Cryptocurrency: BANK RUN PANIC Spreads Around Globe, Crypto and Gold Demand Skyrockets, FDIC Coverup

[grarpamp]

A fifth bank collapses...

11 hours remain until the USA implodes...

Crypto has surged up over 16% since Friday...


Fed Panics: Signature Bank Closed By Regulators; Fed, TSY, FDIC
Announce Another Banking System Bailout

https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm
https://home.treasury.gov/news/press-releases/jy1337

6:20pm ET Update: Panic is finally here.

On Friday, we said that the Fed will have to make an announcement
before the Monday open, and we didn't have to wait that long: in fact,
the Fed waited just 15 minutes after futures opened for trading to
announce the new bailout, alongside even more shocking news: the
Treasury announced that New York State regulators are shuttering
Signature Bank - a major New York bank - adding that all depositors
both at Signature Bank, and also the now insolvent Silicon Valley
Bank, will have access to their money on Monday.

And as we process the shock of yet another small bank failure (which
makes JPMorgan even bigger), the Fed just issued a statement saying
that "to support American businesses and households, the Federal
Reserve Board on Sunday announced it will make available additional
funding to eligible depository institutions  to help assure banks have
the ability to meet the needs of all their depositors.  This action
will bolster the capacity of the banking system to safeguard deposits
and ensure the ongoing provision of money and credit to the economy."

The Fed also said that it is prepared to address any liquidity
pressures that may arise, which in turn has just unveiled the first
bailout acronym of the new crisis: the Bank Term Funding Program, or
BTFP. Some more details:

    The financing will be made available through the creation of a new
Bank Term Funding Program (BTFP), offering loans of up to one year in
length to banks, savings associations, credit unions, and other
eligible depository institutions pledging U.S. Treasuries, agency debt
and mortgage-backed securities, and other qualifying assets as
collateral.  These assets will be valued at par.  The BTFP will be an
additional source of liquidity against high-quality securities,
eliminating an institution’s need to quickly sell those securities in
times of stress.

The Fed explains that the Department of the Treasury will make
available "up to $25 billion from the Exchange Stabilization Fund as a
backstop for the BTFP." And while the Federal Reserve - which was
completely clueless about this banking crisis until Thursday  - does
not anticipate that it will be necessary to draw on these backstop
funds, we anticipate that the final number of needed backstop
liquidity be somewhere north of $2 trillion.

What is more notable is that the BTFP - or Buy The Fucking Pivot -
facility, will pledge collateral at par, not at market value, thus
giving banks credit for all those hundreds of billions in unrealized
net losses, and allowing banks to "unlock liquidity" based on losses
which the Fed and TSY now backstop!

More from the Fed statement:

    After receiving a recommendation from the boards of the Federal
Deposit Insurance Corporation (FDIC) and the Federal Reserve, Treasury
Secretary Yellen, after consultation with the President, approved
actions to enable the FDIC to complete its resolution of Silicon
Valley Bank in a manner that fully protects all depositors, both
insured and uninsured.  These actions will reduce stress across the
financial system, support financial stability and minimize any impact
on businesses, households, taxpayers, and the broader economy.

    The Board is carefully monitoring developments in financial
markets.  The capital and liquidity positions of the U.S. banking
system are strong and the U.S. financial system is resilient.

    Depository institutions may obtain liquidity against a wide range
of collateral through the discount window, which remains open and
available.  In addition, the discount window will apply the same
margins used for the securities eligible for the BTFP, further
increasing lendable value at the window.

    The Board is closely monitoring conditions across the financial
system and is prepared to use its full range of tools to support
households and businesses, and will take additional steps as
appropriate.

But wait, there's more: concurrently with the Fed's statement, the
Treasury also issued a joint statement with the Fed and FDIC in which
Powell, Yellen and Gruenberg all said that they are "taking decisive
actions to protect the U.S. economy by strengthening public confidence
in our banking system. This step will ensure that the U.S. banking
system continues to perform its vital roles of protecting deposits and
providing access to credit to households and businesses in a manner
that promotes strong and sustainable economic growth."

Additionally, the trio announced that all depositors at Silicon Valley
Bank will be bailed out, as will the depositors of New York's
Signature Bank, which has just failed as well, and whose depositors
will be made whole after invoking a "systemic risk exception"

    After receiving a recommendation from the boards of the FDIC and
the Federal Reserve, and consulting with the President, Secretary
Yellen approved actions enabling the FDIC to complete its resolution
of Silicon Valley Bank, Santa Clara, California, in a manner that
fully protects all depositors. Depositors will have access to all of
their money starting Monday, March 13.  No losses associated with the
resolution of Silicon Valley Bank will be borne by the taxpayer.

