USA
Another atmospheric river pounds California, 27K to evacuate
The latest powerful atmospheric river to drench California put nearly 27,000 people under evacuation orders Tuesday due to flooding and landslide risks. On the central coast, workers hauled truckloads of rocks to plug a broken river levee amid steady rain and wind.
Damaging winds with gusts topping 70 mph (113 kph) blew out windows, and there were numerous reports of falling trees. Power outages hit more than 330,000 utility customers in northern and central areas, according to poweroutage.us, which tracks outages nationwide.
Crews raced to stabilize the Pajaro River's ruptured levee Tuesday, placing rocks and boulders to finish filling the gap that opened late Friday, about 70 miles (110 kilometers) south of San Francisco. Workers will then raise that portion's elevation to match the rest of the levee over the next few weeks to make it impermeable, officials said.
Tuesday's storm initially spread light to moderate rain over the state's north and center. But the National Weather Service said the storm was moving faster than expected and that most of the precipitation would shift southward.
Also Read: Snow, rain slam California as Michigan suffers without power
“Even a small amount of rain could potentially have larger impacts,” Shaunna Murray of the Monterey County Water Resources Agency said Tuesday during a news conference.
Powerful winds damaged windows in a San Francisco high-rise, causing glass to rain down and forcing evacuations from the building in the financial district. No injuries were immediately reported. A gust of 74 mph (119 kph) was recorded at the city's airport, the weather service said.
So far this winter, California has been battered by 10 previous atmospheric rivers — long plumes of moisture from the Pacific Ocean — as well as powerful storms fueled by arctic air that produced blizzard conditions. On the East Coast, the start of a winter storm with heavy, wet snow caused a plane to slide off a runway and led to hundreds of school closings, canceled flights and thousands of power outages Tuesday.
Along the Southern California coast, evacuation orders began at 8 a.m. in Santa Barbara County for several areas burned by wildfires in recent years, creating increased risk of flash floods and debris flows.
The storm caused emergency declarations for 40 counties.
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In addition to evacuation orders, more than 71,600 people were under evacuation warnings and 546 people were in shelters by Tuesday morning, said Brian Ferguson, spokesperson for the California Office of Emergency Services. Updated figures were not immediately available.
More flooding was expected on the central coast, where the Pajaro River swelled with runoff from last week's atmospheric river. Authorities had not received reports of any deaths or missing persons related to the storm as of Monday.
The levee breach grew to at least 400 feet (120 meters) since the failure late Friday, officials said. A roughly 20-foot (6.10-meter) gap remained Tuesday afternoon.
Pajaro, an unincorporated community known for its strawberry crops, was largely flooded. More than 8,500 people were told to evacuate, and nearly 250 people have been rescued by first responders since Friday.
Some residents of the largely Latino farmworker community stayed. One shelter was already full by midday Tuesday, and officials were forced to open two more to accommodate the evacuees.
“We live seven houses away from the river and the water level was six feet high, seven probably,” said evacuee Andres Garcia. “So we probably lost everything.”
A second 100-foot (30-meter) breach in the levee opened closer to the Pacific coast, providing a “relief valve” for floodwaters to recede near the mouth of the river, officials said at a news conference Monday.
Built in the late 1940s to provide flood protection, the levee was a known risk for decades and had several breaches in the 1990s. Emergency repairs to a section of the berm were undertaken in January. A $400 million rebuild is set to begin in the next few years.
“We had so many years of drought and they could’ve fixed the levee way back and they didn’t," said Garcia, the Pajaro evacuee. "This is the second time it happened. Back in 1995, same thing. We lost everything.”
The river separates Santa Cruz and Monterey counties. Highway 1, a main link between the two counties, was closed along with several other roads.
Washington reacts on the fly to Silicon Valley Bank failure
After the sudden collapse of Silicon Valley Bank, California Democratic Rep. Maxine Waters started furiously working the phones to find out what was going on with the failed lender — and what would happen to its panicked depositors.
Waters, former chair of the House Financial Services Committee, had her doubts that another bank would step up as a savior and buy the defunct institution.
“Banks don’t just wake up and say: ‘Oh, there’s a problem with another significant bank and they’ve collapsed. Let’s just take it over,’’’ she said.
So began a frenetic weekend of nonstop briefings with regulators, lawmakers, administration officials and President Joe Biden himself about how to handle the demise of the nation's 16th-biggest bank and a go-to financial institution for tech entrepreneurs. At the core of the problem was tens of billions of dollars — including money companies needed to meet payrolls — sitting in Silicon Valley Bank accounts that were not protected by federal deposit insurance that only goes up to $250,000.
Also Read: To avert a banking crisis, HSBC to take over UK arm of failed Silicon Valley Bank
Something needed to be done, federal officials agreed, before Asian stock markets opened Sunday evening and other banks faced the potential for waves of panicked withdrawals Monday morning.
