• Federal Reserve Chair Jerome Powell said Fed Vice Chairman for Supervision Michael Barr will lead a “thorough, transparent and swift review” of the agency’s oversight of Silicon Valley Bank in light of the bank’s collapse last week, with findings set to be released to the public on May 1. Sen. Bill Hagerty (R-Tenn.) said in an interview that the San Francisco Fed “had all the tools necessary to prevent this from happening,” while a spokesperson for the regional Fed bank did not respond to a request for comment. (Reuters)
• The Federal Home Loan Bank System has raised $88.7 billion in a sale of short-term notes, far more than the $64 billion previously planned, according to people with knowledge of the matter. The larger sale could indicate that the FHLB sees a possibility that more banks could need to tap into the system’s liquidity in the coming days as the banking industry navigates the continuing threat of bank runs amid the SVB fallout. (Bloomberg)
• President Joe Biden addressed concerns about the broader banking system, saying Americans “can rest assured that our banking system is safe” and “your deposits are safe,” adding that unlike depositors, failed banks’ investors will “not be protected” as they knowingly took on risk. (CNN) Prior to the administration announcing the bank bailout over the weekend, the president reportedly had concerns about the plan on the grounds that the federal government had been too generous to big banks during the 2008 financial crisis, and officials — including Treasury Secretary Janet Yellen, National Economic Council Director Lael Brainard and Jeff Zients, Biden’s chief of staff — worked to craft a rescue plan that focused on depositors and tried to avoid the “bailout” descriptor. (The Washington Post)
• As news of the failures of SVB and Signature Bank spread, customers began to take their deposits out of regional banks, and according to people with knowledge of the matter, the “too big to fail” banks — including Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and JPMorgan Chase & Co. — are seeing higher-than-usual volumes in deposits, with JPMorgan specifically seeing billions in deposits in recent days. (Bloomberg) Regional bank stocks suffered substantial trading losses yesterday as investors fretted over the flight of deposits, though Jim Herbert, executive chair of First Republic Bank, which was down more than 60%, told CNBC that the bank has not seen many depositors leave and that it has met demands for withdrawals. (MarketWatch)

Worth watching: 

• Fed Governor Michelle Bowman will give remarks at the Independent Community Bankers Association’s conference in Honolulu.

Most Americans Don’t Know What to Expect During Tax Season

Morning Consult

KPMG Gave SVB, Signature Bank Clean Bill of Health Weeks Before Collapse

Jonathan Weil and Jean Eaglesham, The Wall Street Journal

Silicon Valley Bank failed just 14 days after KPMG LLP gave the lender a clean bill of health. Signature Bank went down 11 days after the accounting firm signed off on its audit.

US bank collapse sparks fresh oversight fight in divided Congress

Hannah Lang et al., Reuters

The weekend collapse of Silicon Valley Bank (SIVB.O) sparked a partisan battle in Washington on Monday, with Democrats arguing that a Trump-era change to bank oversight rules undermined the stability of regional banks, claims that Republicans rejected.

GOP senators pushed to keep banking rules loose one week before SVB collapse

Ben Werschkul, Yahoo Finance

The stunning events around Silicon Valley Bank of California and Signature Bank of New York come after years of moves in Washington to ease capital requirements on smaller and regional banks — including one that came just last week.

Barney Frank Pushed to Ease Financial Regulations After Joining Signature Bank Board

Julie Bykowicz, The Wall Street Journal

Former congressman and co-sponsor of the Dodd-Frank bill says there is no evidence the change enabled bank’s failure

As GOP gripes about bank bailouts, McHenry confident regulators will ‘do the right thing’

Sam Sutton Politico

The federal government’s response to the implosion of Silicon Valley Bank and Signature Bank has unleashed a chorus of complaints from GOP politicians.

Was This a Bailout? Skeptics Descend on Silicon Valley Bank Response.

Jeanna Smialek and Alan Rappeport, The Washington Post

A sweeping package aimed at containing damage to the financial system in the wake of high-profile failures has prompted questions about whether the federal government is again bailing out Wall Street.

Financial tremors now muddying Fed inflation debate

Howard Schneider, Reuters

U.S. Federal Reserve officials meet next week again chasing persistent inflation but now balancing that against the first acute tremors from the aggressive interest rate hikes the central bank approved over the past year.

How bank failures may upend the Fed’s war on inflation

Victoria Guida, Politico

Federal Reserve Chair Jerome Powell suddenly has a major new concern to weigh in his year-long battle against inflation: a string of bank failures.

US expected to report strong consumer price increases in February

Lucia Mutikani, Reuters

U.S. consumer prices likely rose at a solid pace in February amid sticky rental housing costs, but economists are divided on whether the data will be enough to push the Federal Reserve to hike interest rates again next week after the failure of two regional banks.

Near-Term US Inflation Expectations Drop Sharply, NY Fed Survey Finds

Jonnelle Marte, Bloomberg

US consumers see inflation dropping sharply over the next year, and they expect the cost of food, gas and other essentials to rise more slowly, according to a survey by the Federal Reserve Bank of New York.

US capitalism is ‘breaking down before our eyes’, says Ken Griffin

Harriet Agnew et al., Financial Times

Citadel founder argues that refusing to bail out SVB depositors in full would be ‘great lesson in moral hazard’

Lawmakers target child labor laws to ease worker shortage

Jacob Knutson, Axios

Legislators in multiple states are invoking a widespread labor shortage to push bills that would weaken long-standing child labor laws.