    We are also announcing a similar systemic risk exception for
Signature Bank, New York, New York, which was closed today by its
state chartering authority. All depositors of this institution will be
made whole.  As with the resolution of Silicon Valley Bank, no losses
will be borne by the taxpayer.

While depositors are safe, creditors and equity holders are not:

    Shareholders and certain unsecured debtholders will not be
protected. Senior management has also been removed. Any losses to the
Deposit Insurance Fund to support uninsured depositors will be
recovered by a special assessment on banks, as required by law.

Finally, the Federal Reserve Board on Sunday announced it will make
available additional funding to eligible depository institutions to
help assure banks have the ability to meet the needs of all their
depositors.

The conclusion:

    The U.S. banking system remains resilient and on a solid
foundation, in large part due to reforms that were made after the
financial crisis that ensured better safeguards for the banking
industry. Those reforms combined with today’s actions demonstrate our
commitment to take the necessary steps to ensure that depositors’
savings remain safe.

Translation: the Fed's hiking cycle is dead and buried, and here comes
the next round of massive liquidity injections. It also means that the
Fed, Treasury and FDIC have just experienced the most devastating
humiliation in recent history - just 4 days ago Powell was telling
Congress he could hike 50bps and here we are now using taxpayer funds
to bail out banks that have collapsed because they couldn't even
handle 4.75% and somehow the Fed has no idea!

To summarize:

    Signature Bank has been closed
    All depositors of Silicon Valley Bank and Signature Bank will be
fully protected
    Shareholders and certain unsecured debtholders will not be protected
    New Fed 13(3) facility announced with $25 billion from ESF to
backstop bank deposits

As we said earlier on twitter, "this is a regulatory failure of
historic proportions by both the Fed and Treasury. Instead of
preventing billions in losses, the Fed was worrying about board
diversity and Yellen was flying to Ukraine. Everyone should be sacked
immediately."

    This is a regulatory failure of historic proportions by both the
Fed and Treasury.

    Instead of preventing billions in losses, the Fed was worrying
about board diversity and Yellen was flying to Ukraine.

    Everyone should be sacked immediately. https://t.co/XDd5LTI6hF
    — zerohedge (@zerohedge) March 12, 2023

Oh, and if the Fed really thinks that $25 billion from the ESF will be
enough to backstop a bank run on $18 trillion of deposits...

... we wish them the best of luck.

* * *

6:10pm ET Update: Futures have opened for trading sharply higher, with
bitcoin and precious metals also spiking amid rising expectations of
either some sort of bank system bailout/backstop or, more likely, an
end to the Fed's hiking cycle.

Echoing what the WaPo reported in an earlier trial balloon, Bloomberg
writes that the Fed and the Treasury Department are preparing
emergency measures to shore up banks and ensure they can meet
potential demands by their customers to withdraw money.

As reported earlier, the Fed is planning to "ease the terms" of banks’
access to its discount window, giving firms a way to turn assets that
have lost value into cash without the kind of losses that toppled
SVB’s Silicon Valley Bank (as we noted earlier, the access to the
Discoint Window was never an issue, what was is the stigma associated
with using it and the likelihood that depositors will flee the moment
it becomes public).

Additionally, the Fed and Treasury are also preparing a program to
backstop deposits using the Fed’s emergency lending authority.

The use of the Fed’s emergency lending authority is for “unusual and
exigent” circumstances, and signals that US regulators view the
spillovers from SVB’s collapse as a sign of systemic risk in markets.
Bloomberg adds that the FDIC will need to declare a system risk
exception in order to insure the uninsured depositors, but we doubt
that will be an issue.

The emergency lending facility is a Depression-era statute in the
Federal Reserve Act that allows the central bank to make loans
directly. The Fed is required to establish that borrowers were unable
to obtain liquidity elsewhere. Using the emergency authority requires
a vote by the Fed’s board and approval from the Treasury secretary.

Meanwhile, as reported previously, some banks began drawing on the
discount window Friday, seeking to shore up liquidity in a panicked
frenzy as widespread liquidations on Friday saw many regional banks
lose as much as half of their market cap before recovering.

Amid speculation of yet another taxpayer funded bailout - and a
guaranteed end to the Fed's rate hikes and potential return of QE -
stock futures jumped above 3900...

.... with gold and bitcoin surging too.

