• The Commodity Futures Trading Commission has sued Binance, its co-founder, Changpeng Zhao, and its former chief compliance officer, Samuel Lim, for violations of the Commodity Exchange Act, including rules around money laundering and terrorism financing. The CFTC alleged that China-based Binance actively obscured where its subsidiaries were located, solicited U.S. users and subverted its own “ineffective compliance program,” and in addition to monetary penalties, the CFTC asked the federal court in its suit to impose trading and registration bans. (CNBC)
• Federal Deposit Insurance Corp. Chairman Martin Gruenberg said in prepared remarks ahead of today’s Senate Banking Committee hearing on the collapses of Silicon Valley Bank and Signature Bank that the FDIC will release a report on the supervision of Signature by May 1, and that the agency may consider changes to deposit insurance levels, while Federal Reserve Vice Chair for Supervision Michael Barr said in written testimony that the banking failures were a “textbook case of mismanagement.” (The Wall Street Journal) Nellie Liang, undersecretary for domestic finance at the Treasury Department, will tell lawmakers that her agency would be prepared to again take action to rescue depositors and prevent contagion, noting that mid-size, small and community banks “serve a vital role in providing credit and financial support to families and small businesses.” (Bloomberg)
• Federal Reserve Governor Philip Jefferson said depositors moving money out of smaller banks in response to recent turmoil in the banking sector could have a disproportionate impact on small businesses. Jefferson also noted that the Fed should remain committed to reaching a target of 2% inflation, a goal he said he hoped could be achieved “in a way that does not damage the economy any more than is necessary.” (Reuters)
• A federal judge granted the U.S. government’s request for a stay on the bankruptcy plan of Voyager Digital Ltd., putting a hold on the planned $1 billion sale of the crypto lender’s assets to Binance US. (Bloomberg)

Worth watching:

• Gruenberg, Barr and Liang testify before the Senate Banking Committee on “Recent Bank Failures and the Federal Regulatory Response.”
• President Joe Biden will discuss how the GOP budget compares with his plan during a visit to a North Carolina semiconductor manufacturer.

Why Americans are so pessimistic about their finances

The Washington Post

Biden’s student loan forgiveness program faces a new threat from Senate Republicans

Katie Lobosco, CNN

President Joe Biden’s student loan forgiveness program faces a new threat from Senate Republicans even before the US Supreme Court rules on whether it can be implemented.

When Student Loan Payments Resume, Households Will Feel the Pinch

Claire Ballentine and Ella Ceron, Bloomberg

Household budgets are going to face a shock later this year when student loan payments resume, according to Jefferies.

World Bank warns of ‘lost decade’ in global growth without bold policy shifts

Andrea Shalal, Reuters

Average potential global economic growth will slump to a three-decade low of 2.2% per year through 2030, ushering in a “lost decade” for the world’s economy, unless policymakers adopt ambitious initiatives to boost labor supply, productivity and investment, the World Bank warned on Monday.

Why It’s Now Easier to Underestimate Your Expenses and Overspend

Veronica Dagher, The Wall Street Journal

Many people are spending more than they think as inflation stays elevated.

China grants billions in bailouts as Belt and Road Initiative falters

James Kynge, Financial Times

New study attempts to capture total rescue loans from world’s biggest bilateral creditor.

Senators Ask Powell If Fed Used Full Powers to Supervise SVB

Zach C Cohen and Craig Torres, Bloomberg

A bipartisan group of senators have sent a letter to Federal Reserve Chair Jerome Powell questioning whether the central bank exercised its full legal authority to oversee Silicon Valley Bank and other midsized financial institutions.

FDIC Added Sweeteners in Deals to Offload SVB and Signature Bank

Max Reyes, Bloomberg

The Federal Deposit Insurance Corp. stuck to its guns and didn’t offer bailouts to keep two lenders from collapsing. Instead, it struck deals that included millions of dollars of sweeteners for the acquiring banks that sent their stocks soaring.

Top Democrat to accuse US regulators of allowing SVB to ‘grow too big, too fast’

Lauren Fedor, Financial Times

Sherrod Brown will draw parallels with 2008 financial crisis in Senate hearing

French Financial Prosecutor Searches 5 Banks on Tax Fraud Claim

Alexandre Rajbhandari, Bloomberg

France’s financial prosecutor is searching 5 banks as part of a probe into tax fraud and money laundering, according to a statement Tuesday.

Banking legislation piles up as wobbly market evolves

Tobias Burns and Karl Evers-Hillstrom, The Hill

Legislative proposals to reform the banking system are beginning to pile up following the failures of several large banks recently.

Small bank deposits fall, but not by much

Neil Irwin, Axios

Deposits at U.S. banks outside the largest 25 fell by $108 billion in the week ended March 15, about a 1.9% drop.

