Economy

The Federal Reserve’s dilemma over whether to press ahead with its campaign of raising interest rates after bank failures has been further complicated by the release of strong inflation data.Officials of the US central bank are set to gather next week for a two-day policy meeting at which they will decide how substantially to alter their plans for monetary tightening in light of the turmoil in the banking system triggered by last week’s implosion of Silicon Valley Bank, which was followed by that of Signature Bank.But following the release of data on Tuesday showing a 0.5 per cent rise in “core” consumer price growth in February despite a slower annual pace, the Fed must now thread a delicate needle of continuing to root out persistent inflation while also ensuring the smooth functioning of the financial system.“They’re stuck between their inflation objectives and their financial stability objectives, and that’s really what they’re evaluating here,” said Nathan Sheets, global head of international economics at Citigroup and a former US Treasury official.In the days before SVB’s collapse, which forced the Fed and other government authorities to intervene to limit contagion, chair Jay Powell had floated the idea that the central bank might consider reverting to half-point rate rises, as data showed renewed strength in the labour market and rebounding consumer spending.That followed a historic, months-long campaign of supersized rate rises intended to tame rampant price pressures, which the Fed had only wound back down to a more typical quarter-point pace in February.At the time, Powell said forthcoming data — including Tuesday’s inflation report and the latest jobs report, which showed employers added a robust 311,000 positions in February — would be closely scrutinised before a decision was made.But economists say the collapse of SVB has fundamentally changed the policy outlook, muddying the central bank’s path forward and raising concerns over the level of interest rates the financial system can withstand.Late on Sunday, economists at Goldman Sachs switched their expectations from a quarter-point increase in March to no rate rise at all, noting “considerable uncertainty about the path beyond” that point.Julian Richers, an economist at Morgan Stanley, said “uncertainty had blown up” in the aftermath of the bank failures, and the Fed would be “attentive” to further signs of stress.February’s inflation report has complicated the picture further. Over the past three months, “core” consumer price growth — which strips out volatile food and energy prices and homes in on services-related costs — has increased at a 5.2 per cent annualised rate, the highest reading since October 2022.

“In the absence of what’s happening in financial markets, this is the type of data that likely would have motivated a 50 basis point rate hike next week,” said Matthew Luzzetti, chief US economist at Deutsche Bank. While he described the inflation data as “unrelenting”, Luzzetti said he expects the Fed to proceed with a quarter-point rate rise this month and signal that the federal funds rate will peak just above 5 per cent.Richers added the CPI figures meant officials should not stop rate rises altogether, even in light of the SVB fallout. “There certainly seem to be concerns about market functioning, but it’s not something that a pause will necessarily ease,” he said.Economists say the Fed must also contend with broader questions of how financial instability stemming from SVB’s failure will effect demand and economic activity.Speaking with the Financial Times on Friday — following the jobs report and SVB’s collapse — Thomas Barkin, president of the Richmond Fed, said he was chiefly focused on demand in determining the future of the central bank’s tightening campaign, adding this was an area in which financial stability “may or may not have an impact”.“Even if the Fed is to stem this and we see no other bank failures, there’s been tightening in credit conditions [and] there’s been tightening in financial conditions,” said Priya Misra, head of global rates strategy at TD Securities, adding that this could lead to an “earlier recession or a deeper one” than previously expected. More

SEOUL (Reuters) -South Korea’s unemployment rate has fallen back to a record low, data showed on Wednesday, mainly due to increased employment among people aged 60 and over, and as shrinking exports and a sluggish housing market have yet to significantly hit payrolls.The unemployment rate was 2.6% in February versus 2.9% in January on a seasonally adjusted basis, matching a record low also touched in August, showed data from Statistics Korea.Economists said the data is one of the most time-lagging indicators.”Manufacturing and construction sectors, among others, will soon begin to show the effects of shrinking exports and a weakening housing market,” said Park Sang-hyun at HI Investment and Securities.People aged 60 or older contributed most to the declining unemployment rate with the figure in this age group falling to 1.6% from 2.6% a month earlier. The jobless rates for other age groups changed little, with some rising slightly.Exports fell in each of the past five months from a year earlier as the global economy slowed after a series of monetary tightening measures worldwide. More

