Goldman Sachs Eyes a Big Payout from Silicon Valley Bank Deal

But not all Democratic senators and their allies agree that the 2018 deregulation was to blame here: Both Jon Tester of Montana and Angus King, independent of Maine, said they stand by their votes for the rollback five years ago. That divide, combined with broad Republican opposition to tougher banking rules, means it’s hard to see the legislative path ahead.

Fears about regional lenders continue to ease. Shares in smaller banks like First Republic, Western Alliance and PacWest Bancorp all jumped on Tuesday, as investors were reassured by the federal banking backstop. Charles Schwab’s stock also rose on Tuesday as the firm’s C.E.O. said its bank was still receiving deposit inflows.

The work of cleaning up the failed banks isn’t over. Investment firms like Apollo and Blackstone are weighing bids for parts of Silicon Valley Bank’s loan book, perhaps with backing from venture capitalists. And creditors have banded together in anticipation of a potential bankruptcy filing by the bank.

Meanwhile, regulators have started soliciting bids for Signature Bank.

Larry Fink, BlackRock’s chief, has used his influential annual letter to push the world’s business leaders to do more on climate change and to turn their words about corporate purpose into action. His letter for this year, which came out on Wednesday, continues that theme but also carries a timely (and stark) warning: The banking sector will need to transform itself in the wake of the collapse last week of Silicon Valley Bank in order to survive.

Bank stocks may have rebounded, but fears of contagion — and recession — persist. Fink cautioned that lenders will have to operate differently in an era of elevated interest rates; they will also face tougher rules and greater regulatory oversight as a consequence of the failure of Silicon Valley Bank and Signature Bank. And, he said, they’ll need to hold more capital on their books (which they will likely need to top up through the capital markets) to avoid the kind of “liquidity mismatch” that brought down S.V.B.

Previous Fed cycles of rapid interest rate tightening “led to spectacular financial flameouts” like the bankruptcy of Orange County, Calif., in 1994, he wrote, and the savings and loan crisis of the 1980s and ’90s. “We don’t know yet whether the consequences of easy money and regulatory changes will cascade throughout the U.S. regional banking sector (akin to the S.&L. crisis) with more seizures and shutdowns coming,” he said.


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