Business

(NEW YORK) — Silicon Valley Bank’s failure on Friday raises concerns over the potential impacts on the climate technology industry, where SVB was heavily involved.

“They went out of their way to attract entrepreneurs, to attract companies in the technology industry. They were one of the first banks to have a dedicated, clean energy sustainable finance department,” Mona Dajani, Global Head of Energy & Infrastructure at the law firm Shearman and Sterling, told ABC News. “They consciously developed this practice, and they were a well-known source — that’s where you could go because they were willing to lend to higher-risk, new companies.”

Silicon Valley Bank provided financing for over 1,550 clients working on climate technology and sustainability, according to its website. As of December 2021, SVB had committed $3.2 billion to such projects. The bank also claimed to have led or participated in 62% of community solar financings, as of last March.

Dajani said many of her clients banked with SVB and that “despite having their money restored” there is a feeling of skittishness after the failure of the bank.

Long-term, she said the failure of SVB could mean some smaller start-up climate technology companies could be cut off from credit lines if no other bank or entity takes on the SVB portfolio.

While larger “clean tech” companies will likely take their business to larger banks, Dajani said smaller companies and start-ups may have a harder time meeting what will likely be stricter standards for loans, possibly leading to a “slight chilling effect” in the industry.

Kiran Bhatraju, founder and CEO of Arcadia, a tech company focused on combating climate change, expressed concern over the downfall of SVB on Twitter Saturday, writing, “What’s missing from the narrative is SVB is a climate bank.”

“They were strong supporters [of] innovators in decarbonization and clean energy infrastructure – financing nearly 60%+ of the community solar market – alongside companies like Sunrun, Vivint, AES, and Bloom,” Bhatraju continued. “Arcadia is fine, and will be fine through this. But my hope for our industry and planet is someone makes sure funds continue to flow on Monday.”

In the aftermath of the bank’s failure, some Republican lawmakers have blamed its so-called “woke” policies, including ESG (Environmental, Social and Governance) and DEI (Diversity, Equity and Inclusion) for the downfall.

“A point that seems to be getting lost in the conversation around SVB is the failure of the San Francisco Fed to monitor the risks that were growing at Silicon Valley Bank,” Sen. Bill Hagerty, R-Tenn., a member of the Senate Banking, Housing and Urban Affairs Committee, tweeted Sunday night. “It is abundantly clear that SVB was terribly mismanaged. Their executives appeared to be more focused on diversity and ESG than managing their own risks. But why didn’t the SF Fed see this before it was too late? Was it because their CEO was on the board of directors of the SF Fed? Or were these regulators just asleep at the wheel? We need answers.”

Banks that utilize ESG policies consider those aspects when evaluating risk and opportunities, and many banks have some version of these policies in place, including Bank of America, JPMorgan, Wells Fargo and others.

While Silicon Valley Bank billed itself as a bank friendly to start-ups in the climate technology space, climate-related start-ups did not make up the bank’s whole portfolio. SVB had notable clients across a variety of business sectors, including finance technology, life science and health care, enterprise software and others.

Sunrun, one of the solar companies banking with SVB, released a statement detailing its exposure on Friday after the bank’s collapse.

“SVB represents a small percentage of our overall hedging facilities as measured by notional value of less than 15%,” Sunrun said in a statement.

Following the news that the FDIC would protect SVB depositors, Sunrun CEO Mary Powell provided additional comment to ABC News, saying, “We are pleased that the federal government acted Sunday to stabilize the banking system, ensuring us access to the less than $80 million we had in deposits at SVB.”

“Sunrun has long-standing banking relationships with a large number of financial institutions, and we remain confident in our ability to replace SVB’s undrawn commitments,” Powell continued. “Sunrun has always believed in strength through diversification.”

In January 2022, the bank announced a commitment to provide “at least $5 billion by 2027” in financing for sustainability efforts.

With SVB’s failure, that commitment, and a potential funding stream for climate tech projects is now void.

