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Fed says it failed to take forceful action on SVB

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The US central bank has said it failed to act with “sufficient force and urgency” in its oversight of Silicon Valley Bank, which collapsed last month in the country’s biggest bank failure since 2008.

The conclusion is one of the main findings from the Federal Reserve’s investigation of the episode.

It sparked global fears about the state of the banking industry.

The review comes as another US lender, First Republic, remains in trouble.

US regulators are reported to be working on a potential rescue for the struggling firm, which was the 14th largest bank in the US at the end of last year.

Michael Barr, the Federal Reserve’s vice chair for supervision, who led the review, said the US central bank should toughen its rules in response to what it had learned from SVB’s demise.

“Federal Reserve supervisors failed to take forceful enough action,” he said, pointing to regulatory standards that were “too low”, supervision that did not work with urgency, and risks to the wider system posed by troubles at a mid-size bank that Fed policies had missed.

“Following SVB’s failure, we must strengthen the Federal Reserve’s supervision and regulation,” he said.

 

Jerome Powell

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The head of the Federal Reserve, chairman Jerome Powell, said he welcomed the “thorough and self-critical report”.

“I agree with and support his recommendations to address our rules and supervisory practices, and I am confident they will lead to a stronger and more resilient banking system,” he said.

The report from the Fed was one of three published by US officials on Friday, detailing regulatory lapses that contributed to the failures of SVB and Signature Bank last month.

Both banks catered to business customers and ran into trouble after the US central bank raised interest rates sharply last year which is when customers started to withdraw money.

SVB’s subsequent announcement that it needed to raise funds last month prompted panic and billions of dollars were withdrawn overnight, forcing regulators to step in.

 

A pedestrian walks by a First Republic Bank office in San Francisco, California.

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The fears then spread to other firms, including Signature Bank and First Republic, which suffered $100bn in outflows last month.

Shares in First Republic, worth more than $120 apiece at the beginning of March, fell more than 40% on Friday to below $4, as questions swirled about its future.

“Uniquely vulnerable”

The Government Accountability Office said the banks were felled by a combination of risky strategies and weak risk management, while officials were slow to take action after uncovering problems.

The Federal Insurance Deposit Corp, which examined Signature, concluded the “root cause” of that bank’s failure was “poor management”, while acknowledging its own oversight was often “not timely”.

The Fed’s review said SVB was “uniquely vulnerable” to problems due to “widespread managerial weaknesses, a highly concentrated business model, and a reliance on uninsured deposits”.

But it also faulted regulators for failing to appreciate the increased risks as the bank grew rapidly and for acting too slowly when it did spot issues.

The Fed’s decision to take a looser approach to oversight of small and mid-size banks, a response to a law Congress passed in 2018, was a key part of the problem, according to the report.

“In the interviews for this report, staff repeatedly mentioned changes in expectations and practices, including pressure to reduce burden on firms, meet a higher burden of proof for a supervisory conclusion, and demonstrate due process when considering supervisory actions,” it said.

“There was no formal or specific policy that required this, but staff felt a shift in culture and expectations from internal discussions and observed behaviour that changed how supervision was executed.”

Mr Barr was appointed to his role by President Joe Biden in 2022. Many of the changes discussed in the report occurred under his predecessor, appointed by Donald Trump.

“Unflinching”

Response was divided in Washington.

Senator Elizabeth Warren, a Democrat known for her critical views of banks, called the Fed’s report an “unflinching assessment” that should push Congress to revise its law and lead to the ouster of Fed chairman Jerome Powell.

Representative Patrick McHenry, the Republican who leads the House Financial Services Committee, said internal reports from the Fed and FDIC were “self-serving”.

“While there are areas … on which we agree the bulk of the report appears to be a justification of Democrats’ long-held priorities,” he said.

“Politicizing bank failures does not serve our economy, financial system, or the American people well,” he said.

 

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Half of Ontarians support union’s goals in ongoing LCBO strike: poll

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Fewer than one-third of Ontarians say they want the provincial government to intervene to end the 12-day strike at Ontario’s main liquor retailer, while about half are supportive of the striking union’s demands.

That’s according to a new Leger poll that asked if the government should use binding arbitration or legislation to ensure LCBO stores open as soon as possible.