“We were racing against the clock,” said Bharat Ramamurti, deputy director of the National Economic Council.
Waters was right to be skeptical about a sale being closed on the fly. The bank’s size — $210 billion in assets — and complexity made it difficult to quickly wrap up a deal.
Federal Deposit Insurance Corp. officials told Republican senators Monday that they received offers for the bank over the weekend but didn’t have time to close; they said they could put Silicon Valley Bank up for auction again, according to a person familiar with the conversation who requested anonymity to discuss a private call.
Also Read: Asian shares mostly sink on jitters after US bank failure
But another plan was coming together. On Sunday, Waters was on the phone with Federal Reserve Chair Jerome Powell, who briefed her on how it would work. The Fed was creating a new emergency program that allowed it to lend directly to banks so they could cover withdrawals without having to sell off assets to raise cash. The idea was to reassure depositors and prevent bank runs at other institutions.
By Sunday night, the Treasury Department, the Fed and the FDIC said the federal government would protect all deposits — even those that exceeded the FDIC’s $250,000 limit.
“It’s miraculous, really,’’ Waters said, calling it "an example of what working together and what government can do with the right people in charge.’’
The praise was not unanimous.
In the call Monday with officials from the FDIC and the Treasury Department, Republican senators expressed concern that millionaire Silicon Valley depositors were being rescued — and the cost might be passed onto community banks in their home states in the form of higher assessments for federal deposit insurance, according to the person familiar with the discussion.
The trouble started last Wednesday when Silicon Valley Bank said it needed to raise $2.25 billion to shore up its finances after suffering big losses on its bond portfolio, which had plunged in value as the Federal Reserve raised interest rates. On Thursday, depositors rushed to pull their money out. An old-fashioned bank run was underway.
At a House Ways and Means committee hearing on Friday morning, Treasury Secretary Janet Yellen said her agency was “monitoring very carefully” developments related to the bank. “When banks experience financial losses, it is and should be a matter of concern,” she told lawmakers.
Biden was briefed about the situation on Friday morning, according to a White House official who spoke on condition of anonymity to discuss private conversations. Then he celebrated an unexpectedly strong February jobs report, met with the leader of the European Union and jetted off to Wilmington, Delaware, to mark his grandson’s 17th birthday.
His weekend would soon be consumed with phone and video calls focused on preventing a nationwide banking crisis. Regulators were so concerned, they didn't even wait until the close of business on Friday — the usual practice — to shut the bank down; they closed the doors during working hours.
It was the second-biggest bank failure in U.S. history and trickier than most: An astonishing 94% of Silicon Valley Bank's deposits — including large cash holdings by tech startups — were uninsured by the FDIC.
As administration officials and regulators worked through the weekend, Biden expressed concern about small businesses and their employees who relied on accounts that were now in jeopardy, the White House official said.
There were also fears, the official said, that if Silicon Valley Bank depositors lost money, others would lose faith in the banking system and rush to withdraw money on Monday, causing a cascading crisis.
Massachusetts Democratic Rep. Jake Auchincloss’ phone had started lighting up even before the weekend. Silicon Valley Bank had eight branches and offices in his home state, and word of its failure was traveling fast on social media.
“The panic within Massachusetts industry and nonprofit sectors became acute within a matter of hours,’’ Auchincloss said. “My phone started just exploding.’’
Silicon Valley Bank wouldn't be the only bank to collapse. By Sunday evening, federal officials announced that New York-based Signature Bank, a major lender to New York landlords, had also failed and was being seized.
The government's plan to cover deposits over $250,000 ended up applying to Signature's customers as well.
In a statement Sunday, Biden said, "The American people and American businesses can have confidence that their bank deposits will be there when they need them.''
On Monday, Powell announced that the Fed would review its supervision of Silicon Valley Bank to understand what went wrong. The review will be conducted by Michael Barr, the Fed vice chair who oversees bank oversight, and be released May 1.
Now Biden and lawmakers are calling for legislative changes to tighten financial rules on regional banks, perhaps restoring parts of the Dodd-Frank law that tightened bank regulation after the 2008-2009 financial crisis but were rolled back five years ago.
Waters said it might be time to raise deposit insurance thresholds. "We can't just say this is an emergency and forget about it,'' she said.
Biden says Jimmy Carter has asked him to deliver his eulogy
President Joe Biden says he plans to deliver the eulogy at the funeral of former President Jimmy Carter, who remains under hospice care at his home in south Georgia.
Biden told donors at a California fundraiser Monday evening about his “recent” visit to see the 39th president, whom he has known since he was a young Delaware senator supporting Carter’s 1976 presidential campaign.
“He asked me to do his eulogy,” Biden said, before stopping himself from saying more. “Excuse me, I shouldn’t say that.”