“The ones that are going to be hurt the most are the unsecured kind of start-ups,” Dajani said. “But I do feel that it will make the clean energy space as a whole come out stronger because they’ve learned from this and they’re trying to strengthen their foundation to avoid another collapse and look at other options for funding, for capital.”

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — The collapse of Silicon Valley Bank, the second-biggest bank failure in U.S. history, took place over less than 48 hours.

Customers withdrew $42 billion — nearly a quarter of the bank’s total deposits — within a single day last week.

The speedy bank run has raised questions about the fragility of financial institutions in a digital environment marked by easy cash withdrawals and the spread of information on social media and other spaces online, where panic among a few can grow into a stampede for the exit.

Such a possibility, known as a digital bank run, heightens the risk of a sudden, widespread cash withdrawal, especially among a group of depositors who share an industry and social ties — like the depositors in Silicon Valley Bank, experts told ABC News.

“This was the first Twitter-fueled bank run,” Rep. Patrick McHenry, R-N.C., the chair of the House Financial Services Committee, said in a statement days after the fall of Silicon Valley Bank.

The group of depositors in Silicon Valley Bank was made up of a relatively small set of venture capital firms, tech startups and other large investors.

After a woeful financial report last Wednesday set off concern, some of the depositors discussed their reactions in WhatsApp and Slack groups devoted to startups, the Wall Street Journal reported.

Meanwhile, several prominent venture capitalists and other major investors voiced their concern on Twitter, amplifying fears of a collapse.

Michael Burry, an investor best known for predicting the subprime mortgage crisis, warned in a now-deleted tweet: “It is possible today we found our Enron.”

On Thursday, shares of Silicon Valley Bank fell 60% in response to concern about the bank’s distressed financial position.

By the early afternoon, the sudden decline of the bank took over online discussions among startup founders, according to entrepreneur Alexander Torrenegra.

“All of my chats with tech founders in the US light on fire with what’s happening,” Torrenegra recounted on Twitter. “Obviously, we have a bank runoff. Surreal.”

Founders Fund, a venture capital fund led by billionaire investor Peter Thiel, withdrew all of its deposits that day, Bloomberg reported.

Since the bank is FDIC-insured, depositors were guaranteed protection of up to $250,000 in funds for different types of accounts held in the event of a collapse. However, many depositors in Silicon Valley Bank held accounts that far exceeded $250,000, raising the stakes for those who failed to remove their funds before a potential bank failure.

“Because information comes out faster, you get the information in real time, it’s widespread and it leads people to take action,” Campbell Harvey, a finance professor at Duke University, told ABC News. “If you’re the first group out, you get 100% of your money and if you’re the last group out, you potentially get zero.”

Hilary Allen, a professor at the American University Washington College of Law who studies banking regulation, said the relatively small and tight-knit community of bank depositors helped accelerate the downfall.

“Virtually all of the depositors were from the same community and a community that was very online,” Allen told ABC News. “If you’ve got something like Silicon Valley Bank, where the vast majority of depositors are in the tech industry and are very connected and all speaking to one another, those are the circumstances in which a panic can really flourish very, very quickly.”

To be sure, investors who fled the bank held well-founded concerns about its financial health.

Silicon Valley Bank had loaded up on investments into long-term Treasury bonds and mortgage bonds, which typically deliver small but reliable returns amid low interest rates. As the Federal Reserve aggressively hiked interest rates over the past year, however, those holdings lost significant value.

A day before the major cash withdrawal, Silicon Valley Bank announced that it had lost $1.8 billion on the sale of those distressed bonds.

“This isn’t purely a bank run,” Itamar Drechsler, a professor of finance at the University of Pennsylvania’s Wharton School of Business, told ABC News. “The bank had a very fundamental problem.”

Still, the speed and reach of online communication likely accelerated the bank’s collapse, Dreschler said.

“Like a crowd that moves together very fast, if it decides to exit someplace, there’s a problem,” Dreschler said. “If we coordinate more through social media and other information technology, that can cause the crowd to move a lot faster.”

