#capital markets

19 01, 2024

Daily-011924

2024-01-19T16:07:07-05:00January 19th, 2024|2- Daily Briefing, Uncategorized|

Bipartisan House Letter Slams Basel Proposal’s Capital Markets Impact

Following up on our analyses yesterday of Congressional pressure on the banking agencies, we here turn to a bipartisan letter from 15 Members of the House led by Capital Markets Subcommittee Ranking Member Sherman (D-CA) and Subcommittee Chair Wagner (R-MO) warning the agencies of the proposal’s adverse capital-markets impact.

Brown Leads Campaign for Strong End-Game Standards

The first unequivocal expressions of support for the capital rules from key Members we have found came today from Banking Committee Chairman Brown (D-OH) and eleven Senate Democrats.

Banking Agencies Seek NBFI Data from FBOs

The OCC, FRB, and FDIC today requested comment on a proposal to gather more granular information on call reports filed by FBOs related to loans and lease receivables.

GOP Leadership Reignites “Operation Chokepoint” Concerns

Reigniting GOP concerns about “Operation Chokepoint” political regulation, Senate Banking Ranking Member Scott (R-SC) today sent a letter to Treasury Secretary Yellen and FinCEN Director Gacki raising concerns that Treasury urged banks to surveil customers’ transaction-level data using what he calls politically-charged search terms such as “Trump” and “MAGA” as well as merchant category codes to detect activity such as legal firearm purchases.

Daily011924.pdf

11 12, 2023

M121123

2023-12-11T10:22:58-05:00December 11th, 2023|6- Client Memo|

Unicorns, Zombies, and Capital Regulation

As was again clear at last week’s Senate Banking hearing, credit availability is much on the mind when it comes to LMI communities and small business.  This makes a good deal of sense given the capital proposal’s unintended consequences, but it’s only part of the story.  When start-up ventures are unable to get bank loans, they turn to the capital market.  This is often necessary due to the start-up’s risk, but in recent years it’s also been driven by hundreds of billions of investor dollars desperately chasing higher yields as the Fed year-in, year-out kept real rates below zero.  Now that rates are finally, really positive, yield-chasing funds have evaporated.  As the New York Times made clear, unicorns have turned into zombies.  Some of the walking dead deserved to die long ago, but the flood of capital-markets funds exiting this sector also strands ventures that could and should have been vital innovators.  Had these entities been buoyed by bank loans as soon as they were viable, many would still be walking.

m121123.pdf

11 12, 2023

Karen Petrou: Unicorns, Zombies, and Capital Regulation

2023-12-11T10:23:04-05:00December 11th, 2023|The Vault|

As was again clear at last week’s Senate Banking hearing, credit availability is much on the mind when it comes to LMI communities and small business.  This makes a good deal of sense given the capital proposal’s unintended consequences, but it’s only part of the story.  When start-up ventures are unable to get bank loans, they turn to the capital market.  This is often necessary due to the start-up’s risk, but in recent years it’s also been driven by hundreds of billions of investor dollars desperately chasing higher yields as the Fed year-in, year-out kept real rates below zero.  Now that rates are finally, really positive, yield-chasing funds have evaporated.  As the New York Times made clear, unicorns have turned into zombies.  Some of the walking dead deserved to die long ago, but the flood of capital-markets funds exiting this sector also strands ventures that could and should have been vital innovators.  Had these entities been buoyed by bank loans as soon as they were viable, many would still be walking.

Not every zombie is an innovator we’ll sorely miss.  Many bet big on not-so-critical products such as still more scooters.  However, one sector left high and dry – early-stage biomedical research – is literally a matter of life and death.

In February of 2021 when the economy was growing but real yields were negative, the total enterprise value of approximately 700 publicly-traded biotechs was $598 billion.  As of the latest data, this is down to $213 billion …

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