TOKYO (Reuters) – Every March, management of major Japanese firms meet with unions for wage talks across industries that set the tone for employees’ pay in the new fiscal year.The precedent set at the “shunto” spring wage talks also influences wages at smaller firms that employ seven out of 10 Japanese workers.The outcome will have a huge influence on how soon the Bank of Japan (BOJ) can end ultra-low interest rates. Steady wage hikes are crucial to kick-starting domestic demand and keeping inflation sustainably around its 2% target.In Japan, with the economy entrenched in deflation for 15 years since the recession of the 1990s, people are unable to shake the perception that neither prices nor wages will rise. Here is an overview of the wage negotiations: and why they are important.HOW IS PAY DECIDED IN JAPAN?In around March of each year, companies and unions negotiate pay for the fiscal year beginning in April of that year.The practice, known as “shunto,” began in 1956 when Japan’s postwar economy was booming. Unions demanded improvement in wages and job conditions by resorting to strikes in big cities, which peaked in the 1960s to 1970s. The shunto wages eventually peaked in 1974 with a record 33% rise in pay. The increases fell below 3% after Japan slipped into deflation and prolonged economic stagnation in the late 1990s as it suffered its own banking crisis.Since then, unionists have turned cooperative, rather than combative, working with management on the shared objective of job security.The focus on job security, rather than higher pay, is blamed for keeping Japan’s wage growth stagnant. The share of low-paid part-timers in the workforce has also doubled since the early 1990s, and these so-called non-regular workers now account for nearly 40% of the workforce, putting a drag on pay increases.WHY ARE COMPANIES UNDER PRESSURE?The stimulus policies introduced by former Prime Minister Shinzo Abe dubbed “Abenomics” in the late 2010s helped boost exporters’ profits by weakening the yen. But it failed to trickle down to households in terms of wage increases.Incumbent premier Fumio Kishida wants to change this under his flagship “new capitalism” policies that seek to distribute wealth more broadly among the population through higher pay.He has called on companies to deliver wage hikes that exceed the pace of inflation and help households navigate higher costs from rising fuel and raw material prices.Companies themselves need to offer higher pay to retain talent and hire young workers as Japan’s rapidly ageing population intensifies a labour shortage.WHAT WILL BE THE OUTCOME OF THE WAGE TALKS?Some of Japan’s biggest firms have already promised large pay hikes including auto giant Toyota Motor (NYSE:TM) Corp and fashion brand Uniqlo parent Fast RetailingAnalysts expect big firms to offer wage hikes of around 3% in wage talks, which would be the fastest pace of increase since 1997 when Japan was on the cusp of deflation. That would follow last year’s 2.2% increase, the first hike in four years.Such increases would meet Kishida’s call for 3% rises but fall short of the ambitious 5% demanded by the Rengo labour umbrella group. WILL WAGES KEEP RISING?The key for the economy will be how much companies will raise base pay, which are across-the-board and permanent payments that provide the basis of future allowances like retirement and pensions.Wary of increasing fixed costs, many Japanese firms have long opted to pay one-off bonuses in good times rather than raise base pay.As Japan slid into deflation in the late 1990s, management and unions agreed for more than a decade to no increases in base pay.Economists projected a 2.85% wage increase in a January poll, with base pay increases accounting for 1.08% and 1.78% from an increase in additional salary, based on seniority.A survey by the Institute of Labour Administration, a labour think tank, which is known for its correlation with shunto results, showed a rise of 8,590 yen ($64.04), or 2.75%, for an average 439 workers surveyed. Asked whether they would carry out base pay increase, 41.6% said they intended to.Mizuho Research & Technologies economists foresee declines persisting until 2024 which will weigh on consumption.($1 = 134.1300 yen) More

