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Fed bosses steered examiners away from probing problems like SVB
All through the period when trouble was brewing at Silicon Valley Bank, the Federal Reserve was taking steps that effectively discouraged examiners from doing much about it. That’s the picture of the Fed’s supervisory culture and the way it evolved in recent years. Following the deregulatory winds blowing from the White House and Congress, regulators ended up having to treat SVB’s failure as a systemic event. Now the Fed has to explain why it didn’t take preventive action. That starts with the publication of a report by Vice Chair for Supervision Michael Barr last Friday. Barr testified last month that Fed supervisors knew about risks at SVB, and had the tools to address them. (Bloomberg Industries - Finance | Apr 27)
Asset management chiefs — changing of the guard
A new generation of asset management chief executives has called time on a “golden decade” for their industry, warning that it is becoming increasingly difficult to navigate the competing pressures of markets, regulators, and politicians. After a decade of zero rates and quantitative easing that pushed equity markets to record highs, investors are grappling with the challenge of a regime change towards both higher inflation and higher interest rates. (Financial Times | Apr 25)
SEC’s climate-disclosure rule isn't here, but it may as well be, many businesses say
A sweeping US climate disclosure rule isn’t yet in place, and it is sure to face legal challenges when it is, but many companies have begun assessing greenhouse-gas emissions from parties in their supply chain as if it were. The Securities and Exchange Commission’s rule — which would require public companies to report climate-related risks and emissions data, including so-called Scope 3 emissions that come from a company’s supply chain — is expected to be brought in soon. The agency issued the proposal in March 2022 as President Biden’s efforts to address global warming through legislation stalled in Congress. (The Wall Street Journal | Apr 25)
AI startups raise $300 million to fight the next big bank run
Shawn Eib was on the case as soon as customers started pulling billions of dollars from Silicon Valley Bank. At home in Virginia, he began scrolling on his laptop through the internet’s dark corners. Dubious sources, including a website the US military accuses of promoting Russian propaganda, fanned the panic. Eib, a 38-year-old former IT administrator at Loyola University New Orleans, is an online disinformation detective for hire. (Bloomberg Technology | Apr 24)
New Wall Street ‘fear gauge’ to track short-term market swings
The Vix — the volatility index popularly known as “Wall Street’s fear gauge” — is going through its biggest shake-up in years with the creation of a new version that will track expectations of short-term market swings. The 1-day Volatility Index — or Vix1d — which was launched by exchange group Cboe on Monday, is a response to a recent transformation in derivatives markets that had sparked concerns about the effectiveness and relevance of the original Vix. (Financial Times | Apr 23) see also One-day Vix shows market's receding fear of inflation data, Fed decisions (Bloomberg Markets | Mar 27)
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