Business
San Francisco Bank, Others Affected by Failure of Silicon Valley Bank
Another Bay Area bank was affected Monday by uncertainty in the financial markets following the failure of Silicon Valley Bank on Friday. Stock in San Francisco-based First Republic Bank sank nearly 62 percent Monday and shares of other regional banks suffered losses, reportedly. On Sunday, regulators seized Signature Bank in New York after it failed.
By Keith Burbank
Bay City News
Another Bay Area bank was affected Monday by uncertainty in the financial markets following the failure of Silicon Valley Bank on Friday.
Stock in San Francisco-based First Republic Bank sank nearly 62 percent Monday and shares of other regional banks suffered losses, reportedly.
On Sunday, regulators seized Signature Bank in New York after it failed.
But a San Jose State University professor of finance and accounting does not see the failure of Silicon Valley Bank and Signature Bank as signs of a coming crisis.
“I don’t think it is a huge contagion issue,” said assistant professor Matthew Faulkner. “It’s more toward an isolated incident.”
Over the weekend and Monday, top federal officials including President Joseph Biden appeared to be getting ahead of the issue.
Biden sought to ease American’s fears by making all deposits held by Silicon Valley Bank customers available regardless of the amount of their deposits, federal officials said over the weekend.
That includes businesses who must pay their employees and their bills, officials said.
“Americans can have confidence that the banking system is safe,” Biden said Monday morning. “Your deposits will be there when you need them.”
Investors will not be protected, Biden said. According to the president, they took a risk and “that’s how capitalism works.”
Taxpayers will not be on the hook for the losses. Money to cover the losses will come from fees that banks pay into the deposit insurance fund, Biden said.
In California, state Treasurer Fiona Ma said Monday that her office has no exposure to Silicon Valley Bank and state and local government funds are safe.
Additionally, companies that did business with Silicon Valley Bank won’t have to pay any penalty if they must file their payroll taxes late, according to the California Employment Development Department, which collects payroll taxes.
Employers can request a waiver online at https://edd.ca.gov/en/payroll_taxes/e-Services_for_Business/ or in writing.
Silicon Valley Bank failed Friday after depositors and investors tried to withdraw $42 billion from the bank on Thursday. The bank had $175 billion in deposits at the end of last year. The withdrawals left the bank with a negative cash balance of nearly $1 billion Thursday.
Monday, First Republic Bank said it widened its financial position with liquidity from the U.S. Federal Reserve Bank and JP Morgan Chase and Co.
First Republic now has more than $70 billion to fund operations, the bank’s officials said. Additional liquidity is available through the Bank Term Funding Program, which the Federal Reserve announced Monday and ensures banks can meet the needs of their depositors.
“First Republic’s capital and liquidity positions are very strong, and its capital remains well above the regulatory threshold for well-capitalized banks,” said Jim Herbert, founder and executive chairman, and Mike Roffler, president and CEO, of First Republic Bank. “First Republic continues to fund loans, process transactions and fully serve the needs of clients.”
U.S. Senate hopeful Rep. Barbara Lee, D-Oakland, blamed the failure of Silicon Valley Bank on the rollback of federal financial regulations by former President Donald Trump.
“Federal oversight over large corporations and our economy is crucial and regulators must once again step in and ensure we do not repeat the mistakes made in 2008,” Lee said in a statement.
Silicon Valley Bank was the 16th largest bank in the United States as of March 10, Faulkner said.
Faulkner suggests depositors open another account, if they have one with more than $250,000 in it, to protect themselves.
Silicon Valley Bank was focused on serving startups, Faulkner said, which was probably part of the reason it failed. But Faulkner said the public only knows part of the story.
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Activism
Oakland Post: Week of June 12-18, 2024
The printed Weekly Edition of the Oakland Post: Week of June 12-18, 2024
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Business
Newsom Admin Takes Steps to Stabilize California’s Troubled Insurance Market
As growing numbers of Insurance companies announce plans to exit California’s insurance market — or cancel customers’ policies — Gov. Gavin Newsom says his administration is taking steps to reverse the trend. Speaking during a news briefing on May 31, Newsom highlighted the plan, which was unveiled as part of a trailer bill on May 28.
By California Black Media
As growing numbers of Insurance companies announce plans to exit California’s insurance market — or cancel customers’ policies — Gov. Gavin Newsom says his administration is taking steps to reverse the trend. Speaking during a news briefing on May 31, Newsom highlighted the plan, which was unveiled as part of a trailer bill on May 28.
Newsom said the proposal speeds up approvals for rate increases and addresses rising costs resulting from incidents like wildfires. Newsom said, under his plan, the Department of Insurance will be required to decide and respond to rate increase requests within 120 days. The plan also calls for streamlining the process for filing for increases; builds in two 330-deay extensions for finalizing rate changes; and provides room for insurers to appeal decisions.
“We need to stabilize this market,” Newsom said. “We need to send the right signals.
Proponents, mainly insurance industry representatives like the Personal Insurance Federation of California, are praising the Governor’s actions while consumer advocates warn that the plan is a threat to public intervention rights California’s Prop 103, a 1988 state law adopted to protect state residents from “arbitrary insurance rates and practices.”
Insurance Commissioner Ricardo Lara thanked Newsom for backing his office’s plan.
“To safeguard the integrity of the insurance market – composed of consumers, homeowners, and business owners – we must fix a system suffering from decades of deferral and delay,” said Lara in a statement. “This measure is one of several parts of a comprehensive plan to enact long-overdue regulatory reforms. The Legislature can do its part to support my reforms by giving this proposal a fair and full consideration, including public input. By enacting this important part of our strategy in statute, the Legislature can help us meet the urgency of the moment.
Lara is working on a longer-term strategy to shore up the insurance market that is expected to be released in December.
Activism
Oakland Post: Week of June 5 – 11, 2024
The printed Weekly Edition of the Oakland Post: Week of June 5 – 11, 2024
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