TOKYO (Reuters) -Bank of Japan (BOJ) policymakers debated the feasibility of making further tweaks to its bond yield curve control with one member saying it must keep “various options in mind” on the future course of monetary policy, minutes of its January meeting showed on Wednesday.The nine-member board concluded that it was premature to exit ultra-loose monetary policy now with inflation yet to sustainably achieve the BOJ’s 2% target, according to the minutes of the Jan. 17-18 meeting.But many board members said distortions in the yield curve, caused in part by the BOJ’s aggressive bond buying to defend its yield cap, have yet to be fixed, the minutes showed, underlining their concern over the rising cost of prolonged monetary easing.”At some point in the future, the BOJ must conduct an examination of its policy to determine the balance of its benefits and cost. For now, however, it was appropriate to maintain monetary easing,” one member was quoted as saying.”The BOJ must keep various options in mind in guiding monetary policy. But with overseas economies slowing now, it’s inappropriate to rush towards an exit” from ultra-easy policy, another board member said, according to the minutes.At the January meeting, the BOJ maintained ultra-low rates, including a bond yield cap it was struggling to defend, defying market expectations it would phase out its massive stimulus programme amid mounting inflationary pressure. More

Officials were initially unsure about the need for the measures they eventually announced to shore up the financial system, but changed their minds quickly.WASHINGTON — On Friday afternoon, the deputy Treasury secretary, Wally Adeyemo, met with Jamie Dimon, the chief executive of JPMorgan Chase & Company, at Mr. Dimon’s office in New York.The Biden administration and the Federal Reserve were considering what would be the most aggressive emergency intervention in the banking system since the 2008 financial crisis, and the question the two men debated was at the heart of that decision.Could the failure of Silicon Valley Bank, the mega start-up lender that had just collapsed, spread to other banks and create a systemic risk to the financial system?“There’s potential,” Mr. Dimon said, according to people familiar with the conversation.Mr. Adeyemo was one of many administration officials who entered last weekend unsure of whether the federal government needed to explicitly rescue Silicon Valley Bank’s depositors before markets opened on Monday morning.In the White House and the Treasury, some officials initially saw the bank’s swift plunge to insolvency as unlikely to spark an economic crisis — particularly if the government could facilitate a sale of the bank to another financial institution.They quickly changed their minds after signs of nascent bank runs across the country — and direct appeals from small businesses and lawmakers from both parties — convinced them the bank’s problems could imperil the entire financial system, not just rich investors in Silicon Valley.On Friday morning, aides met with President Biden in the Oval Office, where they warned that the panic engulfing Silicon Valley Bank could spread to other financial institutions, according to a White House official. Mr. Biden told them to keep him updated on developments.By Friday afternoon, before financial markets had even closed, the Federal Deposit Insurance Corporation had stepped in and shut down the bank.Still, the kind of rescue that the United States ultimately engineered would not materialize publicly until Sunday, after intense deliberations across the government.This account is based on interviews with current and former officials in the White House, Treasury and the Fed; financial services executives; members of Congress; and others. All were involved or close to the discussions that dominated Washington over a frenzied process that began Thursday evening and ended 72 hours later with an extraordinary announcement timed to beat the opening of financial markets in Asia.The episode was a test for the president — who risked criticism from the left and the right by greenlighting what critics called a bailout for banks. It also confronted Treasury Secretary Janet L. Yellen with the prospect of a banking crisis at a moment when she had become more optimistic that a recession could be avoided. And it was the starkest demonstration to date of the impact that the Fed’s aggressive interest rate increases were having on the economy.Wally Adeyemo, deputy Treasury secretary, was initially unsure whether the government would need to intervene to rescue Silicon Valley Bank’s depositors. Andrew Harnik/Associated PressSilicon Valley Bank failed because it had put a large share of customer deposits into long-dated Treasury bonds and mortgage bonds that promised modest, steady returns when interest rates were low. As inflation jumped and the Fed lifted interest rates from near zero to above 4.5 percent to fight it over the last year, the value of those assets eroded. The bank essentially ran out of money to make good on what it owed to its depositors.By Thursday, concern was growing at the Federal Reserve. The bank had turned to the Fed to borrow money through the central bank’s “discount window” that day, but it soon became clear that was not going to be enough to forestall a collapse.Officials including Jerome H. Powell, chairman of the Fed, and