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Federal regulators on Sunday frantically worked to inoculate the financial system from bank runs and confusion by announcing protection for all depositors as well as taxpayers following sudden insolvencies at California’s Silicon Valley Bank on Friday and Signature Bank in New York on Sunday.

Analysts believe more banks may be vulnerable. The Federal Reserve stepped in to “make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors,” Treasury said. The department later described the new Fed offering as “a significant source of liquidity, collateralized by high-quality securities, to eliminate a banking institution’s need to quickly sell those securities in times of stress. This will bolster the capacity of the banking system to safeguard deposits.” 

CNBC: Regulators closed Signature Bank of New York under its state charter citing systemic risk. Signature was one of the main banks serving the cryptocurrency industry. It had a market value of $4.4 billion as of Friday, according to FactSet.

The extraordinary announcement by Treasury Secretary Janet Yellen that the government would lean on backstops in the law in the face of systemic risk to the financial system followed a weekend of intense discussions among officials at the department, the nation’s central bank and the Federal Deposit Insurance Corp. (FDIC). Regulators issued their Sunday statement jointly (The Washington Post). 

President Biden, who approved the regulators’ actions, will speak this morning from the White House about the banking situation.

An auction of SVB’s assets began Saturday night and ended Sunday afternoon in search of a healthy institution to buy the bank (The Wall Street Journal). Reuters reported that early interest in SBV from PNC Financial Group and Royal Bank of Canada cooled on Sunday as regulators sought bids. 

SVB depositors “will have access to all of their money starting Monday,” Yellen said in a written statement, clarifying that the support, which taps a fund supported by the nation’s banks, extends beyond deposits insured for up to $250,000 under the FDIC.

SVB of Santa Clara, Calif., held about $175 billion in customer deposits under the control of the FDIC. Its insolvency sent ripples of fear through the tech industry, Wall Street and Washington on Friday. 

What caused the failure? Bad bets made by the bank and the risk appetite of investors, which soured with rising Federal Reserve interest rates. The 40-year-old SVB, important to innovators and tech investors, had a significant number of large and uninsured depositors that withdrew funds amid economic turbulence (Reuters). 

▪ The New York Times: SVB was the largest bank failure since the financial crisis.

▪ Axios: Congress eyes next steps after dual bank failures.

The turmoil experienced inside at least two banks ups the ante behind the Fed’s strategy to continue raising interest rates to battle inflation. The Federal Open Market Committee next meets on March 21-22. House and Senate lawmakers in both parties last week during testimony by Fed Chairman Jerome Powell questioned the impact on the overall economy and on employment.

The impact on presidential politics was immediate. Former President Trump, through his 2024 campaign team, blamed “out of control Democrats,” some of whom blamed the Trump administration in reaction to the SVB headlines. Nikki Haley, also a GOP presidential candidate, said “the era of big government and corporate bailouts must end” (Fox News).

Early on Sunday, Yellen sought to calm public jitters, telling CBS’s “Face the Nation” that the FDIC worked to ensure that deposits at the California bank are accessible to account holders who need their funds, including to make payroll this week (CBS transcript HERE). However, she said the government would not bail out banks akin to the financial crisis of 2008-2009. “We’re not going to do that again. But we are concerned about depositors and are focused on trying to meet their needs,” she added.

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“We want to make sure that the troubles that exist at one bank don’t create contagion to others that are sound,” she said. “And the goal always is supervision and regulation to make sure that contagion can’t occur.” 

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▪ Politico: “There’s going to be more.” How Washington is bracing for bank fallout.

▪ Vox: Tech’s favorite bank just failed. What does that mean for you?

▪ CNBC: Silicon Valley Bank employees received bonuses hours before last week’s takeover. 

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Related Articles

▪ Biden begins a three-day swing to California and Nevada. He meets today in San Diego with the prime ministers of the United Kingdom and Australia, discusses gun violence in Monterey Park, Calif., on Tuesday, and will headline a Las Vegas event on Wednesday focused on his ambition to lower prescription drug costs. 

▪ The Hill: Republicans brace for the 2024 presidential campaign of Sen. Tim Scott (R-S.C.). 

▪ Politico: Republicans release top targets of Democratic-held House seats in 2024.

▪ Seeking Alpha: Tuesday’s Consumer Price Index report may deliver a huge surprise to the market.

