How a New Regulatory Framework Could Contain Bank Runs and Promote Recovery

By Edoardo Martino and Enrico Perotti April 11, 2024 by renholding

The rapid escalation in uninsured deposit runs in March 2023 led to chaotic intervention with potentially severe fiscal implications. The runs spotlighted once again the limit on prudential norms. Since the collapse of SVB, Credit Suisse, and other smaller banks …

Davis Polk Discusses RECOUP Act’s Clawbacks of Failed-Bank Executives’ Compensation

By Randall D. Guynn, Margaret E. Tahyar, Kyoko Takahashi Lin, Ledina Gocaj and Andrew Tynes April 11, 2024 by renholding

In a recent opinion piece in the Washington Post, former FDIC Chair Sheila Bair and leading British bank historian Charles Goodhart argued in favor of the executive compensation clawback provision in the proposed RECOUP Act, which we analyzed …

Digital Bank Holidays: Buying Time in a Financial Emergency

By Hilary J. Allen March 27, 2024 by renholding

It has been a year since Silicon Valley Bank failed, and one of the major policy questions that emerged – what to do about deposit insurance? – remains unresolved. Banking is an industry that needs public confidence to function, and …

Regulate Congressional Trading Through Registration Under the Securities Laws

By Sarah J. Williams January 23, 2024 by renholding

Illegal insider trading is the weird Barbie of securities regulation, a concept that, like the movie-version of the doll, has been pushed and pulled and misshapen over time. It started with the notion that trading securities of a company based …

Davis Polk Discusses Special FDIC Assessment to Recover SVB and Signature Bank Losses

By Margaret E. Tahyar, Eric McLaughlin, David L. Portilla, Ledina Gocaj and Leon Jiang December 14, 2023 by renholding

The FDIC’s final special assessment is largely unchanged from the proposed rule:

The assessment base is equal to the amount of an insured depository institution’s (IDI) uninsured deposits, as reported for the quarter ended December 31, 2022, minus up to

…

Debevoise Discusses Proposed FDIC Guidelines for Corporate Governance and Risk Management

By Gregory Lyons, Caroline Novogrod Swett, Courtney Bradford Pike, Tejas Dave and Tara Holzer October 30, 2023 by renholding

On October 11, 2023, the Federal Deposit Insurance Corporation (the “FDIC”) published in the Federal Register for comment a notice of proposed rulemaking to establish new guidelines (the “Proposed Guidelines”) for governance and risk management at FDIC-supervised insured depository institutions …

Davis Polk Discusses the Federal Reserve OIG Report on Silicon Valley Bank Failure

By Randall D. Guynn, Margaret E. Tahyar, David L. Portilla, Kirill Lebedev and Dana Seesel Bayersdorfer October 26, 2023 by renholding

The Federal Reserve OIG issued a report on SVB’s failure. Media reports have described it as nearly identical to the Barr Report. The report is more critical of the supervisory staff. It does not blame regulatory tailoring for reduced supervisory …

Why Markets Need More Information to Properly Monitor Banks

By Alireza Gharagozlou June 21, 2023 by renholding

Substantively, banks are pooled investment funds, like mutual funds, exchange traded funds, and so on: They take people’s money and use it to buy financial assets. There is one crucial difference, however. In those other funds, losses are immediately passed …

Skadden Discusses the Impact of Banking System Turmoil

By Sven G. Mickisch, Bao Nguyen and Simon Toms June 9, 2023 by renholding

The runs on Silicon Valley Bank (SVB) and Signature Bank in March 2023 created a “very high” risk of contagion in the U.S. banking system, according to Treasury Department officials. The intervention by banking regulators, using tools approved in response …

Unpacking the U.S. Deposit Insurance Debate

By Todd H. Baker May 24, 2023 by renholding

U.S. banking has always been a risky business. The financial panics of 1819, 1837, 1873, 1907, and 1931-32 all sparked banking crises, recessions, or full-scale depressions. Depositors lost everything every time a bank failed. But the Great Depression was the …

The Bail-In of Credit Suisse CoCos: Why Principal Write-Down Made Sense

By Edoardo Martino and Tom Vos May 12, 2023 by renholding

Credit Suisse (CS) was sold to UBS on March 19, 2023, to avoid its further deterioration from long-lasting distress and widespread distrust, especially after the collapse of Silicon Valley Bank. The most contentious point of the deal may have been …

A Way Out of the Banking Crisis: The Case for a New Style Prime Money Market Fund

By Jeffrey N. Gordon April 24, 2023 by renholding

The best way out of the bank stability problem revealed by the run on Silicon Valley Bank – but spreading to other banks – may be a new style of prime money market fund (“MMF”) that, unlike existing prime MMFs, …

From Hero to Zero – The Case of Silicon Valley Bank

By Lai Van Vo and Huong Thi Thu Le April 14, 2023 by renholding

The sudden collapse of Silicon Valley Bank (SVB) surprised many investors and industry experts, given the bank’s recent accolades and long-standing reputation as one of the best national and regional banks in the U.S.[1]Moreover, there had been no …

Financial Institution Innovation Needed in Silicon Valley

By Jeffrey N. Gordon March 20, 2023 by renholding

The failure of Silicon Valley Bank to find a buyer opens up the possibility (and the need) for a new kind of bank that is focused on financial stability as well as the traditional banking functions of lending and running …

SEC Chair Gensler on Recent Bank Failures, Enhanced Cybersecurity for Market Entities

By Gary Gensler March 16, 2023 by renholding

Good morning. This is an open meeting of the U.S. Securities and Exchange Commission on March 15th, 2023. I want to welcome members of the public who are listening in.

Before we get to today’s agenda, I want to address

…

Treasury, Fed, and FDIC Issue Joint Statement on Actions Relating to Silicon Valley Bank, Signature Bank

By Janet L. Yellen, Jerome H. Powell and Martin J. Gruenberg March 13, 2023 by renholding

Today we 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 …

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