Michael S. Barr, its vice chair for supervision, worked through Thursday night and into Friday morning to try to find a solution to the bank’s unraveling. By Friday, Fed officials feared the bank’s failure could pose sweeping risks to the financial system.Compounding the worry: The prospects of arranging a quick sale to another bank in order to keep depositors whole dimmed through the weekend. A range of firms nibbled around the idea of purchasing it — including some of the largest and most systemically important.One large regional bank, PNC, tiptoed toward making an acceptable offer. But that deal fell through as the bank scrambled to scrub Silicon Valley Bank’s books and failed to get enough assurances from the government that it would be protected from risks, according to a person briefed on the matter.A dramatic government intervention seemed unlikely on Thursday evening, when Peter Orszag, former President Barack Obama’s first budget director and now chief executive of financial advisory at the bank Lazard, hosted a previously scheduled dinner at the bank’s offices in New York City’s Rockefeller Center..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.Among those in attendance were Mr. Adeyemo and a pair of influential senators: Michael D. Crapo, Republican of Idaho, and Mark Warner, Democrat of Virginia. Both were sponsors of a 2018 law that rolled back regulation on smaller banks that critics now say left Silicon Valley Bank vulnerable.Blair Effron, a large Democratic donor who had just been hired by Silicon Valley Bank to advise it on its liquidity crunch, was also there. Earlier that day, the bank had attempted to raise money to stave off collapse with the help of Goldman Sachs — an effort that, by Thursday evening, had clearly failed.The Federal Reserve ultimately opened a lending program to help keep money flowing through the banking system.Al Drago for The New York TimesMr. Effron and Mr. Adeyemo spoke as it became evident that Silicon Valley Bank was running out of options and that a sale — or some bigger intervention — might be necessary. Jeffrey Zients, Mr. Biden’s new chief of staff, and Lael Brainard, the new director of his National Economic Council, were also being pelted by warnings about the bank’s threat to the economy. As Silicon Valley Bank’s depositors raced to withdraw their money on Thursday, sending its stock into free fall, both Ms. Brainard and Mr. Zients began receiving a flurry of calls and texts from worried leaders in the start-up community that the bank heavily served.Ms. Brainard, who had experienced financial crises in other countries while serving in Mr. Obama’s Treasury Department and as a Federal Reserve Board member, had begun to worry about a new crisis emanating from SVB’s failure. She and Mr. Zients raised that possibility with Mr. Biden when they briefed him in the Oval Office on Friday morning.Other officials across the administration were more skeptical, worrying that the lobbying blitz Ms. Brainard and others were receiving was purely a sign of wealthy investors trying to force the government to backstop their losses. And there were concerns that any kind of government action could be seen as bailing out a bank that had mismanaged its risk, potentially encouraging risky behavior by other banks in the future.Ms. Brainard started fielding anxious calls again on Saturday morning and did not stop until late in the evening. She and Mr. Zients briefed Mr. Biden that afternoon — virtually this time, because the president was spending the weekend in his home state of Delaware.Mr. Biden also spoke Saturday with Gov. Gavin Newsom of California, who was pushing aggressively for government intervention in fear that a wide range of companies in his state would otherwise not be able to pay employees or other operational costs on Monday morning.Concerns mounted that day as regulators reviewed data that showed deposit outflows increasing at regional banks nationwide — a likely sign of systemic risk. They began pursuing two possible sets of policy actions, ideally a buyer for the bank. Without that option, they would need to seek a “systemic risk exception” to allow the F.D.I.C. to insure all of the bank’s deposits. To calm jittery investors, they surmised that a Fed lending facility would also be needed to buttress regional banks more broadly.“Because of the actions that our regulators have already taken, every American should feel confident that their deposits will be there if and when they need them,” President Biden said on Monday.Doug Mills/The New York TimesMs. Yellen on Saturday convened top officials — Mr. Powell, Mr. Barr and Martin J. Gruenberg, the chairman of the F.D.I.C.’s board of directors — to figure out what to do. The Treasury secretary was fielding back-to-back calls on Zoom from officials and executives and at one point described what she was hearing about the banking sector as hair-raising.F.D.I.C. officials initially conveyed reservations about their authority to back deposits that were not insured, raising concerns among those who were briefed by the F.D.I.C. that a rescue could come too late.By Saturday night, anxiety that the Biden administration was dragging its feet was bubbling over among California lawmakers.At the glitzy Gridiron Club Dinner in Washington, Representative Ro Khanna, a California Democrat, cornered Steve Ricchetti, a top White House aide and close adviser to the president, and urged Mr. Biden and his team to be decisive. He warned that many of Mr. Biden’s major achievements would be washed away if the banking system melted down.