Bankers at US midsize lenders battle to keep deposits after exodus

Tatiana Bautzer and Nupur Anand, Reuters

Mid-sized U.S. lenders are getting creative as they try to hang onto customer deposits after two bank failures rattled consumers and spurred a $119 billion exodus from small institutions in recent weeks.

“We did not buy Credit Suisse only to close it” – UBS CEO

Reuters

UBS’s CEO Ralph Hamers on Monday said the Swiss bank sees its government-orchestrated takeover of Credit Suisse as a growth opportunity, in an internal memo seen by Reuters.

Schwab’s $7 Trillion Empire Built on Low Rates Is Showing Cracks

Annie Massa and Edward Harrison, Bloomberg

On the surface, Charles Schwab Corp. being swept up in the worst US banking crisis since 2008 makes little sense.

How family-controlled First Citizens became a top-20 US bank

Antoine Gara and Stephen Gandel, Financial Times

Lender has grown rapidly under CEO Frank Holding by acquiring distressed rivals

CFPB’s small business data collection rule hits banks at ‘the worst time,’ analysts say

Kate Berry, American Banker

The Consumer Financial Protection Bureau is expected to come out with a rule this week that will require banks and other lenders to collect data on small businesses that apply for loans. The long-anticipated rule — one of the last unimplemented provisions of the Dodd-Frank Act — comes at a particularly bad time for community and regional banks amid expectations of a pullback in credit this year.

Goldman Sachs scraps plan to buy a third corporate jet amid scrutiny of CEO’s plane use and cost-cutting

Dakin Campbell, Insider Premium

Goldman Sachs has decided to scrap a plan to buy a third corporate jet for the company’s use, a move that follows scrutiny of the CEO’s plane use and a companywide plan to review expenses.

Investors pull nearly $4bn from iShares ESG ETF in one day

Sonya Swink, Financial Times

Quality Factor ETF receives $4.8bn in inflows on same day

Hedge funds flee banks, lending-related stocks

Carolina Mandl, Reuters

Global hedge funds cut their exposure to U.S. banking stocks to a near 10-year record low and fled lending-sensitive shares amid the banking turmoil that began earlier this month, Goldman Sachs said in its prime services weekly report.

Fear of Layoffs Is Changing How People Buy Homes

Veronica Dagher, The Wall Street Journal

More home buyers are putting an unusual escape clause into their contracts: If they lose their job before closing, they can back out of the deal.

Biden asked to exempt housing programs from Buy America rule

Brad Finkelstein, National Mortgage News

A group of affordable housing advocates are calling on the Biden Administration to specify that the Build America, Buy America Act does not apply to certain single-family and multifamily properties.

A Tale of Two Housing Markets: Prices Fall in the West While the East Booms

Nicole Friedman, The Wall Street Journal

The United States is a country of two housing markets. In one, home prices are falling from a year ago. In the other, they’re still posting annual gains. That division runs right down the center of the U.S. In all of the 12 major housing markets west of Texas, plus Austin, home prices fell in January on an annual basis, according to mortgage-data firm  Black Knight Inc.’s home-price index.

Housing market in tech hubs cooling faster than other parts of US – report

Ari Blaff, Reuters

Housing markets in tech hubs are cooling more rapidly than other parts of the United States amid a wave of layoffs in the technology sector and elevated mortgage rates, according to real estate broker Redfin Corp’s report on Monday.

Judge Puts Voyager Sale to Binance.US on Hold Pending Government Appeal

Nikhilesh De, CoinDesk

A federal judge paused Voyager’s efforts to sell its assets to Binance.US in response to the U.S. government’s filing for an emergency stay.

CFTC Could Force Binance to Cease U.S. Operations as Part of Settlement: Bernstein

Will Canny, CoinDesk

The crypto exchange will look to safeguard its dominant international business, which is its cash cow, the report said.

Crypto Advocates Shrug Off CFTC’s Lawsuit Against Binance

Carly Wanna and Isabelle Lee, Bloomberg

For many veterans of the digital-asset world, the US Commodity Futures Trading Commission’s lawsuit against Binance Holdings Ltd. for allegedly breaking derivatives rules is just another day in crypto.

FDIC tells Utoppia to stop claiming to be FDIC insured, ahora

Ebrima Santos Sanneh, American Banker

The Federal Deposit Insurance Corp. on Monday ordered neobank Utoppia Inc. to immediately correct wrongful claims or implications of deposit insurance. Utoppia Inc. is a neobank that offers cryptocurrency wallets and says it provides U.S. FDIC-insured bank accounts to non-U.S. residents.

Cheap FTX crypto tokens were offered to Genesis executives

Kadhim Shubber and Nikou Asgari, Financial Times

Major lender was able to invest at a discounted rate before tokens were issued to public.

Mastercard, Visa Are Among Firms in Talks to Buy Fintech Pismo

Cristiane Lucchesi, Bloomberg

Mastercard Inc. and Visa Inc. are among the firms negotiating to acquire Pismo, which provides cloud-based payment and banking platforms, said people familiar with the matter.