Welcome to NEACH's Innovating Payments Top 3 News Headlines for the week of April 30, 2023. News of the aftermath of banking failures or near-failures continues to roll full steam ahead. The Federal Reserve just issued its findings around the Silicon Valley Bank failure, concluding, "Silicon Valley Bank (SVB) failed because of a textbook case of mismanagement by the bank." Then, on the heels of that report's release, regulators seized and closed First Republic Bank today, selling its deposits to JPMorgan Chase. In addition, the FDIC is expected to "publish a comprehensive overview of the federal deposit insurance system on Monday," a.k.a., today.
Read on to learn more.
1. Bank Failures Widen. JPMorgan Rescues First Republic (Investor's Business Daily)
Regulators seized and closed First Republic Bank early Monday and immediately sold all of its deposits and most of its assets to JPMorgan Chase after scrambling for a deal over the weekend.
First Republic Bank appeared destined for receivership after last week's desperate attempts to broker a rescue. It marks the second-largest U.S. bank failure ever, trailing only Washington Mutual from 2008. Silicon Valley Bank was the second-biggest bank failure for just over a month after going under in March. (Read more.)
2. Re: Review of the Federal Reserve's Supervision and Regulation of Silicon Valley Bank (Board of Governors of the Federal Reserve System)
Silicon Valley Bank (SVB) failed because of a textbook case of mismanagement by the bank. Its senior leadership failed to manage basic interest rate and liquidity risk. Its board of directors failed to oversee senior leadership and hold them accountable. And Federal Reserve supervisors failed to take forceful enough action, as detailed in the report. (Read more.)
3. FDIC report to reopen U.S. bank deposit insurance debate (Reuters)
A key U.S. banking regulator is set to publish a comprehensive overview of the federal deposit insurance system on Monday, teeing up fresh debate about whether the government should expand protections on bank deposits - and if so, by how much.
The review will be the third report issued in the wake of the collapse of Silicon Valley Bank and Signature Bank in March, when regulators ended up backstopping all deposits - including those above the Federal Deposit Insurance Corp's guarantees of up to $250,000 per person, per bank - in an attempt to prevent contagion to the banking system. (Read more.)
What do these shifts mean for your institution in ongoing efforts to manage risk?
Check back soon for our next issue, highlighting the industry's most pressing and need-to-know developments. Until then, visit us online at Innovating Payments.
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AUTHOR: Joe Casali, AAP, NCP
Executive Vice President
As the EVP of Payments Innovation for NEACH, Joe focuses on exploring innovative solutions and technologies that will help position members for success, both now and in the future. Connect with Joe to read more of his blogs, articles, and posts.
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