Carter, who at 98 is the longest-lived U.S. president, announced Feb. 18 that he would spend his remaining days at home receiving end-of-life care, forgoing further medical intervention after a series of short hospital stays. The Carter Center in Atlanta and the former president’s family members have not disclosed details of his condition, though Biden alluded to Carter’s 2015 cancer diagnosis and subsequent recovery.
“I spent time with Jimmy Carter and it’s finally caught up with him, but they found a way to keep him going for a lot longer than they anticipated because they found a breakthrough,” Biden said in Rancho Sante Fe, California.
Biden, 80, and first lady Jill Biden visited Carter and his wife, Rosalynn, who is now 95, at their home in Plains, Georgia, a few months after Biden took office in 2021. Biden was the first U.S. senator to endorse Carter’s 1976 presidential bid, breaking from the Washington establishment that Carter — then a former one-time Georgia governor — shocked by winning the Democratic nomination.
Biden’s presidency represents a turnabout, of sorts, for Carter’s political standing. He served just one term and lost in a landslide to Republican Ronald Reagan in 1980, prompting top Democrats to keep their distance, at least publicly, for decades after he left the White House.
Presidents Bill Clinton and Barack Obama did not have close relationships with Carter. And the longshot presidential candidates who sometimes ventured to Plains over the years typically did so privately.
But as the Carters’ global humanitarian work and advocacy of democracy via The Carter Center garnered new respect, Democratic politicians began publicly circulating back to south Georgia ahead of the 2020 election cycle. And with Biden’s election, Carter again found a genuine friend and ally in the Oval Office.
California court rules for Uber, Lyft in ride-hailing case
App-based ride hailing and delivery companies like Uber and Lyft can continue to treat their California drivers as independent contractors, a state appeals court ruled Monday, allowing the tech giants to bypass other state laws requiring worker protections and benefits.
The ruling mostly upholds a voter-approved law, called Proposition 22, that said drivers for companies like Uber and Lyft are independent contractors and are not entitled to benefits like paid sick leave and unemployment insurance. A lower court ruling in 2021 had said Proposition 22 was illegal, but Monday’s ruling reversed that decision.
“Today’s ruling is a victory for app-based workers and the millions of Californians who voted for Prop 22,” said Tony West, Uber’s chief legal officer. ”We’re pleased that the court respected the will of the people.”
The ruling is a defeat for labor unions and their allies in the state Legislature who passed a law in 2019 requiring companies like Uber and Lyft to treat their drivers as employees.
“Today the Appeals Court chose to stand with powerful corporations over working people, allowing companies to buy their way out of our state’s labor laws and undermine our state constitution,” said Lorena Gonzalez Fletcher, leader of the California Labor Federation and a former state assemblywoman who authored the 2019 law. “Our system is broken. It would be an understatement to say we are disappointed by this decision.”
READ: Does Uber in Bangladesh offer hassle-free service?
The ruling wasn’t a complete defeat for labor unions, as the court ruled the companies could not stop their drivers from joining a labor union and collectively bargain for better working conditions, said Mike Robinson, one of the drivers who filed the lawsuit challenging Proposition 22.
“Our right to join together and bargain collectively creates a clear path for drivers and delivery workers to hold giant gig corporations accountable,” he said. “But make no mistake, we still believe Prop 22 — in its entirety — is an unconstitutional attack on our basic rights.”
The California Legislature passed a law in 2019 that changed the rules of who is an employee and who is an independent contractor. It’s an important distinction for companies because employees are covered by a broad range of labor laws that guarantee them certain benefits while independent contractors are not.
While the law applied to lots of industries, it had the biggest impact on app-based ride hailing and delivery companies. Their business relies on contracting with people to use their own cars to give people rides and make deliveries. Under the 2019 law, companies would have to treat those drivers as employees and provide certain benefits that would greatly increase the businesses’ expenses.
In November 2020, voters agreed to exempt app-based ride hailing and delivery companies from the 2019 law by approving a ballot proposition. The proposition included “alternative benefits” for drivers, including a guaranteed minimum wage and subsidies for health insurance if they average 25 hours of work a week. Companies like Uber, Lyft and DoorDash spent $200 million on a campaign to make sure it would pass.
Three drivers and the Service Employees International Union sued, arguing the ballot proposition was illegal in part because it limited the state Legislature’s authority to change the law or pass laws about workers’ compensation programs. In 2021, a state judge agreed with them and ruled companies like Uber and Lyft were not exempt.
Monday, a state appeals court reversed that decision, allowing the companies to continue to treat their drivers as independent contractors.
The ruling might not be the final decision. The Service Employees International Union could still appeal the decision to the California Supreme Court, which could decide to hear the case.
“We will consider all those options as we decide how to ensure we continue fighting for these workers,” said Tia Orr, executive director of SEIU California.