Twenty-nine per cent of respondents supported such a move, while 44 per cent opposed it. The poll also asked if respondents support the union’s stated goals, including wage increases and more permanent positions. Just under half, 49 per cent, answered in the affirmative, while 25 per cent said they were not supportive.

Awareness of the strike in Ontario is high, according to the poll, with 89 per cent saying they knew about it, though only 15 per cent reported being personally affected. The Leger poll of 601 residents, conducted last weekend, can’t be assigned a margin of error because online surveys are not considered truly random samples.

Approximately 10,000 workers at the LCBO walked off the job on July 5 after negotiations broke down.

The union representing the workers said the sides were headed back to the bargaining table Wednesday.

The Ontario Public Service Employees Union has said the main issue is the province’s alcohol expansion plans that would see ready-to-drink cocktails sold outside LCBO stores — a move it maintains poses an existential threat to the LCBO and could lead to major job losses.

Colleen MacLeod, chair of the union’s LCBO bargaining unit, has said the plan would “mean thousands of lost jobs, fewer hours for the 70 per cent of LCBO retail workers who are casual and struggling to make ends meet, and hundreds of millions in dollars of lost public revenues drained from health care, education and infrastructure.”

The LCBO, a Crown corporation, nets the province $2.5 billion a year.

On Monday, the Ontario government sped up its expansion plan. The 450 stores across Ontario already licensed to sell beer, wine and ciders will be able to start ordering coolers and seltzers on Thursday and sell them as soon as they arrive.

The province has said it does not want to privatize the LCBO, and that the expansion is about giving people more choice and more convenience to buy alcohol.

Stephanie Ross, an associate professor in the school of labour studies at McMaster University, said Premier Doug Ford doesn’t have a great reputation when it comes to labour, given the high-profile disputes in recent years with health-care and education workers. And he’s faced accusations of making policy moves that benefit friends in the private sector, a criticism that’s been levied against him in the LCBO dispute.

“There is a base of support for the union’s message here, both in terms of the working conditions that they’re trying to fight to improve, and in terms of the role that the LCBO plays in funding public services in the province,” she said.

But the public may not be as sympathetic to LCBO workers as it has been to some others, like in the Metro grocery workers’ strike last year, she said — a relatively straightforward fight by low-paid workers struggling to afford food against the industry being partially blamed for food prices.

“And so in the depths of a kind of historic cost-of-living crisis, I think it was easier to feel sympathy for such workers in terms of really having to fight to make up lost ground.”

That means the LCBO union has its work cut out to try and convince the public of its cause, said Ross, especially when consumers are already divided on the liquor privatization issue in the first place. She thinks the union is doing a good job, however, of arguing the case for the LCBO as a public asset that helps fund important public services.

Larry Savage, a professor in the labour studies department at Brock University, said it’s clear both the union and the Ford government “are working hard to win over the public to their respective positions.”

The union has a “potentially powerful strategy” to gain public support, but it’s not a surefire one, he said in an email.

This strategy “requires people to connect the dots between the privatization of the LCBO and the loss of a critical revenue stream that contributes billions to public services like health care and education.”

Meanwhile, the government’s strategy has been to try and leverage consumer frustration over the strike in order to drive more support for increased privatization, said Savage.

“It’s a high-risk strategy because a heavy-handed approach can sometimes backfire and garner greater sympathy for the workers and their cause.”

In the Leger poll, 32 per cent of respondents said they looked for alternative locations to buy alcohol due to the strike, and while 15 per cent said they were concerned the strike could cause them to spend more money on alcohol.

Savage said while many consumers are likely inconvenienced, he also thinks most Ontarians are suspicious of the premier’s intentions when it comes to the LCBO: “It’s a classic case of private profits over the public good.”

This report by The Canadian Press was first published July 17, 2024.

 

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Half of Ontarians support union’s goals in ongoing LCBO strike: poll

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Fewer than one-third of Ontarians say they want the provincial government to intervene to end the 12-day strike at Ontario’s main liquor retailer, while about half are supportive of the striking union’s demands.

That’s according to a new Leger poll that asked if the government should use binding arbitration or legislation to ensure LCBO stores open as soon as possible.

