Banks lose millions of dollars every year due to failing, or refusing, to identify, measure, control or monitor operational risk exposures. Operational risk comprises a threat to an institution’s earnings and liquidity due to problems with people, processes (such as know your client and detecting anti-money laundering), technology/systems, and external events (i.e., third party vendors, civil unrest, terrorism, and natural disasters.) Read more here.
Dodd-Frank and Basel III regulations in the U.S. have not slowed down banks’ lending, asset growth, earnings, dividend payouts, share buybacks, or their political contributions to legislators. Banks can reduce risky assets without having to reduce lending to small-medium sized businesses and individuals. Read More
Commercial real estate loans outstanding have grown slightly over 100% in a decade. CRE borrowers took advantage of the incredibly low interest rates, an economy recovering from the Global Financial Crisis, and banks that in too many cases were less than diligent in underwriting loans. Presently, the amount of commercial real estate loans, as a percent of banks’ total loans, has grown to being slightly higher than it was in the last quarter of 2007. This worries me. Read more.
Rodríguez Valladares Testified Before the Senate Banking, Housing, and Urban Committee About Federal Reserve Accountability
The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 (S2155) directly influenced the supervisory culture and tone at the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency. In my statement, I will focus on lessons learned from the failure of Silicon Valley Bank as well as respectfully recommend legislative and supervisory process changes at the Federal Reserve to improve the safety and soundness of banks given that their health is key to the financial stability of the United States. Read her testimony here
Interest rate hikes by key central banks around the world and tightening credit conditions will put pressure on U.S. regional banks’ capital, credit quality, and profitability. Globally systemically important banks (G-SIBs) are benefiting from the diversity of business lines they have, as well as from the various sources of funding they can access. However, many regional banks, by definition, do not have the asset diversity and funding advantages that G-SIBs enjoy. Read more
We have reached the point where the tide has gone out, and we are seeing what financial institutions have been swimming naked. A third California-headquartered bank, in less than two months, is looking like it is on the verge of collapse. Read more
The FOMC is likely to raise rates twenty-five basis points to a range of 5.0%-5.25%; this would put rates at about a 16-year high. This level of rate rises has been an unpleasant surprise for many consumers and unfortunately, even bank risk managers. Read more
First Republic Bank is dead! Long live JPMorgan! JPMorgan’s acquisition makes it the most globally systemically important bank (G-SIB) in the U.S. and number five globally only after the four Chinese G-SIBs. Read more
Like in Rashomon, Akira Kurosawa’s seminal film, we have heard the story of Silicon Valley Bank’s demise from many perspectives. However, we have yet to hear from the responsible actors in this saga: Silicon Valley Bank’s former Chief Executive Officer Greg Becker and SVB’s Board of Directors. Read more here.
Few things inspire less confidence in investors and analysts than to tell us that you will not be giving earnings guidance about the future and that you will not be taking any questions. Read more here
First Republic Bank’s stock price has plummeted 87% since March 8, when the market learned of Silicon Valley Bank’s impending demise. This is not just a case of contagion. Read more here
Even though many regional banks demonstrated that they benefited from rising interest rates, regional bank indices show that investors were not impressed. Deposits have decreased and provisions for credit losses are rising. Read more here.
Regional banks in the U.S. have not recovered from March’s banking turmoil. Investors and lenders should be more focused on regional banks’ provisions for credit losses, their liquidity ratios, the size and diversity of their depositors, and capital levels. Read More
Citigroup, JPMorgan, PNC, and Wells Fargo are preparing for an impending recession by increasing their provisions for credit losses. This is prudent risk management, especially in light of recent banking sector turmoil. Read More
In this environment of high inflation and uncertainty about the banking sector’s financial health, market participants should scrutinize U.S. leveraged finance markets with great care. Read More
What Deutsche Bank should be doing right now is disclosing its current liquidity and capital ratios. No one had banking chaos on their bingo card at the end of 2022. So why should we be relying on financial information from then? Read More