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LEADING THE DAY

➤ ADMINISTRATION

The Biden administration on Sunday announced actions aimed at limiting oil and gas drilling in Alaska as it is also expected to soon approve a controversial 30-year oil project. The White House is blocking 2.8 million acres in the Arctic Ocean from oil and gas drilling and will also propose additional protections for 13 million acres of federally owned land in Alaska that have significant natural and historic value.

The protections come on the heels of approval of the Willow Project, which would allow ConocoPhillips to extract as many as 629 million barrels of oil from an area known as the National Petroleum Reserve — Alaska over a 30-year period. The project is highly controversial among environmentalists, who point to the oil’s anticipated contribution to climate change, as it is estimated to contribute 278,000 metric tons of carbon dioxide to the atmosphere over the project’s 30-year lifespan (The Hill and The New York Times).

The $5 trillion in tax increases in Biden’s budget is the biggest such package — in dollar terms — ever proposed by a U.S. president and will frame the 2024 election largely as a debate over economic and wealth inequality in the United States, writes The Hill’s Alexander Bolton. The president has pledged not to raise any taxes on people earning less than $400,000, but getting that message to stick with voters will be a challenge. Biden’s emphasis on raising taxes is a strategy to shift the entire debate over the federal deficit away from proposed cuts to discretionary spending, which the president and Democratic allies in Congress see as completely unacceptable to their party’s base.  

▪ The Guardian: Progressives praise Biden for tax hike plan — but Pentagon budget stirs anger.

▪ Vox: Biden’s billionaire tax proposal, explained.

▪ Fortune: Biden proposes eliminating real estate investor tax break, while Republicans discuss cuts to housing programs.

The U.S.-Mexico relationship is at a quarter-century nadir with nationalistic rhetoric emanating from both sides of the border, even as the two countries continue on a path toward economic integration. As The Hill’s Rafael Bernal reports, the kidnapping of four American health care tourists in Mexico, which resulted in the death of two Americans, rattled an already-shaky political detente across the Rio Grande, setting off tit-for-tat accusations between GOP hawks in Congress and Mexican President Andrés Manuel López Obrador. 

The saber rattling was reminiscent of bilateral relations throughout much of the 20th century, where mutual distrust reigned in an asymmetric relationship that former U.S. Ambassador to Mexico Jeffrey Davidow dubbed “the bear and the porcupine.” 

➤ INTERNATIONAL 

British Prime Minister Rishi Sunak will meet with Biden and Australian Prime Minister Anthony Albanese in San Diego today to finalize details of a submarine pact aimed at countering China. The three countries launched the plan in 2021 as part of efforts to stymie China’s growing military footprint in the Indo-Pacific region. In San Diego, the three leaders are expected to decide next steps for Australia to receive nuclear-powered submarines (Reuters). 

Sunak on Sunday told NBC’s Lester Holt in his first U.S. television interview that a more assertive China poses a “systemic challenge” to the global order. “The behavior that we’ve seen in China over recent times is concerning,” Sunak said in the interview, which airs tonight, adding that China is “acting in a more authoritarian fashion at home” and is “more assertive overseas” (NBC News).

Meanwhile, Sunak is facing tension at home, after the U.K. on Friday agreed to fund additional policing of the English Channel and a new migrant detention center in northern France. The deal builds on previous agreements between the two countries and marks the latest step by Britain’s conservative government to combat immigration.

The number of migrants using the channel to reach the U.K. exploded in 2020, climbing from just 300 people to 8,500 in just two years. In 2022, that number spiked sharply with 45,000 arrivals. In response, not only is the government stepping up cooperation with France on immigration, but British Home Secretary Suella Braverman this week introduced a new bill that would refuse the right to asylum to people arriving via irregular migration. Her bill has been widely criticized as racist and legally fraught, with both the United Nations refugee agency and the European court of human rights objecting on human rights grounds (Vox and The Guardian).

▪ Reuters: U.K.’s prime minister to invite Biden to Northern Ireland in April to mark the 25th anniversary of the Good Friday Agreement.

▪ NBC News: How a tweet by a star sports pundit became a battle in the culture war engulfing the U.K. Gary Lineker said the government’s language about asylum was “not dissimilar to that used by Germany in the ’30s.”

▪ Reuters: U.K. approves increased submarine-related exports to Taiwan, risking angering China.

▪ The Wall Street Journal: How Beijing boxed America out of the South China Sea.

