Bank failures: Anger in Congress, but division on what to do
WASHINGTON (AP) — Congress is trying to figure out how best to respond to the abrupt failure of two U.S. banks. Lawmakers are up in arms over the collapse of Silicon Valley Bank and Signature Bank, and they're questioning what went wrong. But while President Joe Biden has urged Congress to strengthen the rules for banks to prevent more failures, lawmakers are divided on legislation. Republicans say the laws already in place were sufficient to prevent the bank failures, if only regulators had done their job. Democrats say a law signed by President Donald Trump in 2018 is a major contributor to what happened. The first of several hearings on the bank failures has been scheduled for March 29.
California, drugmaker partner to produce affordable insulin
DOWNEY, Calif. (AP) — The state of California and a generic drug manufacturer have entered a 10-year partnership to produce affordable, state-branded insulin that they hope will rival longtime producers and push down prices. Democratic Gov. Gavin Newsom says the intent is to disrupt the insulin marketplace, where prices have steadily climbed in recent decades. The product is not expected on store shelves until next year. It is difficult to predict what effect it would have on a market already shaken by change. Insulin makers have recently promised steep price cuts, as pressure builds on drugmakers and insurers to slash the cost of the drug used by millions of Americans.
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Washington turns to Wall Street to help rescue dying bank
In a scene reminiscent of the last financial crisis, the federal government turned to Wall Street this week for help with a blossoming emergency in the banking sector. The anxiety centered on First Republic Bank in San Francisco, which was reeling after customers withdrew billions of dollars. The result was a swift agreement among the nation’s leading banks to lay aside competitive instincts to come to First Republic’s aid. With Washington greasing the wheels, a coalition of lenders put $30 billion in uninsured deposits into the California-based bank as a show of support. The money gives First Republic a lifeline while it reportedly seeks a buyer.
Will Americans end up footing the bill for bank failures?
WASHINGTON (AP) — The government’s response to the failure of two large banks has already involved hundreds of billions of dollars. So will ordinary Americans end up paying for it, one way or another? And what will the price tag be? It could be months before the answers are fully known. The Biden administration said it will guarantee uninsured deposits at both banks. The Federal Reserve announced a new lending program for all banks that need to borrow money to pay for withdrawals. The goal is to prevent a broadening panic in which customers rush to pull out so much money that even healthy banks buckle.
Near 'cliff's edge,' Credit Suisse not seen as systemic risk
GENEVA (AP) — Longtime troubles at Credit Suisse have come to a head this week with a record stock plunge that spread fears of a banking crisis jumping from the U.S. to Europe. But the problems have been building for years at Switzerland’s second-largest bank, ranging from bad bets on hedge funds to a spying scandal involving rival bank UBS. Experts say the upheaval is largely a byproduct of Credit Suisse’s troubles in recent years — making it look relatively vulnerable — and investor worries about the health of Western banks in general following the collapse of Silicon Valley Bank in the United States.
Biden calls for tougher penalties for execs of failed banks
WASHINGTON (AP) — President Joe Biden is calling on Congress to allow regulators to impose tougher penalties on the executives of failed banks, including clawing back compensation and making it easier to bar them from working in the industry. Biden wants the Federal Deposit Insurance Corporation to be able to force the return of compensation paid to executives at a broader range of banks should they fail, and to lower the threshold for the regulator to impose fines and bar executives from working at another bank. He called on Congress to grant the FDIC those powers after the failures of Silicon Valley Bank and Signature Bank sent shockwaves through the global banking industry.
Fed lent $300B in emergency funds to banks in the past week
WASHINGTON (AP) — The Federal Reserves says cash-short banks have borrowed about $300 billion in emergency funding from the central bank in the past week. Nearly half the money — $143 billion — went to holding companies for the two major banks that failed over the past week, Silicon Valley Bank and Signature Bank, triggering widespread alarm in financial markets. An additional $148 billion in lending was provided through a longstanding program called the “discount window,” and amounted to a record level for that program.
Experts, banks look for ideas to stop next bank failure
WASHINGTON (AP) — The warning signs were all there. Silicon Valley Bank was expanding at a breakneck pace and pursuing wildly risky investments in the bond market. The vast majority of its deposits were uninsured by the federal government, leaving its customers exposed to a crisis. None of this was a secret. Yet bank supervisors at the Federal Reserve Bank of San Francisco and the state of California did nothing as the bank rolled over the cliff. The search for causes and culprits – and solutions — is refocusing attention on a 2018 federal law that rolled back tough bank regulations put in place after the 2008-2009 financial crisis and, perhaps even more, on the way regulators wrote the rules that put that law in place.
Japan, German leaders agree to strengthen ties, supply chain
TOKYO (AP) — German Chancellor Olaf Scholz and Japanese Prime Minister Fumio Kishida have agreed to strengthen economic and defense ties. Scholz traveled to Tokyo for the first round of government consultations with Japan, bringing with him six of the 17 Cabinet ministers. Kishida told a joint news conference after the talks that the sides agreed to strengthen supply chains in minerals, semiconductors, batteries and other strategic areas, in order to “counter economic coercion, state-led attempts to illegally acquire technology and non-market practices.” That was an apparent reference to China, whose global rise and concerns about ties with Russia provided the background to the talks. Kishida says Japan and Germany share fundamental values and need to take global leadership.
Russia, Ukraine extend grain deal to aid world's poor
KYIV, Ukraine (AP) — Turkish President Recep Tayyip Erdogan and United Nations officials say an unprecedented wartime deal that allows grain to flow from Ukraine to countries in Africa, the Middle East and Asia has been extended. Neither the U.N. nor Erdogan said how long the agreement would last. Ukraine announced a 120-day extension on Saturday, the day the deal was set to expire. A Russian Foreign Ministry spokesperson says Moscow agreed to a 60-day renewal. Ukraine and Russia signed separate agreements with the U.N. and Turkey last year to allow food to leave the Black Sea region after Russia invaded its neighbor more than a year ago. Moscow has complained about the implementation.