Cryptocurrency: BANK RUN PANIC Spreads Around Globe, Crypto and Gold Demand Skyrockets, FDIC Coverup

[grarpamp]

> Not your keys, Not your Money...

Crypto rockets up another 3% to +13%, Gold and Cmd 1.2%, Yields -5%...

SVB Latest Developments Live Blog: Fed Weighs "Easing Access" To
Discount Window To Avoid Bank Panic

https://www.washingtonpost.com/us-policy/2023/03/12/silicon-valley-bank-deposits/
https://www.reuters.com/business/finance/regulators-urged-find-silicon-valley-bank-buyer-industry-frets-about-fallout-2023-03-12/
https://twitter.com/CGasparino/status/1634960465607688200

As the countdown to the reopening of futures trading gets louder by
the second amid episodic observations of bank runs around the US, news
flow is starting to accelerate fast so this will be a placeholder post
with updates until we get major news.

4:30pm ET Update:  It's getting to the point where every new
"proposal" or "idea" being thrown about is worse than the previous one
(or maybe this is just how the clueless LGBTQ equity-focused Fed is
doing trial balloons on a Sunday afternoon. Shortly after the WaPo
reported that the Fed is "seriously considering safeguarding all
uninsured deposits at Silicon Valley Bank", BBG is out with a report
that the Federal Reserve is also "considering easing the terms of
banks’ access to its discount window, giving firms a way to turn
assets that have lost value into cash without the kind of losses that
toppled SVB Financial Group."

    Such a move would increase the ability of banks to keep up with
demands from depositors to withdraw, without having to book losses by
selling bonds and other assets that have deteriorated in value amid
interest-rate increases — the dynamic that caused SVB to collapse on
Friday.

The report goes on to note that as many had expected, some banks began
drawing on the discount window Friday, seeking to shore up liquidity
after authorities seized SVB’s Silicon Valley Bank, which is precisely
why it is bizarre that this is even news: after all, the Discount
Window has always been opened, and the fact that banks hate to use it
has nothing to do with "ease of access" and all to do with the stigma
of being associated with the discount window. Just recall how banks
that were revealed to have used the discount window around Lehman's
failure saw accelerating bank runs.

Or maybe the Fed's thinking goes that while it would be too late to
save SIVB, other banks would somehow boost confidence of their
depositors by yelling from the rooftops: "Hey, look at us, we are well
capitalized: we just borrowed $X billion from the Fed's Discount
Window."

Needless to say, the mere rumor that regional bank XYZ has been forced
to access this "last ditch" funding facility will result in all its
depositors fleeing, which is why we once again ask: after "fixing"
Ukraine's Burisma, is that polymath genius Hunter Biden now in charge
of US bank bailout policy?

    "Hey, let's stuff all the regional banks into the stigmatizing
facility that accelerated the global financial crisis" - Hunter Biden
https://t.co/HM2PBiztDG
    — zerohedge (@zerohedge) March 12, 2023

3:00pm ET Update: In a reversal of what Janet Yellen said just hours
ago, WaPo reports that federal authorities are "seriously considering
safeguarding all uninsured deposits at Silicon Valley Bank" - and by
extension any other bank on the verge of failure - and are weighing an
extraordinary intervention to prevent what they fear would be a panic
in the U.S. financial system. Translation: bailout of all depositors,
not just those guaranteed by the the FDIC (<$250K).

    Officials at the Treasury Department, Federal Reserve, and Federal
Deposit Insurance Corporation discussed the idea this weekend, the
people said, with only hours to go before financial markets opened in
Asia. White House officials have also studied the idea, per two
separate people familiar with those discussions. The plan would be
among the potential policy responses if the government is unable to
find a buyer for the failed bank.

While selling SVB to a healthy institution remains the preferred
solution - as most bank failures are resolved that way and enable
depositors to avoid losing any money - there have been several reports
that no big bank has stepped up as of yet, leaving the government/Fed
as the only option.

As reported earlier, the FDIC began an auction process for SVB on
Saturday and hoped to identify a winning bidder Sunday afternoon, with
final bids due at 2 p.m. ET.

Some more from the WaPo report:

    Although the FDIC insures bank deposits up to $250,000, a
provision in federal banking law may give them the authority to
protect the uninsured deposits as well if they conclude that failing
to do so would pose a systemic risk to the broader financial system,
the people said. In that event, uninsured deposits could be
backstopped by an insurance fund, paid into regularly by U.S. banks.

    Before that happens, the systemic risk verdict must be endorsed by
a two-thirds vote of the Fed's Board of Governors and the FDIC board
along with Treasury Secretary Janet Yellen. No final decision has been
made, but the deliberations reflect concern over the collateral damage
from SVB's collapse and authorities' struggle to respond amid limits
on their powers implemented following the 2008 financial bailouts.

"We've been hearing from those depositors and other concerned people
this weekend. So let me say that I've been working all weekend with
our banking regulators to design appropriate policies to address this
situation," Yellen said on the CBS program "Face the Nation."