While digital banking allows for quick and easy withdrawals, the availability of such a service likely contributed little or not at all to the bank run, since such technology has existed for many years without significant issue, the experts said.

“People have been talking for a while about whether the speed of digital banking itself would contribute to bank runs,” said Allen, of American University. “My view on that is it has been relatively easy to get your money out for quite a while now. I’m not sure how much of a difference that has made.”

In response to the outcry and fearing wider spread of the crisis, the FDIC, Treasury Department and the Fed ultimately took a major step on Sunday, telling depositors in Silicon Valley Bank that the FDIC would protect all of their funds, including those that exceed the $250,000 limit.

Later that day, the Fed announced an emergency lending program to cover the deposits at issue and restore wider confidence in the financial system.

The spread of panic online may have contributed to the federal government’s decision to take such extraordinary action and prevent uncertainty from seeping further into the financial system, Allen said.

“Was that part of the concern that motivated the Biden administration to step in because it was worried that the very public venting on Twitter might transfer to other banks, as well?” she asked.

On Monday, in a morning address from the White House, President Joe Biden sought to reassure Americans that the banking system was sound.

“Americans can rest assured that our banking system is safe,” Biden said. “Your deposits are safe. Let me also assure you, we will not stop at this. We’ll do whatever is needed.”

Biden also addressed the issue that day in a Twitter post.

ABC News’ Libby Cathey contributed reporting.

Copyright © 2023, ABC Audio. All rights reserved.

(WASHINGTON) — The Justice Department and Securities and Exchange Commission are probing the collapse of Silicon Valley Bank, according to two people familiar with the situation.

The probes, which are separate, are in the preliminary stages and it is not clear whether any wrongdoing has been committed. It is not uncommon after a large public collapse of a bank or company for the Justice Department or SEC to step in and investigate.

The Justice Department and SEC both declined to comment. The news of the probes was first reported by The Wall Street Journal.

In a statement Sunday, SEC Chair Gary Gensler said the agency was focused on “monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly.”

“Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws,” he said.

SVB Chief Executive Officer Greg Becker did not return ABC News’ request for comment.

This is a developing story. Please check back for updates.

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — A New York City woman has gone viral for tweeting about her fight for equal pay.

Kimberly Nguyen, a 25-year-old user experience writer, tweeted earlier this month that she saw a job listing for a full-time position with her company that pays as much as $90,000 more than what she makes as a contractor in the same position.

In a tweet that now has more than 12 million views, Nguyen said that she was able to find out about the salary disparity thanks to a salary transparency law that went into effect in New York City last October.

The law requires companies with at least four employees, at least one of which is based in the city, to include a minimum and maximum salary on job listings, according to the New York City Commission on Human Rights, which is enforcing the law.

“My company just listed on LinkedIn a job posting for what I’m currently doing (so we’re hiring another UX writer) and now thanks to salary transparency laws, I see that they intend to pay this person $32k-$90k more than they currently pay me, so I applied,” she tweeted March 7.

Speaking with “Good Morning America,” Nguyen said that when the city’s salary transparency law first went into effect, “I actually started going online and Google searching, ‘How much does a UX writer make?'”

“I started looking at job listings in New York City for UX writers, and seeing the advertised salary as being way way higher than what I was making,” she said.

When Nguyen saw her company’s job posting this month, which listed a much higher salary for a full-time role, she said she took to Twitter mainly to vent her frustration.

“I was so upset,” she said. “To know that [full-time employees] are making anywhere between $32,000 to $90,000 more than what I’m making for essentially the same work felt rude and disrespectful.”

Nguyen said she is also a poet and she expected her tweet to reach her “poet friends” on Twitter, not to go viral.

“I didn’t intend to be the poet laureate of pay transparency,” she said, adding, “All of a sudden, the tweet was blowing up.”