Twenty-nine per cent of respondents supported such a move, while 44 per cent opposed it. The poll also asked if respondents support the union’s stated goals, including wage increases and more permanent positions. Just under half, 49 per cent, answered in the affirmative, while 25 per cent said they were not supportive.

Awareness of the strike in Ontario is high, according to the poll, with 89 per cent saying they knew about it, though only 15 per cent reported being personally affected. The Leger poll of 601 residents, conducted last weekend, can’t be assigned a margin of error because online surveys are not considered truly random samples.

Approximately 10,000 workers at the LCBO walked off the job on July 5 after negotiations broke down.

The union representing the workers said the sides were headed back to the bargaining table Wednesday.

The Ontario Public Service Employees Union has said the main issue is the province’s alcohol expansion plans that would see ready-to-drink cocktails sold outside LCBO stores — a move it maintains poses an existential threat to the LCBO and could lead to major job losses.

Colleen MacLeod, chair of the union’s LCBO bargaining unit, has said the plan would “mean thousands of lost jobs, fewer hours for the 70 per cent of LCBO retail workers who are casual and struggling to make ends meet, and hundreds of millions in dollars of lost public revenues drained from health care, education and infrastructure.”

The LCBO, a Crown corporation, nets the province $2.5 billion a year.

On Monday, the Ontario government sped up its expansion plan. The 450 stores across Ontario already licensed to sell beer, wine and ciders will be able to start ordering coolers and seltzers on Thursday and sell them as soon as they arrive.

The province has said it does not want to privatize the LCBO, and that the expansion is about giving people more choice and more convenience to buy alcohol.

Stephanie Ross, an associate professor in the school of labour studies at McMaster University, said Premier Doug Ford doesn’t have a great reputation when it comes to labour, given the high-profile disputes in recent years with health-care and education workers. And he’s faced accusations of making policy moves that benefit friends in the private sector, a criticism that’s been levied against him in the LCBO dispute.

“There is a base of support for the union’s message here, both in terms of the working conditions that they’re trying to fight to improve, and in terms of the role that the LCBO plays in funding public services in the province,” she said.

But the public may not be as sympathetic to LCBO workers as it has been to some others, like in the Metro grocery workers’ strike last year, she said — a relatively straightforward fight by low-paid workers struggling to afford food against the industry being partially blamed for food prices.

“And so in the depths of a kind of historic cost-of-living crisis, I think it was easier to feel sympathy for such workers in terms of really having to fight to make up lost ground.”

That means the LCBO union has its work cut out to try and convince the public of its cause, said Ross, especially when consumers are already divided on the liquor privatization issue in the first place. She thinks the union is doing a good job, however, of arguing the case for the LCBO as a public asset that helps fund important public services.

Larry Savage, a professor in the labour studies department at Brock University, said it’s clear both the union and the Ford government “are working hard to win over the public to their respective positions.”

The union has a “potentially powerful strategy” to gain public support, but it’s not a surefire one, he said in an email.

This strategy “requires people to connect the dots between the privatization of the LCBO and the loss of a critical revenue stream that contributes billions to public services like health care and education.”

Meanwhile, the government’s strategy has been to try and leverage consumer frustration over the strike in order to drive more support for increased privatization, said Savage.

“It’s a high-risk strategy because a heavy-handed approach can sometimes backfire and garner greater sympathy for the workers and their cause.”

In the Leger poll, 32 per cent of respondents said they looked for alternative locations to buy alcohol due to the strike, and while 15 per cent said they were concerned the strike could cause them to spend more money on alcohol.

Savage said while many consumers are likely inconvenienced, he also thinks most Ontarians are suspicious of the premier’s intentions when it comes to the LCBO: “It’s a classic case of private profits over the public good.”

This report by The Canadian Press was first published July 17, 2024.

 

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Being Angry at Employers for Looking out for Their Interests Won’t Land You a Job

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The current job market is a stark reminder of a fundamental truth: The employee-employer relationship is inherently asymmetrical. This asymmetry is the default of the employer taking on the risk of investing capital while employees only invest their time. Employers have the upper hand, and the right to work ultimately depends on their decisions, as evidenced by layoffs.

 

Employees don’t own their jobs; their employers do.