But more importantly, the WaPo report contradicts what Yellen said
just a few hours earlier, namely that "during the financial crisis,
there were investors and owners of systemic large banks that were
bailed out . . . and the reforms that have been put in place means we
are not going to do that again,”

This suggests that in just a few short hours, officials and regulators
peaked behind the scenes and realized just how bad a potential bad
crisis could be and have made a 1800 degree U turn.

The result: any erroneous higherer for longerer narrative spewed by
some self-appointed experts has just blown up, and what is about to be
unleashed is another vast liquidity wave, something that bitcoin
clearly is starting to anticipate.

1:15pm ET Update: In a throwback to the legendary "Lehman Sunday",
when dozens of credit traders did an ad hoc CDS trading and novation
session on the Sunday ahead of the bank's Chapter 11 filing to
minimize the chaos and fallout from the coming bankruptcy, Bloomberg
reports that the FDIC kicked off an auction process late Saturday for
Silicon Valley Bank, with final bids due by Sunday afternoon.

The FDIC is reportedly aiming for "a swift deal" but a winner may not
be known until late Sunday.  Bloomberg also reported that the
regulator is racing to sell assets and make a portion of clients’
uninsured deposits available as soon as Monday; the open questions are
i) whether there will be a haircut and ii) how big it will be. A table
from JPM's Michael Cemablest below shows historical haircuts on
uninsured depositors in previous bank crises.

We get a slightly more positive vibe from a Reuters report according
to which "authorities are preparing "material action" on Sunday to
shore up deposits in Silicon Valley Bank and stem any broader
financial fallout from its sudden collapse."

    Details of the announcement expected on Sunday were not
immediately available. One source said the Federal Reserve had acted
to keep banks operating during the COVID-19 pandemic, and could take
similar action now.

"This will be a material action, not just words," one source said.
Earlier, U.S. Treasury Secretary Janet Yellen said that she was
working with banking regulators to respond after SVB became the
largest bank to fail since the 2008 financial crisis.

As fears deepened of a broader fallout across the U.S. regional
banking sector and beyond, Yellen said she was working to protect
depositors but ruled out a bailout.

    "We want to make sure that the troubles that exist at one bank
don't create contagion to others that are sound," Yellen told the CBS
News Sunday Morning show. "During the financial crisis, there were
investors and owners of systemic large banks that were bailed out ...
and the reforms that have been put in place means we are not going to
do that again," Yellen added.

Meanwhile, more than 3,500 CEOs and founders representing some 220,000
workers signed a petition started by Y Combinator appealing directly
to Yellen and others to backstop depositors, warning that more than
100,000 jobs could be at risk.

Reuters also reports that the FDIC was trying to find another bank
willing to merge with SVB:

    "Some industry executives said such a deal would be sizeable for
any bank and would likely require regulators to give special
guarantees and make other allowances."

That said, the longer we wait without some resolution the more likely
it is that SVB's unsecured depositors will get pennies on the dollar,
according to the following (unconfirmed) reporting from Chalie
Gasparino: "Bankers increasingly pessimistic a single buyer will
emerge for SVB, laying out options for clients w money in there:
1-ride it out. 2-sell deposits for around 70-80 cents on dollar to
other financial players; borrow against deposits jpmorgan at 50 cents
on dollar."

    BREAKING: Bankers increasingly pessimistic a single buyer will
emerge for SVB, laying out options for clients w money in there:
1-ride it out. 2-sell deposits for around 70-80 cents on dollar to
other financial players; borrow against deposits @jpmorgan at 50 cents
on dollar
    — Charles Gasparino (@CGasparino) March 12, 2023

The FDIC previously said the agency has said it will make 100% of
protected deposits available on Monday, when Silicon Valley Bank
branches reopen.

There was also news for those whose money remains frozen at SIVB. BBG
notes that tech lender Liquidity Group is planning to offer about $3
billion in emergency loans to start-up clients hit by the collapse of
Silicon Valley Bank.

    Liquidity has about $1.2 billion ready in cash to make available
in the coming weeks, Chief Executive Officer and co-founder Ron Daniel
said in an interview on Sunday. The group is also in discussions with
its funding partners, including Japan’s Mitsubishi UFJ Financial Group
Inc. and Apollo Global Management Inc., to offer an additional $2
billion in loans, he said.

    “By helping the companies to survive now, I’m hoping some of them
would succeed and come back to us in the future,” Daniel said. “We’re
nurturing our future clients.” A typical loan will be a one-year
facility of $1 million to $10 million, or as much as 30% of the
balances held with SVB, Daniel said. The priority is to help companies
meet payroll expenses.

The fate of other SVB-linked entities appears to be somewhat rosier.
Bloomberg reports that Royal Group, an investment firm controlled by a
top Abu Dhabi royal, is considering a possible takeover of the UK arm
of Silicon Valley Bank following its collapse last week, according to
people familiar with the matter. The conglomerate, chaired by United
Arab Emirates National Security Adviser Sheikh Tahnoon bin Zayed Al
Nahyan, is discussing a potential buy-out through one of its
subsidiaries.