* * *

4:30pm ET Update:  It's getting to the point where every new
"proposal" or "idea" being thrown about is worse than the previous one
(or maybe this is just how the clueless LGBTQ equity-focused Fed is
doing trial balloons on a Sunday afternoon. Shortly after the WaPo
reported that the Fed is "seriously considering safeguarding all
uninsured deposits at Silicon Valley Bank", BBG is out with a report
that the Federal Reserve is also "considering easing the terms of
banks’ access to its discount window, giving firms a way to turn
assets that have lost value into cash without the kind of losses that
toppled SVB Financial Group."

    Such a move would increase the ability of banks to keep up with
demands from depositors to withdraw, without having to book losses by
selling bonds and other assets that have deteriorated in value amid
interest-rate increases — the dynamic that caused SVB to collapse on
Friday.

The report goes on to note that as many had expected, some banks began
drawing on the discount window Friday, seeking to shore up liquidity
after authorities seized SVB’s Silicon Valley Bank, which is precisely
why it is bizarre that this is even news: after all, the Discount
Window has always been opened, and the fact that banks hate to use it
has nothing to do with "ease of access" and all to do with the stigma
of being associated with the discount window. Just recall how banks
that were revealed to have used the discount window around Lehman's
failure saw accelerating bank runs.

Or maybe the Fed's thinking goes that while it would be too late to
save SIVB, other banks would somehow boost confidence of their
depositors by yelling from the rooftops: "Hey, look at us, we are well
capitalized: we just borrowed $X billion from the Fed's Discount
Window."

Needless to say, the mere rumor that regional bank XYZ has been forced
to access this "last ditch" funding facility will result in all its
depositors fleeing, which is why we once again ask: after "fixing"
Ukraine's Burisma, is that polymath genius Hunter Biden now in charge
of US bank bailout policy?

    "Hey, let's stuff all the regional banks into the stigmatizing
facility that accelerated the global financial crisis" - Hunter Biden
https://t.co/HM2PBiztDG
    — zerohedge (@zerohedge) March 12, 2023

* * *

3:00pm ET Update: In a reversal of what Janet Yellen said just hours
ago, WaPo reports that federal authorities are "seriously considering
safeguarding all uninsured deposits at Silicon Valley Bank" - and by
extension any other bank on the verge of failure - and are weighing an
extraordinary intervention to prevent what they fear would be a panic
in the U.S. financial system. Translation: bailout of all depositors,
not just those guaranteed by the the FDIC (<$250K).

    Officials at the Treasury Department, Federal Reserve, and Federal
Deposit Insurance Corporation discussed the idea this weekend, the
people said, with only hours to go before financial markets opened in
Asia. White House officials have also studied the idea, per two
separate people familiar with those discussions. The plan would be
among the potential policy responses if the government is unable to
find a buyer for the failed bank.

While selling SVB to a healthy institution remains the preferred
solution - as most bank failures are resolved that way and enable
depositors to avoid losing any money - there have been several reports
that no big bank has stepped up as of yet, leaving the government/Fed
as the only option.

As reported earlier, the FDIC began an auction process for SVB on
Saturday and hoped to identify a winning bidder Sunday afternoon, with
final bids due at 2 p.m. ET.

Some more from the WaPo report:

    Although the FDIC insures bank deposits up to $250,000, a
provision in federal banking law may give them the authority to
protect the uninsured deposits as well if they conclude that failing
to do so would pose a systemic risk to the broader financial system,
the people said. In that event, uninsured deposits could be
backstopped by an insurance fund, paid into regularly by U.S. banks.

    Before that happens, the systemic risk verdict must be endorsed by
a two-thirds vote of the Fed's Board of Governors and the FDIC board
along with Treasury Secretary Janet Yellen. No final decision has been
made, but the deliberations reflect concern over the collateral damage
from SVB's collapse and authorities' struggle to respond amid limits
on their powers implemented following the 2008 financial bailouts.

"We've been hearing from those depositors and other concerned people
this weekend. So let me say that I've been working all weekend with
our banking regulators to design appropriate policies to address this
situation," Yellen said on the CBS program "Face the Nation."

But more importantly, the WaPo report contradicts what Yellen said
just a few hours earlier, namely that "during the financial crisis,
there were investors and owners of systemic large banks that were
bailed out . . . and the reforms that have been put in place means we
are not going to do that again,”

This suggests that in just a few short hours, officials and regulators
peaked behind the scenes and realized just how bad a potential bad
crisis could be and have made a 1800 degree U turn.

The result: any erroneous higherer for longerer narrative spewed by
some self-appointed experts has just blown up, and what is about to be
unleashed is another vast liquidity wave, something that bitcoin
clearly is starting to anticipate.