Women make 82 cents for every dollar earned by men

Nguyen has continued to document her fight for equal pay on Twitter since her initial tweet, saying she is now looking for positions with other companies.

Her tweets caught the attention of women in particular, many of whom noted how the salary transparency law in New York City was opening more people’s eyes to the gender pay gap.

“As a woman of color, we inherently KNOW we’re being disgustingly underpaid, but to actually SEE it?” wrote one Twitter user.

“This. When people argue there’s no gender pay gap this is what we’re talking about,” another wrote.

In the United States, women, on average, make 82 cents for every dollar earned by men, according to the Pew Research Center. The number has not budged in recent years, and it’s even worse for mothers, women of color and all women as they age, data shows.

This year, March 14 is Equal Pay Day, which marks how far into 2023 some women must work to make what white, non-Hispanic men earned in 2022.

Equal Pay Day for Black women will not come until July. For moms, Equal Pay Day does not come until August. For Latina women, Equal Pay Day does not come until October, and for Native women, Equal Pay Day is not until November, according to the American Association of University Women.

Among Asian American and Pacific Islander women, the calendar varies. According to the National Asian Pacific American Women’s Forum, “On average, [Asian American, Native Hawaiian, and Pacific Islander] women earn only 75 cents for every dollar that white, non-Hispanic men make.” However, “some AANHPI ethnic subgroups, particularly Southeast Asian, Native Hawaiian, and Pacific Islander women, experience even bigger wage gaps and don’t catch up until much later in the year.”

The impact of the gender wage gap was seen firsthand over the past three years as a crisis caused by the coronavirus pandemic pushed more than 2 million women out of the workforce, leaving many of them on shakier financial footing than their male counterparts because of the already existing gap, experts say.

Now as women are returning to the workforce in record numbers, Nguyen said she is among those who hope that pay transparency grows as well in order to help women.

“I hope that people continue to advocate for salary pay transparency legislation because clearly it’s very helpful,” Nguyen said. “Especially as a young woman in the workplace, and especially because my parents are immigrants, I have no frame of reference for anything. I don’t know where to start for what to ask for. I’m just dealing with invisible numbers, so to have concrete numbers in front of me is so helpful and so important.”

At least eight states — including Colorado, California, Maryland, Washington and Nevada — and cities already have laws in place that implement some degree of pay transparency.

Emily Martin, vice president for education and workplace justice at the National Women’s Law Center, a policy organization that fights for gender justice, told “GMA” last year that many of those states also prohibit employers from setting a person’s salary based on their salary in their previous job, which helps women.

“Those salary history prohibitions are important for ensuring that pay discrimination doesn’t follow someone from job to job through their career,” Martin said, noting the prohibitions also help ensure that “the employer doesn’t hold all the cards.”

Tips for women when asking for pay

Here are four tips for fighting for equal pay from Martin and Katie Donovan, a pay equity expert and the founder of Equal Pay Negotiations.

1. Do your research on salaries beforehand:

“In part because of the internet and in part because of these policy changes, we are living in a moment where you can find more information about pay in particular roles and particular companies than you could 10 or 15 years ago, and that is a source of power for workers,” said Martin.

“It always of course is a good idea to do your research in these situations and to learn as much as you can about what is publicly available or what the law requires an employer to provide in terms of pay information,” she added.

2. Be comfortable asking about salary:

“There’s a little bit of culture shift happening with employers where there is more of an understanding that posting a salary range is a good equity practice, so we’re seeing more employers do it even where the law doesn’t require it,” Martin said. “That in turn means that it is a more reasonable question for job applicants to ask of employers, even if employer hasn’t posted it, to ask whether that information is available.”

3. In most cases, you’re protected against giving your salary history:

“Under the Federal Equal Pay Act, a lot of courts have held that salary history isn’t legal justification for paying a woman less than a man in the same role, so you do actually have some protection against pay discrimination based on salary history,” Martin said.

