- ‘This is going to be pretty bumpy going forward’: First Republic stock shares plunge almost 50% as people move their money despite $30 billion bailout Fortune
- JPMorgan CEO Jamie Dimon Leading Efforts to Craft New First Republic Bank Rescue Plan – WSJ The Wall Street Journal
- First Republic continues tanking, but other regional banks are rallying on Monday CNBC
- Fate of First Republic Uncertain as Shares Plummet Again The New York Times
- First Republic, Athenex fall; Franchise Group, Exelixis rise Bellingham Herald
- View Full Coverage on Google News
Tag Archives: bailout
Janet Yellen Drops Bombshell on Silicon Valley Bank Bailout Scandal: Fed Can’t ‘Discriminate’ Against Chinese Investors – msnNOW
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Pakistan Rupee Slumps To Record Low, Crisis-Hit Nation Seeks Bailout
The Pakistani rupee fell by Rs 24 and was trading at Rs 255 against the US dollar
New Delhi:
Pakistan’s currency today has fallen to a record low of Rs 255 against the US dollar, according to local media reports. The tumble comes after the cash-strapped government relaxed its grip on the exchange rate to win much-needed loans from the International Monetary Fund (IMF).
Pakistan’s money exchange companies removed the limit on the dollar-rupee rate from Wednesday, and said they will let the local currency drop slowly in the open market.
The Pakistani rupee fell by Rs 24 and was trading at Rs 255 against the US dollar at 1 pm, the Express Tribune reported.
The IMF had asked the Pak government to end its control and let market forces determine the currency rate, a condition that was readily accepted. Pakistan has been looking to win the global body’s approval to get $6.5 billion in funding which is currently stalled.
While Pakistan won an IMF bailout last year, the release of funds has been stalled this year.
The low forex reserve in Pakistan has led to massive food inflation. In some parts of the country, a packet of flour is being sold for as high as Rs 3,000. Videos of people fighting for food and chasing food trucks are doing the rounds on social media.
The country has also plunged into darkness owing to frequent blackouts.
“We haven’t been able to do anything. Everybody is sitting idle. We can’t operate any machines,” says Zafar Ali, who runs a workshop.
Pakistan’s central bank this week also raised interest rates to a 24-year high to fight surging prices.
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Binance plans to buy FTX’s non-U.S. operations in latest crypto bailout
WASHINGTON/LONDON, Nov 8 (Reuters) – Crypto giant Binance signed a nonbinding agreement to buy rival FTX’s non-U.S. unit, FTX.com, to help cover a “liquidity crunch” at the cryptocurrency exchange, the companies said on Tuesday, in a surprise move that raised fresh concerns about the risks investors face in the volatile crypto market.
Binance CEO Changpeng Zhao said in a tweet that FTX, run by billionaire Sam Bankman-Fried, had “asked for our help” after “a significant liquidity crunch.”
He said Binance, the world’s biggest crypto exchange, will be conducting due diligence in the coming days as the next step toward an acquisition of FTX.com. The U.S. operations of Binance and FTX are not part of the deal, Bankman-Fried said in a separate tweet.
“It has been an open secret for a while now that FTX and Binance were in existential competition; the only surprise today is that things have escalated so quickly to a seeming conclusion,” said Joseph Edwards, investment adviser at Securitize Capital. “The move should provide relief to consumers in the short-term, but creates question in the long run.”
The deal is the latest emergency rescue in the world of cryptocurrencies this year, as investors pulled out from riskier assets amid rising interest rates. The cryptocurrency market has fallen by about two-thirds from its peak to $1.07 trillion.
It also underscores an abrupt reversal of fortune for Bankman-Fried, who had positioned himself as the industry’s saviour by rescuing rivals who had gotten into trouble earlier in the year.
“Liquidity crunch issues continue to haunt the crypto market,” said Dan Raju, CEO of Tradier, financial services provider and brokerage. “It’s scary to think that FTX, which is one of the largest crypto exchanges in the world, was bitten by liquidity concerns and Binance, their biggest rival, is coming to their rescue. This will make for some strange bedfellows.”
FTX had seen around $6 billion of withdrawals in the 72 hours before Tuesday morning, according to a message to staff sent by Bankman-Fried that was seen by Reuters.