* * *

1:15pm ET Update: In a throwback to the legendary "Lehman Sunday",
when dozens of credit traders did an ad hoc CDS trading and novation
session on the Sunday ahead of the bank's Chapter 11 filing to
minimize the chaos and fallout from the coming bankruptcy, Bloomberg
reports that the FDIC kicked off an auction process late Saturday for
Silicon Valley Bank, with final bids due by Sunday afternoon.

The FDIC is reportedly aiming for "a swift deal" but a winner may not
be known until late Sunday.  Bloomberg also reported that the
regulator is racing to sell assets and make a portion of clients’
uninsured deposits available as soon as Monday; the open questions are
i) whether there will be a haircut and ii) how big it will be. A table
from JPM's Michael Cemablest below shows historical haircuts on
uninsured depositors in previous bank crises.

We get a slightly more positive vibe from a Reuters report according
to which "authorities are preparing "material action" on Sunday to
shore up deposits in Silicon Valley Bank and stem any broader
financial fallout from its sudden collapse."

    Details of the announcement expected on Sunday were not
immediately available. One source said the Federal Reserve had acted
to keep banks operating during the COVID-19 pandemic, and could take
similar action now.

"This will be a material action, not just words," one source said.
Earlier, U.S. Treasury Secretary Janet Yellen said that she was
working with banking regulators to respond after SVB became the
largest bank to fail since the 2008 financial crisis.

As fears deepened of a broader fallout across the U.S. regional
banking sector and beyond, Yellen said she was working to protect
depositors but ruled out a bailout.

    "We want to make sure that the troubles that exist at one bank
don't create contagion to others that are sound," Yellen told the CBS
News Sunday Morning show. "During the financial crisis, there were
investors and owners of systemic large banks that were bailed out ...
and the reforms that have been put in place means we are not going to
do that again," Yellen added.

Meanwhile, more than 3,500 CEOs and founders representing some 220,000
workers signed a petition started by Y Combinator appealing directly
to Yellen and others to backstop depositors, warning that more than
100,000 jobs could be at risk.

Reuters also reports that the FDIC was trying to find another bank
willing to merge with SVB:

    "Some industry executives said such a deal would be sizeable for
any bank and would likely require regulators to give special
guarantees and make other allowances."

That said, the longer we wait without some resolution the more likely
it is that SVB's unsecured depositors will get pennies on the dollar,
according to the following (unconfirmed) reporting from Chalie
Gasparino: "Bankers increasingly pessimistic a single buyer will
emerge for SVB, laying out options for clients w money in there:
1-ride it out. 2-sell deposits for around 70-80 cents on dollar to
other financial players; borrow against deposits jpmorgan at 50 cents
on dollar."

    BREAKING: Bankers increasingly pessimistic a single buyer will
emerge for SVB, laying out options for clients w money in there:
1-ride it out. 2-sell deposits for around 70-80 cents on dollar to
other financial players; borrow against deposits @jpmorgan at 50 cents
on dollar
    — Charles Gasparino (@CGasparino) March 12, 2023

The FDIC previously said the agency has said it will make 100% of
protected deposits available on Monday, when Silicon Valley Bank
branches reopen.

There was also news for those whose money remains frozen at SIVB. BBG
notes that tech lender Liquidity Group is planning to offer about $3
billion in emergency loans to start-up clients hit by the collapse of
Silicon Valley Bank.

    Liquidity has about $1.2 billion ready in cash to make available
in the coming weeks, Chief Executive Officer and co-founder Ron Daniel
said in an interview on Sunday. The group is also in discussions with
its funding partners, including Japan’s Mitsubishi UFJ Financial Group
Inc. and Apollo Global Management Inc., to offer an additional $2
billion in loans, he said.

    “By helping the companies to survive now, I’m hoping some of them
would succeed and come back to us in the future,” Daniel said. “We’re
nurturing our future clients.” A typical loan will be a one-year
facility of $1 million to $10 million, or as much as 30% of the
balances held with SVB, Daniel said. The priority is to help companies
meet payroll expenses.

The fate of other SVB-linked entities appears to be somewhat rosier.
Bloomberg reports that Royal Group, an investment firm controlled by a
top Abu Dhabi royal, is considering a possible takeover of the UK arm
of Silicon Valley Bank following its collapse last week, according to
people familiar with the matter. The conglomerate, chaired by United
Arab Emirates National Security Adviser Sheikh Tahnoon bin Zayed Al
Nahyan, is discussing a potential buy-out through one of its
subsidiaries.