8 dead after smuggling boats capsize off San Diego coast
At least eight people were killed when two migrant smuggling boats capsized in shallow but treacherous surf amid heavy fog, authorities said Sunday, marking one of the deadliest maritime human smuggling operations ever off of U.S. shores.
A Spanish-speaking woman on one of the panga-style boats called 911 Saturday night to report the other vessel overturned in waves at Black's Beach, authorities said. She said there were 15 people on the capsized vessel and eight on hers.
Coast Guard and San Diego Fire-Rescue crews pulled bodies of eight adults from the water, but fog hampered the search for additional victims. Recovery efforts resumed Sunday but no additional bodies were found.
Survivors may have escaped on land, including the woman who called 911. Authorities did not know her whereabouts.
San Diego Lifeguard Chief James Gartland said rescuers found the two boats overturned in shallow waters when they arrived. Surf was modest, with swells around 3 feet (1 meter), but skies were foggy and black.
“That area is very hazardous, even in the daytime," Gartland said at a news conference. "It has a series of sandbars and in-shore rip currents, so you can think that you can land in some sand or get to waist-high, knee-high water and think that you’re able to be safe to exit the water, but there’s long, in-shore holes. If you step into those holes, those rip currents will pull you along the shore and back out to sea.”
Black's Beach is about 15 miles (24 kilometers) north of downtown San Diego in a secluded area not far from the popular La Jolla Shores. Its reputation for some of the best breaks in Southern California draws many surfers.
Hundreds of maritime smuggling operations occur every year off California's coast and sometimes turn fatal. In May 2021, a packed boat carrying migrants capsized and broke apart in powerful surf along the rocky San Diego coast, killing three people and injuring more than two dozen others.
Smuggling off the California coast has ebbed and flowed over the years but has long been a risky alternative for migrants to avoid heavily guarded land borders. Pangas enter from Mexico in the dead of night, sometimes charting hundreds of miles north. Recreational boats try to mix in unnoticed with fishing and pleasure vessels during the day.
South of the U.S. border, there are many secluded, private beaches with gated entrances between high-rises with magnificent ocean views, some only partially built because funds dried up during construction. Popotla, a fishing hamlet where narrow streets are lined with vendors selling a wide variety of local catch, is favored among smugglers for its large, sandy beach and relatively gentle waves.
At least some of Saturday's victims were Mexican, according to the consulate in San Diego, but how many was unknown. Illegal crossings have soared under President Joe Biden, with many migrants turning themselves in to Border Patrol agents and being released in the United States to pursue their cases in immigration court.
A pandemic rule scheduled to end May 11 denies migrants a chance to seek asylum on grounds of preventing the spread of COVID-19 but enforcement has fallen disproportionately on Mexicans, Hondurans, Guatemalans and El Salvadorans because those have been the only nationalities that Mexico agreed to take back.
As a result, people of those four countries have been more likely to try to elude capture, knowing they are likely to be expelled under the public health rule, known as Title 42 authority. Mexico recently began taking back Cubans, Haitians, Nicaraguans and Venezuelans under Title 42.
As Biden weighs Willow, he blocks other Alaska oil drilling
As President Joe Biden prepares a final decision on the huge Willow oil project in Alaska, his administration announced he will prevent or limit oil drilling in 16 million acres in Alaska and the Arctic Ocean.
Plans announced Sunday night will bar drilling in nearly 3 million acres of the Beaufort Sea — closing it off from oil exploration — and limit drilling in more than 13 million acres in a vast swath of land known as the National Petroleum Reserve - Alaska.
The moves come as regulators prepare to announce a final decision on t he $8 billion Willow project, a controversial oil drilling plan pushed by ConocoPhillips in the petroleum reserve. Climate activists have rallied against project, calling it a “carbon bomb” that would be a betrayal of Biden's campaign pledges to curb new oil and gas drilling.
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Meanwhile, Alaska lawmakers, unions and indigenous communities have pressured Biden to approve the project, saying it would bring much-needed jobs and billions of dollars in taxes and mitigation funds to the vast, snow- and ice-covered region nearly 600 miles (965 kilometers) from Anchorage. Sen. Dan Sullivan, R-Alaska, called Willow “one of the biggest, most important resource development projects in our state’s history.”
Biden’s decision on Willow will be one of his most consequential climate decisions and comes as he gears up for a likely reelection bid in 2024. A decision to approve Willow risks alienating young voters who have urged stronger climate action by the White House and flooded social media with demands to stop the Willow project. Approval also could spark protests similar to those against the failed Keystone XL oil pipeline during the Obama administration.
Rejection of the project would meet strong resistance from Alaska’s bipartisan congressional delegation, which met with top officials at the White House in recent days to lobby for the project. Republican Sen. Lisa Murkowski, who provided key support to confirm Interior Secretary Deb Haaland, said it was no secret she has cooperated with the White House on a range of issues.
“Cooperation goes both ways,″ she told reporters.