“On an average day, we have tens of millions of dollars of net in/outflows. Things were mostly average until this weekend, a few days ago,” Bankman-Fried wrote in the message to staff sent on Tuesday morning. “In the last 72 hours, we’ve had roughly $6b of net withdrawals from FTX.”
Withdrawals at FTX.com are “effectively paused,” he wrote, adding that would be resolved in “the near future.”
FTX did not immediately respond to a request for comment on the message to staff.
‘LEGITIMATE REASON TO WORRY’
The deal comes after the in-house token of crypto exchange FTX slumped, losing one-third of its value and dragging down other major digital assets, amid talk of pressure on FTX’s financials.
Binance, which dominates the crypto industry, with over 120 million users, is currently under investigation by the U.S. Justice Department into possible violations of money-laundering rules, Reuters reported last week.
A spokesperson for the U.S. Commodity Futures Trading Commission said the agency is monitoring the situation.
News of the deal initially buoyed major cryptocurrencies, but those gains were quickly erased.
FTX token – which gives holders discounts on FTX trading fees – was last trading at 11.83, down 47%.
Bitcoin , the biggest digital token, was down 6%.
“People have a legitimate reason to worry about the security of their digital assets if one of the world’s largest centralized exchanges ends up in financial difficulties,” said Pascal Gauthier, CEO and Chairman of crypto security firm Ledger. “It’s time for an honest, industry-wide reckoning on the importance of crypto custody.”
Crypto users raised questions on Twitter last week about FTX’s token following a report by news website CoinDesk on a leaked balance sheet from Alameda Research, a trading firm founded by Bankman-Fried that has close ties with FTX.
On Sunday, Zhao said his firm would liquidate its holdings of the FTX token due to unspecified “recent revelations.”
Bankman-Fried had initially said the exchange was “fine” and that concerns were “false rumours.”
In a tweet on Tuesday, he said his teams were working on clearing out the withdrawal backlog: “This will clear out liquidity crunches. This is one of the main reasons we’ve asked Binance to come in.”
“A *huge* thank you to CZ, Binance,” Bankman-Fried wrote, referring to the rival CEO who goes by his initials.
Reporting by Tom Wilson in London and Hannah Lang in Washington
Additional reporting by Tom Westbrook in Singapore, Prentice in Washington and Angus Berwick in New York
Editing by Megan Davies, Catherine Evans and Matthew Lewis
Our Standards: The Thomson Reuters Trust Principles.
Biden’s union pension bailout: What it means, and will it work?
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The Biden administration unveiled details this week of the final rules surrounding the federal bailout of hundreds of union pension plans passed as part of Democrats’ $1.9 trillion American Rescue Plan Act coronavirus relief package last year, saying it will secure workers’ benefits for decades to come.
ARPA’s Special Financial Assistance Program injects $90 billion of taxpayer funds into the federal government’s Pension Benefit Guaranty Corporation, which insures private-sector pensions. Prior to the passage of the purported COVID package, the PBGC was set to become insolvent in 2026.
The White House claims the plan will prevent 2 to 3 million workers from having their pension payments cut in retirement, by saving upwards of 200 private-sector union plans that had been in danger of insolvency.
US President Joe Biden speaks about the economy and the final rule implementing the American Rescue Plans Special Financial Assistance program, protecting multiemployer pension plans, at Max S. Hayes High School in Cleveland, Ohio, July 6, 2022. (Photo by SAUL LOEB/AFP via Getty Images / Getty Images)
President Biden touted the accomplishment during a speech in Ohio on Wednesday, saying that retirees in the shaky plans who have already seen cuts in benefits “will have them restored retroactively,” and that he “turned a promise broken into a promise kept.”
BIDEN PROVES HIMSELF TOXIC TO DEMOCRATS DURING OHIO TRIP, JIM JORDAN SAYS: ‘WHERE’S TIM RYAN?’
“We saw before the pandemic and the economic crisis that followed,” Biden said, “Millions of retirees were at risk of losing their retirement security through no fault of their own, based on conditions and unrelenting attacks on unions that were taking place.”
But some pension experts are skeptical of the plan, and are raising concerns.
One sticking point is that the rules have changed to allow one-third of the taxpayer-provided funds to be invested in stocks, which, according to The Wall Street Journal, “overrides a previous restriction that generally limited them to investment-grade bonds.”
