First Republic Bank in Rescue Talks with Biggest U.S. Lenders​​​

The biggest banks in the U.S. are discussing a joint rescue of First Republic Bank totaling more than $25 billion to shore up the beleaguered lender, the Wall Street Journal reported. JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. are in talks to deposit $5 billion of their own money each into First Republic. Morgan Stanley and Goldman Sachs Group Inc., as well as regional banks U.S. Bancorp, PNC Financial Services Group Inc. and Truist Financial Corp., would all kick in smaller amounts. The details are still being worked out, and the banks have discussed the plan with officials and regulators in Washington, D.C. A deal could be unveiled as early as today. Big banks received an influx of billions of deposits from midsize lenders, including First Republic, over the past week in the wake of the collapse of Silicon Valley Bank. The deal could be structured in such a way that the banks are effectively giving back some of the money they have raked in from panicky First Republic depositors. (Subscription required.) ​​​Read more.

Bank Runs Used to Be Slow. The Digital Era Sped Them Up​​​

A bank run conjures images of It’s a Wonderful Life, with anxious customers crammed shoulder to shoulder, desperately pleading with a harried George Bailey to hand over their money. The failure of Silicon Valley Bank last week had the panic but few other similarities, instead taking place on Twitter, message boards, mobile phones and bank websites, the Associated Press reported. What made the failure of Silicon Valley Bank unique compared to past failures of large banks was how quickly it collapsed. Last Wednesday afternoon, the $200 billion bank announced a plan to raise fresh capital; by Friday morning, it was insolvent and under government control. Regulators, policymakers and bankers are looking at the role that digital messaging and social media may have played in the collapse, and whether banks are entering an age when the psychological behavior behind a bank run — mass fear from depositors of losing their savings — may be amplified and go viral quicker than bank officers and regulators can successfully respond to it. Read more.

Corporate Borrowers Squeezed by Rising Rates​​​

Companies that piled on debt throughout the pandemic and the economic recovery could be in for a tough road ahead as the bills come due, the Associated Press reported. Corporate borrowers will have to pay more of that debt back as refinancing grows more difficult with rising interest rates. The persistent squeeze from inflation is keeping costs high for many companies while stifling consumer demand and sapping purchasing power. Corporate debt rose from roughly $16.3 trillion just before the pandemic hit to about $19.8 trillion near the end of 2022, according to the Federal Reserve. Economists and analysts expect some kind of recession to hit the U.S. economy in 2023, and the severity of it could weigh heavily on both large and small companies as they repay debt. Near-term profit pressures on U.S. corporate borrowers look set to intensify, noted a report from S&P Global Ratings on the outlook for corporate credit. Read more.

Hotel Block for ABI's Annual Spring Meeting Closes on Monday!​​​

Make sure to register by Monday to receive the special rate and get in on the room block that ABI has secured from the JW Marriott for the Annual Spring Meeting in Washington, D.C., being held April 20-22! For more information and to register, please click here.

Student Loan Bills Are Set to Come Due, Adding Pressure on Younger Americans​​​

The expected restart of student loan repayments later this year could place additional pressure on younger borrowers, who are already falling behind on debt in an era of high inflation and rising interest rates, the Wall Street Journal reported. Americans in their 30s and younger are showing signs of financial strain. In the fourth quarter, they fell behind on credit card payments by 90 days or more at a rate similar to that in 2009, at the end of the financial crisis. Those borrowers also hold more than 54% of outstanding student loan debt, New York Federal Reserve data show. About 40 million borrowers hold $1.6 trillion in federal student debt, with many of them owing hundreds of dollars a month. Most haven’t made payments on that debt since March 2020, when the federal government halted payments at the start of the pandemic. The suspension has been extended several times by the Biden administration, but student loan payments are expected to restart this summer after the Supreme Court acts on litigation challenging a Biden plan for mass student-debt cancellation. Read more. (Subscription required.)

Little Relief for U.S. Consumers as Sticky Rents Keep Inflation Elevated​​​

U.S. consumer prices increased solidly in February as Americans faced persistently higher costs for rents, posing a dilemma for the Federal Reserve, whose fight against inflation has been complicated by the collapse of two regional banks, Reuters reported. Economists disagreed on whether the report from the Labor Department on Tuesday, which also showed underlying consumer prices rising by the most in five months, would compel the Fed to prioritize bringing inflation under control or focusing on the stability of the financial markets. Excluding the volatile food and energy components, the CPI increased 0.5%, the biggest gain since September, after climbing 0.4% in January. A 0.7% increase in owners' equivalent rent (OER), a measure of the amount homeowners would pay to rent or would earn from renting their property, was the main driver of the rise in the so-called core CPI. Last month's rise in the OER matched January's advance. With independent measures showing rents heading on a downward trajectory, some analysts worried that housing was overstating core CPI. The rent measures in the CPI tend to lag behind the independent gauges. Read more.

Americans Lost a Record $10.3 Billion to Online Scammers Last Year, FBI Says​​​

Americans lost more than $10 billion to online scammers last year, new government data show, the highest level since the Federal Bureau of Investigation began tracking losses in 2000. The FBI said its Internet Crime Complaint Center, or IC3, recorded more than 800,000 complaints in 2022, or more than 2,000 complaints a day, the Wall Street Journal reported. So-called phishing expeditions represented the largest number of scams, with more than 300,000 complaints, the FBI said in a report. Phishing usually involves the use of unsolicited email, text messages and phone calls, purportedly from a legitimate company, requesting personal or financial information. “Today’s cyber landscape has provided ample opportunities for criminals and adversaries to target U.S. networks, attack our critical infrastructure, hold our money and data for ransom, facilitate large-scale fraud schemes, and threaten our national security,” FBI Executive Assistant Director Timothy Langan said. The total losses to online scammers rose to $10.3 billion last year from $6.9 billion in 2021. However, the overall number of complaints recorded by IC3 fell slightly from 2021. In 2022, investment scam losses more than doubled from a year ago and were the most common scheme reported, according to the report. Cryptocurrency investment fraud rocketed to $2.57 billion last year from $907 million in 2021. (Subscription required.) Read more.

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