March 13, 2023 Latest on the Silicon Valley Bank collapse

By Mark Thompson, Aditi Sangal and Elise Hammond, CNN

Updated 0707 GMT (1507 HKT) March 14, 2023
32 Posts
Sort byDropdown arrow
1:43 p.m. ET, March 13, 2023

SVB collapse stymies Etsy payments to sellers

From CNN's Parija Kavilanz

Etsy, a hugely popular online marketplace for artisans to list and sell handmade items, told CNN Business it experienced a delay in issuing payments to some sellers because of the unexpected collapse of Silicon Valley Bank. 

"We understand how important it is for these small businesses to be able to receive their funds when they need them. This impacted a small group of sellers, approximately 0.5% of our active seller base," an Etsy spokesperson said in an email to CNN Business on Monday. 

Etsy Marketplace, which has 5.4 million global sellers worldwide, has accounts with multiple banks. It said its account SVB held a a low single-digit percentage of its total cash.

The company said it has started processing payments via another payment partner on Monday.

1:16 p.m. ET, March 13, 2023

Senate Republicans are being briefed by Treasury now

From CNN's Lauren Fox

People walk past the U.S. Department of Treasury building on March 13 in Washington, DC.
People walk past the U.S. Department of Treasury building on March 13 in Washington, DC. (Chip Somodevilla/Getty Images)

Senate Republicans are currently receiving a briefing from the Treasury Department on the collapse of Silicon Valley Bank, Sen. Tim Scott's spokesperson told CNN. Scott is on the Senate Banking Committee.

The briefing comes after several Republicans on the committee were not included on invitations for an all-member briefing by the Treasury last night. Some of those members were able to join the briefing very late after flagging the issue to the Treasury, but this briefing today is intended to keep members across the aisle in the loop.

12:00 p.m. ET, March 13, 2023

Regional bank stocks are plummeting, even after intervention

From CNN's Nicole Goodkind

A trader works at the post where First Republic Bank is traded on the floor of the New York Stock Exchange on March 13.
A trader works at the post where First Republic Bank is traded on the floor of the New York Stock Exchange on March 13. (Brendan McDermid/Reuters)

The Biden administration scrambled this weekend to restore confidence in the US banking system after the collapse of Silicon Valley Bank and Signature Bank.

But investors signaled in Monday trading that the plan wasn't enough. Stocks of regional banks tumbled to record lows in Monday trading and were in and out of trading halts as their share prices moved remained volatile.

  • Shares of First Republic fell nearly 66% Monday afternoon.
  • Shares of Western Alliance Bancorp plummeted about 60%.
  • PacWest Bancorp fell more than 34%.
  • First Horizon stock fell about 23%.

So what explains the post-backstop plan plunge?

Wall Street remains worried that the Federal Reserve's aggressive interest rate hikes will continue to roil regional banks.

Markets are anxious to know "whether the Fed will lift rates at all, or will they announce a pause in the monthly Quantitative Tightening program. Or both," said Quincy Krosby, chief global strategist for LPL Financial.

It will be difficult to get an answer. The Fed just entered its mandated quiet period ahead of its policy meeting next week.

JPMorgan's David Kelly said in a note Monday morning that the Biden administration's plan may help a bit, but markets won't be satisfied until the Fed makes a decision around interest rates.

"These actions may be sufficient to stem some of the current turmoil in global markets emanating from smaller US banks," he said. "However, it should be noted that these problems were largely set up by over-easy Fed policy for many years and are now being triggered by excessive tightening."

Back when interest rates were near zero, US banks scooped up lots of Treasuries and bonds. Now, as the Fed hikes rates to fight inflation, those bonds have declined in value.

When interest rates rise, newly issued bonds start paying higher rates to investors, which makes the older bonds with lower rates less attractive and less valuable.

The result is that US banks now have a large amount of unrealized losses on their books and may lack liquidity.

Treasury yields, meanwhile, have receded to historic lows — 2-year notes have fallen more than 100 points since Wednesday and are on track to notch their largest three-day drop since Black Monday in October 1987 — as Wall Street worries about about the economic and market fallout of the bank failures.