NEW POLLING SHOWS MAJORITY OF AMERICANS BELIEVE THE COUNTRY IS HEADING IN THE WRONG DIRECTION
In response to the plan, University of Pennsylvania Wharton School of Business Professor Dr. Olivia Mitchell, executive director of the school’s Pension Research Council, tweeted, “Spare me!”
She called the move “risky,” and said it is “unlikely” to keep the multi-employer plans “solvent through 2051, despite White House optimism.”
US President Joe Biden is greeted by (L-R) US Representatives Shontel Brown and Marcy Kaptur, US Senator Sherrod Brown and Cleveland Mayor Justin Bibb, on arrival at Cleveland Hopkins International Airport in Cleveland, Ohio, July 6, 2022. (Photo by SAUL LOEB/AFP via Getty Images / Getty Images)
Derek Kreifels, CEO of the State Financial Officers Foundation, noted that the pension funds were in trouble long before the pandemic, asserting the move was political and a gamble for taxpayers and union workers alike.
“The White House is going to allow the same pension fund managers – who have been historically awful at their jobs – the ability to make riskier investments with not only hardworking American’s pensions, but also the nearly $100 billion worth of taxpayer dollars delivered to unions under the guise of COVID relief,” Kreifels told FOX Business.
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He added, “In truth, this is a disaster of the Biden administration’s own making, putting millions of American’s retirements at risk with terrible economic policies that are reverberating throughout every facet of our lives – from the gas pumps to the grocery stores.”
Ryan Frost, a policy analyst at Reason Foundation’s Pension Integrity Project, says whether the bailout and its new rules will work is “a mixed bag.”
People cheer as US President Joe Biden speaks about the economy and the final rule implementing the American Rescue Plans Special Financial Assistance program in Cleveland, Ohio, July 6, 2022. (Photo by SAUL LOEB/AFP via Getty Images / Getty Images)
“Obviously it will work for these retirees as they’ll no longer be facing benefit cuts as the PBGC runs out of money, but there are zero safeguards in place to prevent the plans from running out of money again,” he said. “In fact, the bill even modifies the PBGC guarantee formula to increase the maximum potential benefits the retiree can receive.”
Frost says the question is what the trade-off will be for the U.S. taxpayer to bail out these private pensions.
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“The plans will now be projected to reach 80% funded in 30 years, using some unknown discount rate that is going to vary between each plan,” he told FOX Business. “Congress needs to come back next year and put some safeguards and strings around plans who accept this money so they don’t drop further into insolvency, risking pension cuts and requiring another ‘financial assistance’ program snuck into a $1.9 trillion budget package.”
China’s Suning.com gets bailout from local governments and Alibaba
HONG KONG — Troubled Chinese retailer Suning.com has secured a $1.4 billion bailout, backed by local government funds, suppliers and Alibaba Group Holding, as Beijing seeks to calm jittery debt markets that could undermine economic momentum.
Suning.com, a leading seller of home appliances and consumer electronics, said in a filing Tuesday that billionaire founder Zhang Jindong, his trust and two of his Suning holding companies had agreed to yield their controlling interest in the retailer, with a 16.96% stake to pass to a consortium led by the government of Jiangsu Province and the state asset management committee of Nanjing, the provincial capital where Suning.com is based.
Alibaba, home appliance makers Haier Group and Midea Group, electronics manufacturer TCL Technology and smartphone maker Xiaomi are also part of the rescue consortium, according to the filing. Through its unit Taobao China, Alibaba already held a 19.99% stake in Suning.com, which it acquired in 2015.
Under the deal, Zhang’s stake would fall to 17.62% while his Suning Appliance company would retain a 2.73% interest.
Suning.com shares surged by the maximum 10% allowed to 6.15 yuan on Tuesday on the Shenzhen Stock Exchange, recovering from an eight-year low as they resumed trading for the first time since their suspension on June 16, pending the deal’s announcement. The share sale was priced at 5.59 yuan a share, the last traded price before the halt.
Alibaba shares were up 1.2% at HK$208.40 by late afternoon in Hong Kong.
Suning, which traces its origins to an air conditioning shop set up by Zhang in 1990, now has 4,000 stores, according to its website.