Saudi Arabia’s surprise agreement to renew diplomatic relations with Iran marks a significant blow to Israeli Prime Minister Benjamin Netanyahu’s key foreign-policy goal of creating a regional alliance built around isolating Iran.

Israel views Iran as its primary global foe due to its support for proxy militias across the Middle East that target Israel, such as Lebanon-based Hezbollah and Gaza-based Hamas. Netanyahu, meanwhile, has long led the charge to garner international support for isolating Iran and halting its efforts to acquire nuclear weapons (The Wall Street Journal). 

▪ The Hill: China-brokered Iran-Saudi deal raises red flags for the U.S.

▪ The New York Times: The Saudi-Iran pact could transform the Middle East. Both countries as well as the broader region have much to gain from the reset in relations — if the agreement truly holds.

Chinese President Xi Jinping is planning to travel to Russia to meet with his counterpart, Vladimir Putin, as soon as next week, sources told Reuters. The visit would come sooner than expected; the plans come as China has been offering to broker peace in Ukraine, an effort that has been met with skepticism by Western leaders given Beijing’s diplomatic support for Moscow.

Months after Russian soldiers were driven out of Kupiansk in the Kharkiv region of northeast Ukraine, authorities are stepping up efforts to evacuate Ukrainian civilians amid relentless Russian shelling. Moscow’s forces have made it impossible for Ukraine to restore everyday life in the reclaimed areas as Russian troops have continued to pound parts of the region close to the front lines with artillery (The New York Times). Ukrainian forces faced relentless Russian attacks on Bakhmut today, with both sides reporting mounting enemy casualties as they battled across a small river that bisects the ruined town and now marks the front line (Reuters). 

▪ The Hill: Congress wants to label the Wagner Group as a terrorist organization. Why is Biden opposed? 

▪ The Economist: How Ukraine tamed Russian missile barrages and kept the lights on.

▪ CNN: Russian wives and mothers call on Putin to stop sending mobilized men “to their slaughter.”

▪ The Washington Post: Defending Ukraine’s “highway of life” — the last road out of Bakhmut.

▪ The New York Times: The war in Ukraine puts centuries of Swiss neutrality to the test.

New U.K. intelligence shows that while Russian military casualties are high in Ukraine, those soldiers aren’t coming from Moscow and St. Petersburg. By and large, they’re being recruited heavily from ethnic minorities and the countryside (EuroMaidan Press).

▪ Reuters: Why Canada asylum seekers are using unofficial U.S. border crossings.

▪ Reuters: India’s government opposes recognizing same-sex marriage.

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IN FOCUS/SHARP TAKES

➤ CONGRESS

The working relationship between Speaker Kevin McCarthy (R-Calif.) and House Minority Leader Hakeem Jeffries (D-N.Y.) is notably different than that the top House Republican had with former Speaker Nancy Pelosi (D-Calif.), write The Hill’s Emily Brooks and Mychael Schnell, most simply, in that they have a working relationship at all. 

Pelosi once called McCarthy a “moron” and McCarthy once joked that it would be hard not to hit Pelosi on the head as he took the Speaker’s gavel from her. House Republicans frequently complained that they were left out of the loop on legislation and top negotiations. But now, Jefferies and McCarthy are frequently seen huddling off the House floor. McCarthy and other top Republicans have publicly thanked Jeffries for working with them on different issues, such as the China select committee and a members’ briefing by the CBO director. 

Absences in the Senate are becoming an issue for Democrats, leaving them with a fragile majority, The Hill’s Al Weaver reports. Due to health issues, Senate Democrats have been without Sens. John Fetterman (Pa.) and Dianne Feinstein (Calif.) in recent weeks, creating a 49-49 split in the chamber that has forced members of the conference to only bring up votes that they know have bipartisan support and caused problems at the committee level.

“It’s the reality. When you’re 51-49, every senator every day is decisive,” Sen. Dick Durbin (Ill.), the No. 2 Senate Democrat, told The Hill. “This is the reality of life in the Senate.” 

Republicans, meanwhile, are using their new House majority and the Democrats’ slim majorities in the Senate to target Biden administration regulations, writes The Hill’s Rachel Frazin. While Biden has the ability to veto their resolutions of disapproval and leave his administration’s work intact, taking these votes does give the GOP an additional platform to address the issues — specifically what they’ve described as burdens on industry and “woke” financial policy — and to put vulnerable Democrats on the record. 

▪ The Hill: Democrats seek to pivot toward the center on crime.