"The move into the Treasury market reflects concern that the administration's attempts to calm investor anxiety won't work, and that ensuing panic and fear could quickly lead to the dreaded "contagion" that envelops the market's psyche," said Krosby.

12:41 p.m. ET, March 13, 2023

"We would have had to shut down" without government intervention after SVB collapse, startup founder says

From CNN's Aditi Sangal

Stefan Kalb, co-founder and CEO of Seattle-based startup Shelf Engine, during his interview with CNN.
Stefan Kalb, co-founder and CEO of Seattle-based startup Shelf Engine, during his interview with CNN. (CNN)

If the US government had not intervened with the steps they did, a Seattle-based startup called Shelf Engine that had all its money stored at Silicon Valley Bank would have shut down, says its co-founder and CEO Stefan Kalb.

The initial FDIC-insured "$250,000 would have been nice to have starting today," he told CNN. "However, for us that means we would have to shut down by the end of the week. And the reason that's the case is because we would have made payroll, and that doesn't even really cover the full payroll for us."

The hours since Thursday afternoon had been stressful, he said, recounting the notes he got from colleagues and investors, urging him to pull money out of SVB. When he opened another account and tried to wire all his money, it wasn't honored, and that's when he said he knew he was stuck.

"As a co-founder and CEO, I'm personally liable for that payroll. Which means that if I would have let our team work past Friday, I would have had to somehow cover that personally, and I just could not let that happen," he told CNN.

He listed a few reasons for why he put all of the startup's money at Silicon Valley Bank:

  • This is the part of the agreement with Silicon Valley Bank: "When you borrow from the bank, they say, 'hey that is fine, but you need to put all of your assets in the bank,'" Kalb explained.
  • A week ago, the bank was "the gold standard," he added: "We were expecting Silicon Valley Bank to be around, and we thought that it was the safest place to put our cash. So we didn't really think twice about it," he said, adding that the company's strategy has changed "dramatically" as the events have unfolded.

Finally, he said he was "quite relieved" after hearing from President Joe Biden on the administration's actions after the collapse. "I think this administration has taken this on exactly the way the way I it should be. That is the depositors of the bank need to be made whole. This a cornerstone of the US economy."

12:33 p.m. ET, March 13, 2023

Stocks rise as banking troubles spur hopes for softer Fed action

Traders work on the floor of the New York Stock Exchange during morning trading on March 13.
Traders work on the floor of the New York Stock Exchange during morning trading on March 13. (Michael M. Santiago/Getty Images)

US stocks rose Monday, reversing earlier losses as investors grew their bets that the Federal Reserve will pull back on its aggressive rate-hiking campaign due to issues brewing among regional banks.

By mid-morning, the Dow was up 0.5%. The S&P 500 and Nasdaq gained 0.6% and 1.17%, respectively.

The CME FedWatch Tool showed a possibility of around 36% that the central bank would not raise its benchmark lending rate at its upcoming meeting, and a roughly 64% possibility of a quarter-point increase. The figures have remained volatile as investors mull over the financial crises at US regional banks and the government's effort to contain them.

The Biden administration said that it will backfill customers' deposits at the collapsed Silicon Valley Bank and Signature Bank, assuaging fears that American taxpayer dollars would be used.

The Securities and Exchange Commission said it's on the watch for misconduct that could further disrupt the market.

Bank stocks continued their slide despite the market's newfound strength.

11:49 a.m. ET, March 13, 2023

Swiss regulator is watching its banks and insurers for exposure after SVB collapse

From CNN's Hanna Ziady

Switzerland’s financial regulator Finma said Monday it is on alert for any signs of potential fallout for the country’s banks and insurers following the collapse of Silicon Valley Bank and Signature Bank.

“As is customary in such incidents, Finma is evaluating the direct and indirect exposure of the banks and insurance companies it supervises to the institutions concerned,” it said in a statement. “The aim is to identify any cluster risks and potential for contagion at an early stage.”

Finma also said it was monitoring the collapse of crypto-focused lender Silvergate, which entered liquidation voluntarily on Wednesday.

Silvergate said it would repay all deposits before winding down operations.

Shares in Swiss lenders slid Monday, tracking losses in the sector globally. Embattled Credit Suisse tumbled nearly 13% to a new record low. Shares of its bigger Swiss rival, UBS, fell 8%.