 

In the face of rejection after rejection, job seekers become frustrated and angry, blaming employers for being unreasonable, greedy, or only looking out for their interest, as if their employers are in the business of hiring people. This mindset is counterproductive and will only hinder your ability to land a job.

 

I don’t think job seekers are angry with employers. I think they’re angry because they were in demand, and now they’re not. Recently, the tech industry has had more than its share of layoffs. Most likely, until now, those laid off had only experienced being highly sought after. A shift of this kind requires humility, which is lacking amid all the anger directed at employers.

 

When making a hiring decision, the employer rightfully prioritizes its interests over those of the job seeker. Employers seek candidates who can deliver value and contribute to their organization’s success. In contrast, job seekers look for roles that fit their skills, experience, and career goals. Employers looking after their interests aren’t wrong or nefarious; it’s simply smart business.

 

Employers’ self-interests are not your enemies. Instead, use them to your advantage by identifying them and positioning yourself as the solution. Demonstrating how you’ll support the employer’s interests will turn you from a generic candidate into an asset.

Three strategies can be used to align your self-interests—presumably landing a job—with those of an employer (Envision, “You scratch my back, and I’ll scratch yours.”):

 

Understand the employer’s priorities, the obvious being to generate profit.

 

Job seekers tend to focus solely on the job description and the required qualifications and overlook the company’s overall goal(s). Knowing (read: researching) the company’s goals will enable you to explain how your skills and experience can support their goals.

 

Suppose you’re applying for a marketing coordinator role at a rapidly growing tech startup. The job posting lists key responsibilities, including managing the company’s social media accounts, creating content, and planning events. However, after studying the company holistically, you find, like most companies, it prioritizes gaining new customers.

 

With this knowledge, you can position yourself as a candidate who can help drive that growth by emphasizing, using quantifying numbers (e.g., In eight months, increased Instagram followers from 1,200 to 32,000.) in your resume, LinkedIn profile, cover letter and during your interview, your experience developing high-performing social media campaigns attracting new leads for previous employers. You could mention your innovative ideas for using user-generated content to raise brand awareness or partnering with industry influencers. The key is to show that you possess the required functional skills and understand the company’s overall goals and how you can help achieve them.

 

Explain how you’ll make your ‘to-be’ boss’s life easier.

 

Your ‘to-be’ boss is juggling a million competing priorities, budget constraints, and pressure from their boss to optimize their team’s productivity.

 

Position yourself as the candidate who’ll simplify your ‘to-be’ boss’s life, and you’ll differentiate yourself from other candidates. During the interview, make it a point to understand the specific pain points and challenges your ‘to-be’ boss is facing—I outright ask, “What keeps you up at night?”—and then present yourself as a solution.

 

Perhaps the department has a retention problem. You could tell a STAR (Situation, Task, Action, Result) story, demonstrating your ability to build strong cross-functional relationships and create a positive work culture that boosts employee engagement and loyalty.

 

Educating your prospective boss that by hiring you, they’ll have one less headache is a hard-to-ignore value proposition.

 

Show how their success is equal to yours.

 

Hiring boils down to finding candidates who can drive measurable business results. Don’t rely solely on your skills and experience. Outline how you can deliver tangible benefits to the employer. Quantify the value you’ve brought to previous employers.

 

If you’re applying for a sales role, share data on the year-over-year revenue growth, client retention rates, and customer satisfaction scores you achieved in your previous positions. Quantify the value you brought to the organization, then explain how you can replicate or exceed that level of performance in the new role.

 

Say you’re interviewing for an IT support position. In addition to highlighting your technical expertise, again using a STAR story, highlight your expertise in streamlining processes, reducing downtime, and providing exceptional customer service. Tie those accomplishments back to the employer’s need to maximize productivity and minimize disruptions.

 

The key is to make a compelling case that the employer also succeeds when you succeed.

 

It’s understandable to feel frustrated by rejection, but the most successful candidates recognize that employers have legitimate business priorities. Identifying an employer’s interests and showing how you can support them will improve your chances of landing a job. Stop expecting an employer to save you. Save an employer.

_____________________________________________________________________

 

Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers “unsweetened” job search advice. You can send Nick your questions to artoffindingwork@gmail.com.

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