Haaland, who fought the Willow project as a member of Congress, has the final decision on whether to approve it, although top White House climate officials are likely to be involved, with input from Biden himself. The White House said no final decision on Willow has been reached.
Under the conservation plan announced Sunday, Biden will bar drilling in nearly 3 million acres of the Arctic Ocean, and impose new protections in the petroleum reserve.
The withdrawal of the offshore area ensures that important habitat for whales, seals, polar bears and other wildlife "will be protected in perpetuity from extractive development,'' the White House said in a statement.
The action completes protections for the entire Beaufort Sea Planning Area, building upon President Barack Obama’s 2016 withdrawal of the Chukchi Sea Planning Area and the majority of the Beaufort Sea, the White House said.
Separately, the administration moved to protect more than 13 million acres within the petroleum reserve, a 23-million acre chunk of land on Alaska’s North Slope set aside a century ago for future oil production.
The proposed Willow project is within the reserve, and ConocoPhillips has long held leases for the site. About half the reserve is off limits to oil and gas leasing under an Obama-era rule reinstated by the Biden administration last year.
Areas to be protected include the Teshekpuk Lake, Utukok Uplands, Colville River, Kasegaluk Lagoon and Peard Bay Special Areas, collectively known for their globally significant habitat for grizzly and polar bears, caribou and hundreds of thousands of migratory birds.
Abigail Dillen, president of the environmental group Earthjustice, welcomed the new conservation plan, but said if the Biden administration believes it has authority to limit oil development in the petroleum reserve, officials should extend those protections to the Willow site.
"They have the authority to block Willow,'' she said in an interview Sunday.
Athan Manuel, director of the Sierra Club's lands protection program, said the benefits of the new protections would be more than undone by damage from Willow, which would be the biggest new oil field in decades in Alaska, producing up to 180,000 barrels per day, according to ConocoPhillips.
“No proposal poses a bigger threat to lands, wildlife, communities and our climate than ConocoPhillips’ Willow project,'' Manuel said in a statement. "Oil and gas leasing on public lands and waters must end — full stop. The eyes of the world are watching to see whether this administration will live up to its climate promises.''
In 2015, President Barack Obama halted exploration in coastal areas of the Beaufort and Chukchi seas, and he later withdrew most other potential Arctic Ocean lease areas — about 98 percent of the Arctic outer continental shelf. The bans were intended to protect polar bears, walruses, ice seals and Alaska Native villages that depend on the animals.
President Donald Trump reversed Obama's decision, but a federal judge restored the Obama-era restrictions in 2019, ruling that Trump exceeded his authority.
The Biden administration received one bid in December for the right to drill offshore for oil and gas in Alaska’s Cook Inlet.
US turns to new ways to punish Russian oligarchs for the war
The U.S. has begun an aggressive new push to inflict pain on Russia’s economy and specifically its oligarchs with the intent of thwarting the Kremlin’s invasion of Ukraine.
From the Treasury Department to the Justice Department, U.S. officials will focus on efforts to legally liquidate the property of Russian oligarchs, expand financial penalties on those who facilitate the evasion of sanctions, and close loopholes in the law that allow oligarchs to use shell companies to move through the U.S. financial system.
Andrew Adams, who heads the KleptoCapture task force, designed to enforce the economic restrictions within the U.S. imposed on Russia and its billionaires, told The Associated Press that the group is prioritizing its efforts to identify those who help Russians evade sanctions and violate export controls.
“These illicit procurement networks will continue to take up an ever-increasing amount of our bandwidth,” said Adams, who also serves as acting deputy assistant attorney general.
So far, more than $58 billion worth of sanctioned Russians’ assets have been blocked or frozen worldwide, according to a report last week from the Treasury Department. That includes two luxury yachts each worth $300 million in San Diego and Fiji, and six New York and Florida properties worth $75 million owned by sanctioned oligarch Viktor Vekselberg.
Also Read: US government moves to stop potential banking crisis
The U.S. has begun attempts to punish the associates and wealth managers of oligarchs — in Vekselberg's case, a federal court in New York indicted Vladimir Voronchenko after he helped maintain Vekselberg’s properties. He was charged in February with conspiring to violate and evade U.S. sanctions.
The case was coordinated through the KleptoCapture group.
“I think it can be quite effective to be sanctioning facilitators,” Adams said, calling them “professional sanctions evasion brokers.”
A February study led by Dartmouth University researchers showed that targeting a few key wealth managers would cause far greater damage to Russia than sanctioning oligarchs individually.
Other attempts to inflict pain on the Russian economy will come from the efforts to liquidate yachts and other property owned by Russian oligarchs and the Kremlin, turning them into cash to benefit Ukraine.