The cost of buying insurance against the risk of Credit Suisse defaulting on its debt rose to an all-time high, while the price of some of its bonds fell sharply, according to Reuters.

Credit Suisse, once a big player on Wall Street, has been hit by a series of missteps and compliance failures over the past few years that have damaged its reputation and profit. The bank posted its biggest annual loss in 2022 since the financial crisis in 2008, as customers withdrew 111 billion Swiss francs ($121 billion) in the three months to December.

11:47 a.m. ET, March 13, 2023

Consumers are expecting relief soon from high inflation, Fed survey shows

From CNN's Alicia Wallace

A person shops in a supermarket on February 13 in Los Angeles, California.
A person shops in a supermarket on February 13 in Los Angeles, California. (Mario Tama/Getty Images)

Americans are expecting relief from high inflation within the next year, according to Federal Reserve Bank of New York survey data released Monday.

One-year inflation expectations dropped sharply in February to levels not seen since May 2021, tumbling 0.8 percentage points to 4.23%. Consumers indicated they expect to get some relief in how much they pay for food, rent, medical care and gas, according to the New York Fed's Survey of Consumer Expectations. However, those surveyed said they expect median home prices to rise 1.4%.

Measurements of inflation expectations are closely watched by Fed officials as they seek to bring down the highest inflation seen in decades.

On the three- and five-year horizons, inflation expectations held mostly steady: Median expectations for inflation three years from now ticked down 0.5 percentage points to 2.66% and increased by 0.1 percentage points to 2.6%.

What's desired is for expectations to be "anchored" at roughly 2%, which is the Fed's target rate. If inflation expectations run high, then there is a concern that could cause workers to demand pay raises to counter their lost purchasing power, and the fear would be that business raise prices in turn and ultimately push up inflation.  

Consumers are still expecting to see a strong job market over the next 12 months: Year-ahead earnings growth expectations held firm at 3% and unemployment expectations fell by 1.8 percentage points.

Still, consumers are also expecting to pull back on how much more they're spending. Household spending growth expectations fell to 5.6% last month, marking the fourth consecutive decline. 

11:02 a.m. ET, March 13, 2023

SEC says it's on high alert for potential misconduct after Silicon Valley Bank collapse

From CNN’s Matt Egan

The headquarters of the US Securities and Exchange Commission (SEC) is seen in Washington, DC, in January 2021. 
The headquarters of the US Securities and Exchange Commission (SEC) is seen in Washington, DC, in January 2021.  (Saul Loeb/AFP/Getty Images)

After the panic that caused the collapse of Silicon Valley Bank, the Securities and Exchange Commission (SEC) says it’s on high alert for any potential misconduct that threatens market stability. 

"In times of increased volatility and uncertainty, we at the SEC are particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly,” SEC Chair Gary Gensler said in a statement.  

The warning follows a bank run at SVB, where panicked customers pulled $42 billion on Thursday alone. 

“Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws,” Gensler said. 

10:59 a.m. ET, March 13, 2023

New York governor says she pushed feds to offer same protections to Signature Bank depositors as SVB's

From CNN’s Celina Tebor

NY State Governor Kathy Hochul on March 10 in New York City.
NY State Governor Kathy Hochul on March 10 in New York City. (John Lamparski/NurPhoto/Shutterstock)

New York Gov. Kathy Hochul said Monday that she pushed the federal government to offer the same protections to Signature Bank’s depositors as Silicon Valley Bank’s.

The New York State Department of Financial Services closed Signature Bank on Sunday night and appointed the Federal Deposit Insurance Corporation (FDIC) as a receiver, according to a press release from the FDIC Sunday.

All depositors of the institution will be made whole, the press release reads, and “no losses will be borne by the taxpayers.”

Hochul said she "pushed hard" for the protections, and stressed, “this is not a bailout."

"This is simply using fees that are assessed on all banks by the FDIC in such a time they would need them,” she said, adding that her office was “successful in persuading the federal government to include Signature and all of its customers in its protections.”

Signature Bank's seizure did not happen in a vacuum, and it “truly was in response to what happened at SVB,” the governor said.

Signature Bank had total assets of $110.4 billion and total deposits of $82.6 billion as of December 31, according to the FDIC.