Banking Crisis 2023

Concerns about a credit crunch in the market have highlighted mortgage lenders' reliance on other institutions for funding.

The Federal Reserve wants a smaller balance sheet to help rein in inflation. But uncertainty in the banking system is pushing it in the opposite direction.

Bond market investors continue to drive down the benchmark 10-year Treasury yield, even after short-term rates were boosted 25 basis points on Wednesday.

The San Francisco bank said the move is designed to "foster closer alignment with the shareholder experience and signal commitment to the bank and all of its stakeholders." The company's stock price has fallen 89% this year, and government officials have reportedly been working with industry leaders on a rescue deal.

More hikes are likely as the Board is confident its bid to quell inflation won't deepen a nascent banking crisis.

Financial tightening stemming from two recent bank collapses has served as its own check on inflation, according to Federal Reserve Chair Jerome Powell. He said the relatively small rate hike announced Wednesday was not the result of financial stability concerns.

The Los Angeles company says it secured $1.4 billion of cash from a financing facility from Atlas SP Partners after clients drew down an additional 20% of the bank's deposits. Deposit levels have "stabilized," PacWest says.

Mortgage professionals are carefully monitoring indicators of whether turbulence in the financial markets will continue to put downward pressure on rates.

Wall Street leaders and U.S. officials discussing an intervention at First Republic Bank are exploring the possibility of government backing to encourage a deal that would shore up the lender, people with knowledge of the matter say.

The firm is the latest mortgage player to distance itself from the turmoil on Wall Street.

Economists have warned since last summer that speedy monetary tightening could be destabilizing. This week, the Federal Reserve will decide whether to stay on that course.

The incentive structures for both banks and large, sophisticated depositors have changed because of federal regulators' decision to guarantee the uninsured deposits of Silicon Valley Bank and Signature Bank.

In prepared remarks to the American Bankers Association, Treasury Secretary Janet Yellen says the government's intervention to cover uninsured deposits at Silicon Valley and Signature banks "reduced the risk of further bank failures."

The government-backed acquisition heads off regulatory and financial concerns at a Swiss bank that could have affected overseas financial institutions that U.S. lenders count on.

After a bank run led to Signature Bank's failure, New York Community Bancorp bought much of what was left from the FDIC. The acquirer now faces questions about how it will persuade the remaining depositors to stick around.

Since the sudden collapse of Silicon Valley Bank on March 10, unstable deposit funding has roiled the banking industry. Ideas on how to reestablish confidence include providing a temporary guarantee for all deposits, raising the deposit insurance limit and reviving an expired program that helped quell market panic in 2008.

On Monday, the top banking Republicans in both chambers laid blame for Silicon Valley Bank and Signature Bank's failures on the Federal Deposit Insurance Corp. and Federal Reserve, and they asked the agencies for a full autopsy of what went wrong.

The Federal Deposit Insurance Corp. says it has extended the deadline for bids on Silicon Valley Bank, will break the bank into two parts for sale and will allow nonbanks to bid on asset portfolios.

Flagstar Bank, a subsidiary of New York Community Bancorp, will buy most of failed Signature Bank, but it's not taking Singature's digital-assets business as part of the deal.

Institutions can borrow against par-valued securities that they would otherwise have to sell at a loss when there's a run on deposits, and it could have effectiveness beyond its actual usage.