing.com/news/cryptocurrency-news/feds-btfp-may-administer-2-trillion-to-us-banks-states-jp-morgan-3031892 | https://fortune.com/2023/03/13/us-regional-banks-first-republic-pacwest-plunge-silicon-valley-bank-collapse-fallout-continues/ | https://www.bloomberg.com/news/articles/2023-03-15/svb-bank-collapse-raises-2023-us-recession-fears | https://www.usatoday.com/story/money/2023/03/15/url-svb-collapse-effect-on-economy/11479999002/