Ukrainian President Volodymyr Zelenskyy has long called for Russian assets to be transferred to Ukraine, and former Biden administration official Daleep Singh told the Senate Banking Committee on Feb. 28 that forfeiting Russia's billions in assets held by the U.S. is “something we ought to pursue.”
Singh suggested the U.S. should “use the reserves that we have immobilized at the New York Fed, transfer them to Ukraine and allow them to put them up as collateral to raise money.” He ran the White House's Russia sanctions program when he was national security adviser for international economics.
Adams said the KleptoCapture task force is pursuing efforts to sell Russians' yachts and other property, despite the legal difficulties of turning property whose owners' access has been blocked into forfeited assets that the government can take and sell for the benefit of Ukraine.
He stressed that the U.S. will operate under the rule of law. “Part of what that means is that we will not take assets that are not fully, totally forfeited through the judicial procedures and begin confiscating them without a legal basis,” Adams said.
He added that the task force has had “success in working with Congress and working with folks around the executive branch in obtaining authorization to transfer certain forfeited funds to the State Department.”
The Treasury Department said on Thursday that the government is “paving the way” for $5.4 million in seized funds to be sent as foreign assistance to Ukraine.
Additionally, strengthening laws that serve as loopholes for sanctions evaders will also be a priority across federal departments, officials say.
The Financial Crimes Enforcement Network, under Treasury, is expected to roll out rules to address the use of the U.S. real estate market to launder money, including a requirement on disclosing the true ownership of real estate.
Steven Tian, director of research at the Yale Chief Executive Leadership Institute, who tracks companies' disengagement from Russia, said the new real estate rule is long overdue.
“I would point out that it’s not just unique to Russian oligarchs. As you know, the real estate market makes use of shell companies in the United States, period," Tian said.
Erica Hanichak, the government affairs director at the FACT Coalition, a nonprofit that promotes corporate transparency, urged the administration to put the rule forward by late March, when the U.S. co-hosts the second Summit for Democracy with the governments of Costa Rica, Netherlands, South Korea and Zambia.
“We’re viewing this as an opportunity for the United States to demonstrate leadership not only in addressing corrupt practices abroad, but looking to our own backyard and addressing the loopholes in our system that facilitate corruption internationally," she said.
4 dead in shooting at Dallas apartment building
A news report said four people died in a Sunday night shooting at a Dallas apartment building.
WFAA-TV reported police have confirmed officers were called for a report of a shooting around 7:10 p.m. in the Northwest Dallas area.
The station reported police said four people were discovered with gunshot wounds and all of the victims died at the scene. No information on the victims was immediately available.
Police said there was no perceived threat to the public, WFAA reported.
US government moves to stop potential banking crisis
The U.S. government took extraordinary steps Sunday to stop a potential banking crisis after the historic failure of Silicon Valley Bank, assuring all depositors at the failed institution that they could access all their money quickly, even as another major bank was shut down.
The announcement came amid fears that the factors that caused the Santa Clara, California-based bank to fail could spread. Regulators had worked all weekend to try to find a buyer for the bank, which was the second-largest bank failure in history. Those efforts appeared to have failed Sunday.
In a sign of how fast the financial bleeding was occurring, regulators announced that New York-based Signature Bank had also failed and was being seized on Sunday. At more than $110 billion in assets, Signature Bank is the third-largest bank failure in U.S. history.
Also Read: A major bank failed. Here’s why it’s not 2008 again
The near-financial crisis that U.S. regulators had to intervene to prevent left Asian markets jittery as trading began Monday. Japan’s benchmark Nikkei 225 sank 1.6% in morning trading, Australia’s S&P/ASX 200 lost 0.3% and South Korea’s Kospi shed 0.4%. But Hong Kong’s Hang Seng rose 1.4% and the Shanghai Composite increased 0.3%.
In an effort to shore up confidence in the banking system, the Treasury Department, Federal Reserve and FDIC said Sunday that all Silicon Valley Bank clients would be protected and able to access their money. They also announced steps that are intended to protect the bank’s customers and prevent additional bank runs.
“This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” the agencies said in a joint statement.
Under the plan, depositors at Silicon Valley Bank and Signature Bank, including those whose holdings exceed the $250,000 insurance limit, will be able to access their money on Monday.
Also Sunday, another beleaguered bank, First Republic Bank, announced that it had bolstered its financial health by gaining access to funding from the Fed and JPMorgan Chase.
In a separate announcement, the Fed late Sunday announced an expansive emergency lending program that's intended to prevent a wave of bank runs that would threaten the stability of the banking system and the economy as a whole. Fed officials characterized the program as akin to what central banks have done for decades: Lend freely to the banking system so that customers would be confident that they could access their accounts whenever needed.
The lending facility will allow banks that need to raise cash to pay depositors to borrow that money from the Fed, rather than having to sell Treasuries and other securities to raise the money. Silicon Valley Bank had been forced to dump some of its Treasuries at at a loss to fund its customers’ withdrawals. Under the Fed’s new program, banks can post those securities as collateral and borrow from the emergency facility.