“I said, Steve, this is a massive issue not just for Silicon Valley, but for regional banks around America,” Mr. Khanna said, adding that Mr. Ricchetti replied: “I get it.”Privately, it was becoming clear to Mr. Biden’s economic team that banking customers were getting spooked. On Saturday evening, officials from the Treasury, the White House and the Fed tentatively agreed to two bold moves they finalized and announced late on Sunday afternoon: The government would ensure that all depositors would be repaid in full, and the Fed would offer a program providing attractive loans to other financial institutions in hopes of avoid a cascading series of bank failures.But administration officials wanted to ensure the rescue had limits. The focus, according to a person familiar with the conversation, was ensuring that businesses around the country would be able to pay their employees on Monday and that no taxpayer money would be used by tapping the F.D.I.C.’s Deposit Insurance Fund.It was a priority that the rescue not be viewed as a bailout, which had become a toxic word in the wake of the 2008 financial crisis. The depositors would be protected, but the bank’s management and its investors would not.By Sunday morning, regulators were putting the finishing touches on the rescue package and preparing to brief Congress. Ms. Yellen, in consultation with the president, approved the “systemic risk exception” that would protect all of the bank’s deposits. The bipartisan members of the Federal Reserve and the F.D.I.C. voted unanimously to approve the decision.That evening, they announced a plan to make sure all depositors at Silicon Valley Bank and another large failed financial institution, Signature Bank, were repaid in full. The Fed also said it would offer banks loans against their Treasury and many other asset holdings, whose values had eroded.“Because of the actions that our regulators have already taken, every American should feel confident that their deposits will be there if and when they need them,” Mr. Biden said during brief remarks at the White House.By Tuesday afternoon the intervention was showing signs of working. Regional bank stocks, which had fallen on Monday, had partially rebounded. The outflow of deposits from regional banks had slowed. And banks were pledging collateral at the Fed’s new loan program, which would put them in a position to use it if they decided that doing so was necessary.The financial system appeared to have stabilized, at least for the moment. More

TOKYO (Reuters) – Big Japanese firms are set to offer the largest pay rises in a quarter century this year driven by inflation at 41-year high, in a sign that cash-rich firms may be warming to Prime Minister Fumio Kishida’s calls to boost consumption through higher wages.As annual labour talks dubbed “shunto”, Japanese for “spring offensive”, wrap up at many blue-chips on Wednesday, positive signs are emerging Japan Inc may be ready to boost wages to a level that can at least offset high living costs amid surging import inflation.Major firms are expected to raise wages by 2.85%, according to a survey of 33 economists taken by Japan Economic Research Center (JERC), far above last year’s 2.2% and the fastest gain since 1997 when Japan slid into 15 years of deflation.Given that consumer inflation, at 4.1%, outpace wage hikes, pay rises of 3% or more need to continue in the coming years to sustain price stability at 2%, said Hisashi Yamada, senior economist at Japan Research Institute.”Average wage hikes that are consistent with the central bank’s 2% price target are 3% which can be met this year albeit temporarily,” Yamada said.Takahide Kiuchi, a former Bank of Japan board member who is now executive economist at Nomura Research Institute, said base pay rises hold the key in determining how wages may affect prices.The JERC survey showed that excluding seniority-based pay, base compensation that boosts fixed labour costs accounts for just 1.08%.”We need to focus on base pay. It will likely be a little above 1%, still way lower than price increase,” Kiuchi said.Kishida’s government will likely hold a joint three-party meeting with labour and management for the first time in eight years on Wednesday to ensure structural wage hikes.FOLLOW THE PACE-SETTERThere are already some encouraging signs.Workers from Japan’s largest group of trade unions last week struck early