Economic security for women “more fragile” than realized

Hope King, Axios

Many measures of economic progress for women are pointing in the right direction, but the pandemic has put the vitality of that progress under strain.

Supreme Court case features twist on appropriations power

Michael Macagnone, The Hill

Congress has used a clause in the Constitution for more than two centuries to control how the federal government spends funds, but the Supreme Court is poised to decide whether that same language also limits what lawmakers can do.

FDIC Planning Another Silicon Valley Bank Auction

Andrew Ackerman, The Wall Street Journal

Regulators are planning to take another crack at auctioning failed Silicon Valley Bank, according to people familiar with the matter, after they were unable to find a buyer for the firm over the weekend.

Private Equity Giant Talks to VC Firms About SVB Bid

Erin Woo and Amir Efrati, The Information

A large private equity firm has been talking to General Catalyst, Redpoint Ventures, Upfront Ventures and other venture capitalists as the PE firm considers bidding for part of the bank, according to four people with knowledge of the discussions.

Credit Suisse Finds Material Weaknesses in Financial Reporting

Margot Patrick, The Wall Street Journal

Credit Suisse Group said it found material weaknesses in its financial reporting over the past two years because of ineffective internal controls.

Silicon Valley Bank’s U.K. arm to be acquired by HSBC for just over $1

Annabelle Timsit, The Washington Post

HSBC has agreed to buy Silicon Valley Bank’s subsidiary in the United Kingdom for 1 pound — just over $1 — under a deal facilitated by the British government and the Bank of England following the U.S. lender’s collapse.

Market-watchers keep close eye on First Republic as banking fallout continues

Julia Mueller, The Hill

Attention has turned to San Francisco-based First Republic Bank after its shares fell starkly Monday in the wake of Silicon Valley Bank’s shutdown, which marked the largest U.S. bank collapse since the 2008 financial crisis.

Top economist Mohamed El-Erian says unlimited deposit guarantee will be hard to reverse after SVB fallout: ‘We are now in a different world’

Prarthana Prakash, Fortune

“Did we need to do all this? I think given the urgency over the weekend and the fact that there was no perfect policy response, we had to make some compromises,” El-Erian said about the federal government’s intervention.

SEC commissioner raises concerns over compliance deadlines

Courtney Degen, Pensions & Investments

SEC Commissioner Mark T. Uyeda expressed concern about overwhelming the agency’s regulated entities with several upcoming compliance deadlines, as the SEC continues to plow forward with its rule-making.

Billionaire Charles Schwab’s wealth plunged nearly $3 billion after his brokerage’s shares were hammered amid the banking crisis

Huileng Tan, Insider

Investors are worried as Charles Schwab Corp is sitting on a significant amount of unrealized losses on its bond assets.

Individual Investors Pile Into Cash, Chasing Higher Returns

Hardika Singh, The Wall Street Journal

Retail assets in money-market funds sit near records and demand for CDs climbs

There Were a Few Savvy Investors Who Saw Silicon Valley Bank’s Collapse Coming

Michelle Celarier, New York magazine

The abrupt collapse of Silicon Valley Bank last week came as a surprise to nearly all the denizens of the venture-capital world.

A new surprise for U.S. savers: Turn 529s into retirement money

Chris Taylor, Reuters

The new legislation lets savers roll over unused funds from their kids’ 529 college-savings plans into a Roth IRA.

CFPB and DOJ: Lenders are liable for appraisal discrimination

Chris Clow, Housing Wire

The Consumer Financial Protection Bureau (CFPB) and the U.S. Department of Justice (DOJ) announced Monday that they filed a statement of interest to “explain the application of the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA) to lenders relying on discriminatory home appraisals.”

Homeowners who held onto a 3% mortgage rate are becoming ‘accidental landlords’

Alena Botros, Fortune

The era of lower-than-ever mortgage rates is long gone, and it’s been replaced with rates hovering around 7%. But homeowners who locked in lower rates before or during the Pandemic Housing Boom aren’t selling. In fact, some of them are becoming “accidental landlords,” simply because they don’t want to lose their low rates of the past.

Justice Department Probes Collapse of Do Kwon’s TerraUSD Stablecoin

Alexander Osipovich, The Wall Street Journal

The Justice Department is investigating last year’s collapse of the TerraUSD stablecoin, adding the risk of U.S. criminal charges to the pressure on its creator, South Korean crypto entrepreneur Do Kwon, people familiar with the matter said.

CFTC Names Executives From Circle, TRM, Fireblocks Among Others to New Tech Advisory Group

Nikhilesh De, CoinDesk

The committee will be chaired by former White House official Carole House.

Santander, HSBC, Deutsche and Others Still Willing to Serve Crypto Clients After Banking Failures, DCG Says

Lavender Au, CoinDesk

Major banks are still willing to work with crypto firms, though they may restrict services, according to messages from DCG viewed by CoinDesk.

Stablecoin USDC Sees Redemptions Even as Crypto Market Rebounds

Olga Kharif, Bloomberg

Crypto market participants redeemed nearly $1.74 billion of the stablecoin USD Coin on Monday, according data compiled by researcher Nansen.

BlockTower Capital Funds Had Exposure to Silvergate, Signature Bank

Brandy Betz, CoinDesk

Four private funds of crypto asset manager BlockTower Capital used now-shuttered Signature Bank, Silvergate Bank – and in one case, both – as custodians for the assets, according to the most recent regulatory filing required for investment advisers. The funds added up to about $940 million in gross asset value.