The Treasury has set aside $25 billion to offset any losses incurred under the Fed’s emergency lending facility. Fed officials said, however, that they do not expect to have to use any of that money, given that the securities posted as collateral have a very low risk of default.
Analysts said the Fed’s program should be enough to calm financial markets on Monday.
“Monday will surely be a stressful day for many in the regional banking sector, but today’s action dramatically reduces the risk of further contagion,” economists at Jefferies, an investment bank, said in a research note.
Though Sunday's steps marked the most extensive government intervention in the banking system since the 2008 financial crisis, its actions are relatively limited compared with what was done 15 years ago. The two failed banks themselves have not been rescued, and taxpayer money has not been provided to the banks.
President Joe Biden said Sunday evening as he boarded Air Force One back to Washington that he would speak about the bank situation on Monday. In a statement, Biden also said he was “firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”
Regulators had to rush to close Silicon Valley Bank, a financial institution with more than $200 billion in assets, on Friday when it experienced a traditional run on the bank where depositors rushed to withdraw their funds all at once. It is the second-largest bank failure in U.S. history, behind only the 2008 failure of Washington Mutual.
Some prominent Silicon Valley executives feared that if Washington didn’t rescue the failed bank, customers would make runs on other financial institutions in the coming days. Stock prices plunged over the last few days at other banks that cater to technology companies, including First Republic Bank and PacWest Bank.
Among the bank's customers are a range of companies from California’s wine industry, where many wineries rely on Silicon Valley Bank for loans, and technology startups devoted to combating climate change. Sunrun, which sells and leases solar energy systems, had less than $80 million of cash deposits with Silicon Valley. Stitchfix, the clothing retail website, disclosed recently that it had a credit line of up to $100 million with Silicon Valley Bank and other lenders.
Tiffany Dufu, founder and CEO of The Cru, a New York-based career coaching platform and community for women, posted a video Sunday on LinkedIn from an airport bathroom, saying the bank crisis was testing her resiliency. Given that her money was tied up at Silicon Valley Bank, she had to pay her employees out of her personal bank account. With two teenagers to support who will be heading to college, she said she was relieved to hear that the government’s intent is to make depositors whole.
“Small businesses and early-stage startups don’t have a lot of access to leverage in a situation like this, and we’re often in a very vulnerable position, particularly when we have to fight so hard to get the wires into your bank account to begin with, particularly for me, as a Black female founder,” Dufu told The Associated Press.
Silicon Valley Bank began its slide into insolvency when its customers, largely technology companies that needed cash as they struggled to get financing, started withdrawing their deposits. The bank had to sell bonds at a loss to cover the withdrawals, leading to the largest failure of a U.S. financial institution since the height of the financial crisis.
Treasury Secretary Janet Yellen pointed to rising interest rates, which have been increased by the Federal Reserve to combat inflation, as the core problem for Silicon Valley Bank. Many of its assets, such as bonds or mortgage-backed securities, lost market value as rates climbed.
Sheila Bair, who was chairwoman of the FDIC during the 2008 financial crisis, recalled that with nearly all the bank failures then, “we sold a failed bank to a healthy bank. And usually, the healthy acquirer would also cover the uninsured because they wanted the franchise value of those large depositors so optimally, that’s the best outcome.”
But with Silicon Valley Bank, she told NBC's “Meet the Press,” “this was a liquidity failure, it was a bank run, so they didn’t have time to prepare to market the bank. So they’re having to do that now, and playing catch-up.”
One of Silicon Valley's top banks fails; assets are seized
Regulators rushed Friday to seize the assets of one of Silicon Valley's top banks, marking the largest failure of a U.S. financial institution since the height of the financial crisis almost 15 years ago.
Silicon Valley Bank, the nation’s 16th-largest bank, failed after depositors hurried to withdraw money this week amid anxiety over the bank’s health. It was the second biggest bank failure in U.S. history after the collapse of Washington Mutual in 2008.
The bank served mostly technology workers and venture capital-backed companies, including some of the industry's best-known brands.
“This is an extinction-level event for startups,” said Garry Tan, CEO of Y Combinator, a startup incubator that launched Airbnb, DoorDash and Dropbox and has referred hundreds of entrepreneurs to the bank.
“I literally have been hearing from hundreds of our founders asking for help on how they can get through this. They are asking, ‘Do I have to furlough my workers?’”
There appeared to be little chance of the chaos spreading in the broader banking sector, as it did in the months leading up to the Great Recession. The biggest banks — those most likely to cause an economic meltdown — have healthy balance sheets and plenty of capital.
Nearly half of the U.S. technology and health care companies that went public last year after getting early funding from venture capital firms were Silicon Valley Bank customers, according to the bank’s website.
