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How and Why Two Banks Died, but Depositors Big and Small Were Saved

HOW AND WHY TWO BANKS DIED, BUT DEPOSITORS BIG AND SMALL WERE SAVED

Cost Free
Presentation Length 1.0 hour

Recorded DateApril 7, 2023
CPE:Not available
(archived webinars do not offer CPE credits)
Subject AreaEconomics
Course LevelBasic
Course Description

Learn how the FDIC and state regulators had the legal authority to shut down Silicon Valley Bank (SVB) and Signature Bank and why they did it. This course will examine the facts, not the rumors. Delve into the source of SVB’s liquidity problems with a special focus on the purchase of long-term, fixed-rate securities and the effect of classifying them as held to maturity (HTM) rather than available for sale (AFS).

This course will also explore some common myths about who should have known what and when they should have known it. The session will help you address the concerns of your clients about the two bank closures and the risks to the industry for a while.

Learning Objectives:


  • Evaluate the disproven myth that banks have buckets of cash in the vault just waiting to be withdrawn

  • Recognize that capital may be king, but liquidity causes bank runs

  • Summarize the financial statement treatment of HTM versus AFS securities

  • Calculate the "real numbers": how much below book value was the fair value of the securities portfolio at SVB; how big was the deposit outflow; how did SVB compare to its peer group on key metrics; what did Flagstar reject and what did Flagstar keep

  • Describe the difference between these closures and the prior banking crises of 1980, 1989, and 2008

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Mr. Hack’s primary practice focus is providing a full range of legal services to banks and other financial institutions.

His broad-based financial institutions practice addresses a full range of legal needs for banks and other regulated institutions. He has chartered numerous de novo banks and has prepared stock offering materials to satisfy both FDIC and SEC requirements to raise capital in public and private offerings for both new and seasoned companies. He regularly assists clients in addressing complex regulatory issues and in dealing with examination report criticisms. On the retail banking side, he helps develop documentation for cutting-edge bank services to satisfy federal and state regulations in fields as varied as cybersecurity, BSA/AML compliance, and remote transaction security procedures. For over 40 years, he has been a leader in negotiating data processing contracts and core system conversions with almost every major data processing service provider. On the lending side, he negotiates and documents complex multi-national trade finance transactions as well as more conventional domestic commercial mortgage loans and commercial construction loans.

He also supports other practice areas within the firm by bringing his extensive knowledge of banking transactions and banking law to the table when clients need assistance in matters involving money, finance, and securities transactions.

His Professional Associations & Memberships include the following: New York State Bar Association, Executive Committee Member and Former Chair: Business Law Section, Co-Chair of Wine Beer and Spirits Law Committee: NYS Bar Association, and Member: Banking Law Committee.

About Our Presenter

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Gallet Dreyer & Berkey, LLP is considered to be one of New York City’s leading law firms. Our attorneys have earned the highest client review rating possible from Martindale-Hubbell®. This rating is only earned by attorneys with the foremost legal skills and highest ethical standards.

Each of our partners is greatly respected in his or her area of practice. As a result, we are able to provide clients with a superior work product rivaling that of larger firms, while maintaining the reasonable rates and personalized service of a smaller firm.