▪ The Washington Post: In an unusual move, judge delays public notice of abortion-pill hearing.

▪ The Hill: Republicans race to outdo each other on education policy.

▪ PBS: Sen. Jon Tester (D-Mont.) discusses looming battles in Congress.

➤ MEDIA

Fox News’s reputation is being strained by the drip-drip of leaked texts and emails from a massive $1.6 billion defamation lawsuit it is facing from Dominion Voting Systems — yet the stakes may be higher than just the financial fallout. Fox for years billed itself as a straight-news network featuring opinion programming presented at night, but the suit has put the spotlight on internal messages that raise serious questions about whether hosts were more interested in telling their audience what they wanted to hear than in getting to the truth. 

“The revelations of the Dominion court filings have only verified what most journalists and non-Fox News viewers has known for years: lies, innuendos, false reporting in the most obvious and damaging circumstances have been par for the course,” Joe Saltzman, a professor of journalism and communication director at the Image of the Journalist in Popular Culture, a project of the Norman Lear Center, told The Hill.

But it does not appear that Fox viewers are being turned off by the lawsuit, which has continued to generate headlines even as Fox host Tucker Carlson last week came under fire for airing footage of the Jan. 6, 2021, attack on the Capitol in a way that suggested reaction to the incident had been overblown (The Hill).

▪ CNN: Carlson’s airing of security video spills into criminal court cases involving Jan. 6 defendants. Although defense attorneys argue new and exculpatory information, prosecutors last week said that “nearly all” of the Capitol security footage Carlson played was previously available to attorneys representing riot defendants. 

▪ The Washington Post: What key players at Fox News said about the network and its viewers.

▪ The New York Times: Fox’s PR woes may not directly translate to legal ones.

Hyper-partisan politicians reaped four times the press coverage of bipartisan colleagues around the 2022 midterms, according to a study by a George Mason University think-tank and Starts With Us, an organization looking to overcome partisan division in America. As The Hill’s Daniel de Visé reports, even The New York Times heavily favored partisan flamethrowers over collaborative voices in government. Rep. Marjorie Taylor Greene (R-Ga.), the most partisan representative, received 10 times the coverage of Rep. Don Bacon (R-Neb.), her least partisan GOP colleague — and a name that, for many, likely won’t ring a bell. 

Jimmy Finkelstein, The Hill’s former owner, is launching The Messenger in May — a news site that will cover politics, business, entertainment and sports. Financed with $50 million in investor money, the site will start with at least 175 journalists based in New York, Washington and Los Angeles, according to executives. It will mark the latest venture in a long journalism career for Finkelstein, 74, who once ran and was a part-owner of The Hollywood Reporter. The Messenger’s goal is to create an alternative to a national news media that Finkelstein says has come under the sway of partisan influences, he told The New York Times.

“I remember an era where you’d sit by the TV, when I was a kid with my family, and we’d all watch ‘60 Minutes’ together,” he said. “Or we all couldn’t wait to get the next issue of Vanity Fair or whatever other magazine you were interested in. Those days are over, and the fact is, I want to help bring those days back.”

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OPINION

■ With SVB’s demise, elevated bond yields are revealing some nasty surprises. More are likely, by Bloomberg Opinion columnist Marcus Ashworth. https://bloom.bg/429vhVC

■ I know something about perseverance, but not like the women on the front lines of crisis, by Michelle Yeoh, Oscar recipient and United Nations Development Program goodwill ambassador, guest essayist, The New York Times. https://nyti.ms/3TiwS7y 

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WHERE AND WHEN

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The House will convene on Tuesday at 4 p.m.

The Senate meets Tuesday at 3 p.m. and will resume consideration of the nomination of Brent Neiman to be a deputy under secretary of the Treasury. 

The president at 8 a.m. will receive the President’s Daily Brief at the White House. Biden will speak from the Roosevelt Room this morning about the banking crisis. He will depart the South Lawn for San Diego, Calif., at 9:50 a.m. He will arrive in California and hold a trilateral meeting at 11:50 a.m. PT with British Prime Minister Rishi Sunak and Australian Prime Minister Anthony Albanese at a nearby hotel to discuss a nuclear submarine partnership (The Washington Post). The president will speak about the alliance from Naval Base Point Loma at 2 p.m. PT. He will meet individually with Sunak at 2:45 p.m. PT and with Albanese at 4 p.m. PT. Biden will depart for Rancho Santa Fe, Calif., where he will headline a Democratic National Committee fundraiser at 6:45 p.m. PT. Biden will travel back to San Diego where he will remain overnight.    