The bank also boasted of its connections to leading tech companies such as Shopify, ZipRecruiter and one of the top venture capital firms, Andreesson Horowitz.
Tan estimated that nearly one-third of Y Combinator’s startups will not be able to make payroll at some point in the next month if they cannot access their money.
Internet TV provider Roku was among casualties of the bank collapse. It said in a regulatory filing Friday that about 26% of its cash — $487 million — was deposited at Silicon Valley Bank.
Roku said its deposits with SVB were largely uninsured and it didn’t know “to what extent” it would be able to recover them.
As part of the seizure, California bank regulators and the FDIC transferred the bank's assets to a newly created institution — the Deposit Insurance Bank of Santa Clara. The new bank will start paying out insured deposits on Monday. Then the FDIC and California regulators plan to sell off the rest of the assets to make other depositors whole.
Read more: Startup-focused Silicon Valley Bank becomes largest bank to fail since 2008 financial crisis
There was unease in the banking sector all week, with shares tumbling by double digits. Then news of Silicon Valley Bank's distress pushed shares of almost all financial institutions even lower Friday.
The failure arrived with incredible speed. Some industry analysts suggested Friday that the bank was still a good company and a wise investment. Meanwhile, Silicon Valley Bank executives were trying to raise capital and find additional investors. However, trading in the bank’s shares was halted before stock market's opening bell due to extreme volatility.
Shortly before noon, the FDIC moved to shutter the bank. Notably, the agency did not wait until the close of business, which is the typical approach. The FDIC could not immediately find a buyer for the bank's assets, signaling how fast depositors cashed out.
The White House said Treasury Secretary Janet Yellen was “watching closely.” The administration sought to reassure the public that the banking system is much healthier than during the Great Recession.
“Our banking system is in a fundamentally different place than it was, you know, a decade ago,” said Cecilia Rouse, chair of the White House Council of Economic Advisers. “The reforms that were put in place back then really provide the kind of resilience that we’d like to see.”
In 2007, the biggest financial crisis since the Great Depression rippled across the globe after mortgage-backed securities tied to ill-advised housing loans collapsed in value. The panic on Wall Street led to the demise of Lehman Brothers, a firm founded in 1847. Because major banks had extensive exposure to one another, the crisis led to a cascading breakdown in the global financial system, putting millions out of work.
At the time of its failure, Silicon Valley Bank, which is based in Santa Clara, California, had $209 billion in total assets, the FDIC said. It was unclear how many of its deposits were above the $250,000 insurance limit, but previous regulatory reports showed that lots of accounts exceeded that amount.
The bank announced plans Thursday to raise up to $1.75 billion in order to strengthen its capital position. That sent investors scurrying and shares plunged 60%. They tumbled lower still Friday before the opening of the Nasdaq, where the bank's shares were traded.
As its name implied, Silicon Valley Bank was a major financial conduit between the technology sector, startups and tech workers. It was seen as good business sense to develop a relationship with the bank if a startup founder wanted to find new investors or go public.
Conceived in 1983 by co-founders Bill Biggerstaff and Robert Medearis during a poker game, the bank leveraged its Silicon Valley roots to become a financial cornerstone in the tech industry.
Bill Tyler, director of operations for TWG Supply in Grapevine, Texas, said he first realized something was wrong when his employees texted him at 6:30 a.m. Friday to complain that they did not receive their paychecks.
TWG, which has just 18 employees, had already sent the money for the checks to a payroll services provider that used Silicon Valley Bank. Tyler was scrambling to figure out how to pay his workers.
"We’re waiting on roughly $27,000," he said. "It’s already not a timely payment. It’s already an uncomfortable position. I don’t want to ask any employees, to say, ‘Hey, can you wait until mid-next week to get paid?’”
Silicon Valley Bank's ties to the tech sector added to its troubles. Technology stocks have been hit hard in the past 18 months after a growth surge during the pandemic, and layoffs have spread throughout the industry. Venture capital funding has also been declining.
At the same time, the bank was hit hard by the Federal Reserve's fight against inflation and an aggressive series of interest rate hikes to cool the economy.
As the Fed raises its benchmark interest rate, the value of generally stable bonds starts to fall. That is not typically a problem, but when depositors grow anxious and begin withdrawing their money, banks sometimes have to sell those bonds before they mature to cover the exodus.
That is exactly what happened to Silicon Valley Bank, which had to sell $21 billion in highly liquid assets to cover the sudden withdrawals. It took a $1.8 billion loss on that sale.
Ashley Tyrner, CEO of FarmboxRx, said she had spoken to several friends whose businesses are backed by venture capital. She described them as being “beside themselves” over the bank's failure. Tyrner's chief operating officer tried to withdraw her company's funds on Thursday but failed to do so in time.
“One friend said they couldn't make payroll today and cried when they had to inform 200 employees because of this issue,” Tyrner said.