Regulators aim to secure US Treasuries, weak spots remain in regional banking post-SVB failure, private equity firms struggle with high unsold assets, and new rules reshape the bond market. Exploring factors behind SVB collapse, regulatory challenges, market enhancements, and risks in the Treasury market.
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Quick takeaways
Regulators intervened post-SVB collapse to safeguard US Treasuries, highlighting need for diverse bank risk assessment.
Private equity firms struggle with $3 trillion in unsold assets, exploring exit strategies amid deal-making challenges.
Deep dives
Banking Crisis and Lessons Learned
During the banking crisis a year ago, Silicon Valley Bank collapsed due to risky investments rather than bad loans. Regulators had to intervene to ensure depositors were protected, leading to the involvement of the Federal Deposit Insurance Corporation and emergency lending by the Fed. However, the crisis highlighted the need for regulators to consider various ways banks can encounter problems beyond traditional risk assessment, such as liquidity challenges.
Private Equity Struggles and Potential Turnaround
Private equity firms globally are facing challenges in selling unsold companies worth over $3 trillion due to increased financing costs. Some signs of recovery are emerging, particularly in the IPO space with companies like Douglas and Gal Dermot planning listings. PE groups are encountering difficulties but exploring viable exit strategies amidst the deal-making rut.
Regulatory Concerns and New Rules in the US Treasury Market
The US Treasury market, a key global financial hub, has faced disruptions prompting regulatory actions to enhance stability. Recent rules introduced by the SEC focus on dealer oversight and central clearing to mitigate risks. While these measures aim to safeguard the market, concerns exist about potential vulnerabilities, concentration risks, and the need for meticulous implementation to preserve market integrity.
America’s regulators say new rules will help maintain the dominance of US Treasuries, and there are still weaknesses in regional banking a year after the failure of Silicon Valley Bank. Plus, a new Bain & Co report reveals that private equity groups are sitting on a record of unsold assets.
The FT News Briefing is produced by Fiona Symon, Sonja Hutson, Kasia Broussalian and Marc Filippino. Additional help by Zach St. Louis, Saffeya Ahmed, Sam Giovinco, Peter Barber, Michael Lello, David da Silva and Gavin Kallmann. Our engineer is Monica Lopez. Topher Forhecz is the FT’s executive producer. The FT’s global head of audio is Cheryl Brumley. The show’s theme song is by Metaphor Music.