agreements for hefty wage hikes. Other unions from Toyota , the world’s No. 1 automaker, and Honda, have also secured their biggest pay rises in decades.What’s unique about shunto in Japan is that every March, more than 300 major firms capitalised at 1 billion yen or more and with 1,000 or more workers, negotiate with their union following wages pace-setters such as Toyota Motor (NYSE:TM) Corp.Company unionists have historically tended to settle for relatively meagre pay hikes around 2% in recent years, as unions are inclined to cooperate with management in keeping job security rather than aggressively demanding pay rises.It remains unclear, however, whether the wave of wage hikes could spread to small firms, which employ seven out of 10 workers but struggle to pass on costs to their bigger clients at the end of supply chains.Some analysts are also sceptical that unions will be as aggressive in demanding higher pay in coming years if inflation eases, as it is expected to from the middle of the year.Real wages fell in January at the fastest pace since May 2014 when the sales tax was raised to 8% from 5%.Japan’s wages have grown just about 5% over the last 30 years, far below an average 35% gain among member countries during the same period, OECD data shows.(This story has been refiled to remove extraneous word in paragraph 2) More

The U.S. Justice Department is probing the sudden demise of the bank, which was shuttered on Friday following a bank run, the source said, declining to be named as the inquiry is not public. The Securities and Exchange Commission has launched a parallel investigation, according to the Wall Street Journal, which first reported the probes.Spokespeople for the SEC, SVB and the Justice Department declined to comment. The investigation is in early stages and may not result in allegations of wrongdoing or charges being filed, the source said. Officials are also examining stock sales by officers of SVB Financial Group, which owned the bank, the WSJ reported, citing people familiar with the matter.SEC Chair Gary Gensler on Sunday said in a statement the agency is particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors during periods of volatility.The rapid demise of Silicon Valley Bank and the fall of Signature Bank (NASDAQ:SBNY) have left regulators racing to contain risks to the rest of the sector. On Tuesday, ratings agency Moody’s (NYSE:MCO) cut its outlook on the U.S. banking system to “negative” from “stable.”SVB Financial Group and two top executives were sued this week by shareholders, who accused them of concealing how rising interest rates would leave its Silicon Valley Bank unit susceptible to a bank run. More

(Reuters) – Silicon Valley Bank’s new Chief Executive Tim Mayopoulos on Tuesday urged the failed bank’s top venture capital clients to move their deposits to its newly created bridge entity, people who attended a virtual meeting with him said.The Federal Deposit Insurance Corporation (FDIC) appointed the former Fannie Mae CEO to head Silicon Valley Bridge Bank N.A. after the regulator took control of SVB. Its collapse last week crippled stocks and triggered concerns of a contagion throughout global markets.SVB was a major lender for startups, serving as banking partner for nearly half of U.S. venture-backed technology and healthcare companies that listed on stock markets in 2022. Last week, more than 650 funds signed a letter vowing to keep working with the bank if it found a new buyer.Mayopoulos told clients deposits at the bank were now among the safest of any U.S. banks or institutions, attendees at the meeting said. The new bank will honor existing loan facilities and lines of credit for its customers, easing widespread concern among many startups which have loan agreements with the bank, they added.”You have the ability to cast your vote in favor of this system,” they quoted Mayopoulos as saying. In a message posted on the bank’s website on Tuesday, he said the bank was “open for business.”He also laid out potential outcomes for the bank, including getting recapitalized as a new independent chartered bank, finding a buyer, or winding down, which he said was “not very likely,” the clients said.Hemant Taneja, CEO of venture capital firm General Catalyst, recommended on Tuesday that its clients who had banked with SVB keep or return at least 50% of their capital to the bank.Numerous VC funds last week advised companies in their portfolios to move funds out of SVB to avoid the risk of being caught up in its potential failure.”We believe SVB is now one of the safest and most secured banks in the country,” Taneja wrote in a note he shared on Twitter.Mayopoulos was president and CEO of Fannie Mae, a government-sponsored enterprise that provides access to home mortgage credit, from 2012 to 2018. He has also served as general counsel of Bank of America (NYSE:BAC), and held senior roles at Deutsche Bank (ETR:DBKGn), Credit Suisse First Boston, and Donaldson, Lufkin & Jenrette. More