Vice President Harris will be in Washington and has no public schedule.

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ELSEWHERE

➤ TECH

The rise of AI and its potential to disrupt the legal industry has been forecast multiple times before. But the rise of the latest wave of generative AI tools, with ChatGPT at its forefront, has those within the industry more convinced than ever. Experts say Generative AI, which uses large datasets to learn to generate pictures or text that appear natural, could be a good fit for the legal industry, which relies heavily on standardized documents and precedents (WIRED).

“Legal applications such as contract, conveyancing, or license generation are actually a relatively safe area in which to employ ChatGPT and its cousins,” said Lilian Edwards, professor of law, innovation, and society at Newcastle University.

▪ Fortune: OpenAI’s tech is rapidly being added to a new type of software that could upend how law is practiced and paid for, and how young lawyers learn the ropes.

▪ The Economist: Lessons from finance’s experience with artificial intelligence.

In late 2022, four University of Minnesota Law School professors agreed to have artificial-intelligence-generated answers from ChatGPT mixed into their anonymous grading system. The artificial intelligence (AI) bot generated answers that averaged a C+ in most courses — a passing grade (Minnesota Lawyer and KARE 11).

▪ Car and Driver: Odometer tampering on used cars is rolling higher these days. Here’s a troubling statistic: there’s about a 3.5 percent chance that a car will have its odometer messed with in the first 11 years of its life.

▪ Business Insider: Ford wants to allow your car to lock you out — and even drive itself to an impound lot or scrapyard — if you miss payments.

➤ PANDEMIC & HEALTH

The Food and Drug Administration approved a Pfizer nasal spray for treatment of migraines that uses a different therapy from other nasal products on the market for severe headache pain. According to clinical trial results published in the journal Lancet Neurology, the fast-acting treatment, which will be sold as Zavzpret, performed better than a placebo in relieving pain and patients’ most bothersome symptoms (The New York Times).

Researchers have confirmed links between the genes that predict a woman’s age at first menstruation and menopause, age of first birth and number of live births with their risk of cardiovascular disease, strokes and other heart-related conditions in a study published last month in the Journal of the American Heart Association. Researchers say there’s no need to worry if you got your period or had your first child at a young age. Rather, the data adds sex-specific factors to the list of variables that doctors should consider and also means that the risk factors that can be modified should be better monitored (The Washington Post).

▪ The Washington Post: Among the medical experts at the forefront of dealing with the coronavirus that causes COVID-19, everyday life has become more normal. All have been vaccinated and boosted and many have had COVID-19 too, a combination that seems to provide more durable protection.

▪ San Francisco Chronicle: Is it time for another COVID-19 booster shot? Health officials aren’t sure.

Information about the availability of COVID-19 vaccine and booster shots can be found at Vaccines.gov. 

Current U.S. COVID-19 deaths are 1,862 for the most recent week, according to the Centers for Disease Control and Prevention. (Data is reported on Fridays.)

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THE CLOSER

And finally … 🎥 “Everything Everywhere All at Once” was everywhere all at once during the 95th Academy Awards, taking home seven Oscars, including best picture, best directing and best original screenplay. The offbeat metaverse-hopping film also took home statuettes for best actress and best supporting actor and actress, with stars Michelle Yeoh, Ke Huy Quan and Jamie Lee Curtis honored for their performances (The New York Times).

The best actor award went to Brendan Fraser for his Hollywood-style career comeback in “The Whale.” “So this is what the multiverse looks like!” he proclaimed in his acceptance speech, thanking director Darren Aronofsky for “throwing me a creative lifeline” (The Los Angeles Times).

Yeoh, 60, during her speech, enthused, “Ladies, don’t let anybody ever tell you that you are ever past your prime,” as she became the first Asian woman to receive the Oscar. “Never give up.” 

Quan’s win marked a comeback for the one-time child star who gave up acting for two decades (Reuters). Curtis, the daughter of Tony Curtis and Janet Leigh, referenced her pedigree with emotion during her acceptance speech. “My mother and my father were both nominated for Oscars in different categories. And I just won an Oscar,” she said (CBS News). 

Variety has the full list of honorees from last night’s festivities, and Vox rounded up five winners — among them a donkey — and four losers — hint: anyone looking for drama — of the night.

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