After establishing a dominant position in online shopping, Alibaba has invested heavily in recent years in physical retail, both by buying stakes in existing chains and building its own.
Last year, Alibaba doubled its stake in Hong Kong-listed hypermarket chain Sun Art Retail Group to over 70%, after earlier buying into department store group Intime Retail and Lianhua Supermarket Holdings. It also has its own supermarket chain, Freshippo, also known as Hema. In consumer electronics, it has often lagged behind rival JD.com.
According to Tuesday’s bailout agreement, all parties agreed that the share sale proceeds would be used primarily to clear debt.
Investor fears over Suning.com’s finances began to boil when Zhang last year gave up rights to demand repayment of 20 billion yuan ($3.09 billion) from developer China Evergrande Group after it failed to list a unit on a domestic exchange as promised when it borrowed the funds. Suning.com has $7 billion of debts due within a year.
A Beijing court last month ordered a freeze on more than a quarter of founder Zhang’s stake in Suning.com for reasons the company has not disclosed. Also in June, creditors agreed to extend the maturity on a 2.89 billion yuan bond by two years. The two events helped send the company’s stock and bonds tumbling.
The conclusion of the bailout will provide Suning.com some stability as its sales have yet to recover from the effects of the coronavirus pandemic against its expanded debt burdens from deals to buy French retailer Carrefour’s China operations and the department store arm of Dalian Wanda Group, among others.
The company said in a separate filing on Tuesday that it expects to report a net loss of between 2.5 billion yuan and 3.2 billion yuan for the first half of the year, after sales dropped by nearly a third. In the same period last year, it recorded a loss of 166.59 million yuan.
“The diversified investor portfolio helps push Suning.com to further improve the governance, operations and business transformation,” the company said about the share sale deal. “The [consortium] will actively support Suning to grow healthily and stably.”
The deal comes as Shenzhen International Holdings and Shenzhen Kunpeng Equity Investment Management separately said a March agreement to acquire 23% of Suning.com for $2.3 billion will not proceed.
Zhang is perhaps best known for a $319 deal to take a controlling stake in Italian pro soccer club Inter Milan in 2016. Soccer also has been an investment area for other acquisitive Chinese conglomerates now struggling with excessive debt, including Evergrande and Wanda Group.
China’s total nonfinancial corporate debt climbed to 164.7% of gross domestic product in the last quarter of 2020 from 149.4% a year earlier, according to the Institute of International Finance. The ratio is the world’s second-highest behind Hong Kong.
GameStop short-seller down 30% this year gets $2.8 billion bailout from the firms of billionaire investors Steve Cohen and Ken Griffin
Steve Marcus/Reuters
- Steve Cohen’s Point72 and Ken Griffin’s Citadel are investing $2.75 billion in Melvin Capital.
- Melvin is down about 30% this year as its short positions are getting hammered.
- Day traders have bid up the stock prices of GameStop, Bed Bath & Beyond, and other popular shorts.
- Visit Business Insider’s homepage for more stories.
A pair of billionaire investors are swooping in to support a short-selling hedge fund in its battle against an army of irreverent day traders.
Steve Cohen’s Point 72, Ken Griffin’s Citadel, and other partners are plowing a total of $2.75 billion into Melvin Capital, the hedge funds said on Monday. They will receive non-controlling revenue shares in Melvin in return for their money.
Melvin will welcome the cash injection as painful short bets have left it down 30% year-to-date as of Friday, The Wall Street Journal reported.
Scores of retail investors, including some members of Reddit forum r/wallstreetbets, have targeted heavily shorted stocks in recent weeks. They drove GameStop’s stock price up as much as 145% on Monday, Bed Bath & Beyond up 58%, BlackBerry up 48%, and AMC up 39%.
Melvin takes more negative positions than most of its Wall Street rivals, exposing it to potentially heavy losses. It owned “puts” – bets that a stock price will fall – on 17 US-listed companies including GameStop and Bed Bath & Beyond at the end of September.
The firm’s strategy has paid off in the past. Melvin has returned an average of 30% annually since its founding in 2014, and had grown its assets under management to $12.5 billion at the start of this year, The Journal said.
Gabe Plotkin, a former star portfolio manager at Cohen’s SAC Capital, quit to start Melvin in 2014. He counted Cohen as a day-one backer.
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