Tag:Banking
Growing Banking Crisis: Silicon Valley Bank Failure
Founded in 1983, Silicon Valley Bank (SVB) is a midsize California-based lender that shook the foundation of the entire global financial system. Regulators closed SVB on March 10, making it the largest bank failure since the 2008 financial crisis and the second largest in U.S. history. While SVB offered various services from standard checking accounts to loans, it was primarily home to venture capitalists in the tech industry. Therefore, the majority of the corporate deposits were larger than the Federal Deposit Insurance Corporation’s (FDIC) $250,000 insurance limit, leaving over $150 billion in uninsured deposits at the end of 2022. The sudden collapse caused a frenzy leaving companies and investors vulnerable having already experienced mass layoffs in the tech industry.
The Role of Regulators During the Collapse of Silicon Valley Bank
On March 10th, 2023, Silicon Valley Bank (SVB) collapsed practically overnight, followed only two days later by the collapse of Signature Bank. Prior to its collapse, SVB uniquely served a single category of customers – start-ups. As the largest bank failure since the 2008 financial crisis, SVB’s bankruptcy resulted in significant consequences for the tech industry. While SVB has since been acquired by First Citizens BancShares, the House Financial Services Committee is currently seeking answers from both regulators and SVB executives about how such a failure could have occurred and how to prevent it from happening again.
Proposal to Change TULA Late Fee Maximum on Credit Cards: Is it Beneficial or Burdensome?
Megan Aldworth Associate Editor Loyola University Chicago School of Law, JD 2023 The Truth in Lending Act (TILA), established 1968, is aimed to protect consumers against unfair credit practices and billing by lenders. Under TILA, lenders must provide consumers (borrowers) with information that allows them to compare loan terms given by various lending institutions. …
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Deutsche Bank Reorganization Results in New Compliance Chief
Deutsche Bank, the multinational investment banking and financial services company, will name Laura Padovani as its new Chief Compliance Officer. The move comes as part of a broader reorganization in the company’s compliance division, taking place in the aftermath of regulatory investigations in the United States and Germany. The regulatory investigations of Deutsche Bank over the last several years concern the organization’s questionable practices as it relates to money laundering and other offenses. The investigations also involve massively high-profile individuals, such as Jeffrey Epstein and Donald Trump.
Coinbase Global Inc. Settlement Raises More Questions for Financial Regulators
On January 4th, 2023, the New York State Department of Financial Services made public that a $100 million settlement with the cryptocurrency exchange Coinbase Global Inc. (Coinbase) has been agreed to. The settlement follows an enforcement action imposed this past August aiming to regulate cryptocurrencies. With a lot of discussion happening given the recent collapse of FTX and anti-money laundering violations by Robinhood Markets, this action begs the question: should the digital currency industry be regulated nationwide and, if so, what should these regulatory agendas look like?
Financial Institutions and the Financing of Emissions: How Firms are Addressing the Climate Emergency Through Net Zero Emission Initiatives.
Megan Aldworth Associate Editor Loyola University Chicago School of Law, JD 2023 While our world economy is driven by commerce, over the last few decades, it has become apparent that along with driving the economy, commerce is driving our planet into a state of emergency. According to the UN Secretary-General, “the climate emergency is …
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Could Anna Delvey Have Gotten Away with It? Bank Vetting for a $22 million Loan
Anna Delvey, the alleged scammer who attempted to obtain financial backing of anywhere from $22 million to $40 million in loans, is once again the subject of much debate due to the new Netflix series chronicling her alleged crimes and other actions. The question this article attempts to answer is whether she ever had a chance of realizing her goal of creating an exclusive, members-only, art club much like Soho House. This question hinges on whether she ever had a real chance to secure the funding to make it possible.
From Beans to Banking
Starbucks. What comes to mind? Expensive coffee in a nice atmosphere? Mermaids? A warm pumpkin spice latte? Perhaps. However, the words “billion-dollar bank” likely do not cross anyone’s mind. As wild as it seems, the huge coffee company actually has $1.5 billion in assets, an amount larger than eighty-five percent of the banks in the United States. Not only is Starbucks flush with cash, but, unlike actual banks, it can use this money to invest in other ventures, invest in the marketplace, or expand its business. This begs the question, is Starbucks merely a coffee company or will it join the ranks of Bank of America and Citibank?
An Update on the Gamestop Frenzy: Calls for Regulation and a Congressional Hearing
Cora Leeuwenburg Associate Editor Loyola University of Chicago School of Law, JD 2022 The controversy surrounding the unprecedented movement by retail investors and Gamestop has not died down in the last month following the stock’s meteoric rise in price and dramatic fall. The wildly volatile stock has lost hedge funds millions and resulted in …
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One of Wall Street’s Hottest Trends: The SPAC
SPACs have been around for decades and often existed as last resorts for small companies that would have otherwise had trouble raising money on the open market. But they’ve recently become more prevalent because of the extreme market volatility caused, in part, by the global pandemic.
While many companies chose to postpone their IPOs due to the pandemic, others chose the alternate route to an IPO by merging with a SPAC. A SPAC merger allows a company to go public and get a capital influx more quickly than it would have with a conventional IPO.