Specialist
Former executive at Office of the Comptroller of the Currency (OCC)
Agenda
- Potential contagion risk following the recent closures of Silvergate Bank (NYSE: SI), Silicon Valley Bank (SVB; NASDAQ: SIVB) and Signature Bank (NASDAQ: SBNY)
- Analysis of why previous stress tests and regulatory supervisory failed for the banks recently appointed to receivership
- Structure and implications of the BTFP (Bank Term Funding Program) – how does this impact industry structure, risk appetite and bank compliance mechanics?
- Reflections on President Biden's recent statements on the US banking sector, noting expectations for longer-term regulation
- 2023 outlook and potential changes, including discussion on CDARS (Certificates of Deposit Account Registry Service)
Questions
1.
Can you guide us through the events leading to Silvergate, SVB [Silicon Valley Bank] and Signature Bank’s closures in early March 2023? Was any of it expected, and who are you looking to blame?
2.
The current situation raises a massive question as to how the 190 banks you alluded to somehow passed through regulatory stress tests and audits. How would you explain that?
3.
Acknowledging that this situation is larger than just SVB and Signature, we can try and glean some information using these banks as case studies. It came out that the CEO of SVB sold a portion of his shares weeks before the portfolio loss announcement. What would you be asking that CEO today?
4.
It was largely reported that we would hear a verdict on the sale of the bank by late Sunday 12 March 2023. Given that this has not yet occurred, how should we be interpreting the silence?
5.
KPMG gave SVB a clean bill of health weeks before the collapse. What role do big auditors play in influencing the perception of duration risk health on balance sheets, and how is the legitimacy of these terms impacted?
6.
There are still a lot of outstanding questions regarding SVB, besides who is eventually going to come in and assume the bank. One question we’re seeing come up repeatedly is, what are the financial aspects of receivership in the US – what happens to the affected holding company’s claims?
7.
Signature Bank and SVB have very stark differences, but they suffered a very similar fate within a three-day span. Do you agree with regulators’ decision to close Signature Bank, despite not having the shifty or high-beta deposit base inherent to VC-backed technology depositors?
8.
What impact might the market havoc have had on the commercial real estate industry? The board of Signature wasn’t necessarily concerned for its performance – it didn’t think, at any given point, deposits were all going to get up and leave, but the bank’s closure sparked panic throughout other regional banks who don’t necessarily have that same VC-backed or technology deposit base.
9.
How would you assess President Biden’s recent public reaction to this situation?
10.
How do you assess the narrative that the roll-back of the Dodd-Frank safety rail in 2018 is at all to blame for the reduced level of supervision on regional and mid-size banks such as SVB and Signature? Is that a valid argument, or is it just a distraction?
11.
What’s the way forward? How can we make dislocations less likely in the future?
12.
We talked about potential changes that need to occur for accounting regimes and whether or not HTM [held-to-maturity] accounting is still necessary. Where do CDARS [Certificates of Deposit Account Registry Service] fit in?
13.
Do you think we can expect further bank run contagion?
14.
We’re seeing news that UBS is in talks to acquire Credit Suisse. How would you assess that development and what message does that send to the US banking system?
15.
You mentioned how a group of banks came together to help bail out First Republic via a USD 30bn capital injection, which did help the bank’s market movement a little bit on 16 March 2023, but we’ve since seen this come back down another 30%. Can you help us understand this strategy and whether you expect to see it again? Do you think this strategy is effective in the longer term?
16.
Do you expect to see greater concentration towards the big four, too-big-to-manage banks – JPMorgan Chase, Bank of America, Wells Fargo and Citibank?