“That’s one reason why if I were in that position, I would try to gently deflect an interviewer by saying something like, ‘It sounds like what you really want to understand is the salary that I’m looking for in this job, and this is what it is,'” she said. “And hopefully that is informed by some data that you’ve been able to find in the world through sites like Glassdoor and the like about what the market rate is for the position.”

4. Ask for more than the median salary range:

“As a candidate, when you’re given a job offer, you say, ‘I’m not accepting median. That’s low,'” said Donovan. “You aim for 75 percentile or higher, because that’s where the white guys are hanging.”

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) —  The largest bank failure since the 2008 crisis has triggered a major U.S. government intervention to protect the financial system.

Silicon Valley Bank, the nation’s 16th largest bank, collapsed on Friday, forcing a government takeover and calling into question the fate of almost $175 billion in customer deposits.

On Sunday, Signature Bank, the 29th-largest bank in the U.S., closed its doors, suggesting the financial panic had spread.

Many bank stocks plummeted in early trading on Monday. First Republic Bank dropped 65% before trading was halted; Western Alliance Bancorp fell almost 60%. Charles Schwab, the eight-largest U.S. bank, dropped nearly 10%.

“This has been riding on a roller coaster the last couple of days,” Joe Lynyak, a partner at the international law firm Dorsey & Whitney and an expert on bank failures, told ABC News. “Suddenly, we’re in a crisis.”

Here’s what you need to know about what caused the Silicon Valley Bank failure, how far it has spread and what it means for you.

Why did Silicon Valley Bank collapse?

The failure of Silicon Valley Bank resembles an “old-fashioned bank run,” William Chittenden, a professor of finance at Texas State University, told ABC News.

The bank’s deposit base, which draws heavily from startup firms in the tech industry, tripled in size during the pandemic-era tech boom between 2020 and 2022. Rather than invest all of the deposits into other startups or venture firms, the bank placed a sizable share of the funds into long-term Treasury bonds and mortgage bonds, which typically deliver small but reliable returns amid low interest rates.

In short order, however, the low-interest rate environment evaporated. Over the last year, the Federal Reserve raised its benchmark interest rate 4.5%, the fastest pace since the 1980s. The sudden spike in interest rates dropped the value of Silicon Valley Bank’s Treasury bonds and mortgage bonds, punching a hole in its balance sheet.

Facing a difficult business environment for tech companies, some large clients pulled money from the bank last week and it was forced to sell some of the distressed securities in order to provide the cash.

“When the bank started selling the assets, it became more evidence of the value that they’d lost,” Anat Admati, a professor at Stanford’s Graduate School of Business, told ABC News.

“Imagine that your entire assets are your house and you bought the house with very little down payment and housing prices go down,” Admati added. “You’re basically under water, meaning if you sell the assets, you can’t pay your debt.”

The vulnerable condition of the bank’s balance sheet scared other major depositors, who in turn pulled their funds from the bank, prompting a bank run that gained momentum quickly since the bank depended on a relatively small number of large depositors. It collapsed within days.

“The bank simply didn’t have enough cash on hand to meet all of their depositor needs,” Chittenden said.

Escalating the financial risk, New York-based Signature Bank shuttered on Sunday at the order of state officials. The bank, which had recently welcomed cryptocurrency deposits, fell prey to fears of a bank run among those who held risky assets, Chittenden said.

“The run on Silicon Valley Bank kind of spooked those customers,” Chittenden added. “So Signature Bank went under.”

What did the government do in response to the collapse of Silicon Valley Bank?

The U.S government has taken speedy and extraordinary steps to limit the risk posed to the financial system.

“The government was caught unawares and had to take extreme emergency action,” said Lynyak of Dorsey & Whitney.

Almost immediately, the Federal Deposit Insurance Corporation, which protects the stability of the financial system, took over Silicon Valley Bank on Friday in an effort to protect depositors.

Since the bank is FDIC-insured, depositors are guaranteed protection of up to $250,000 in funds for each different type of account held.

The group of depositors in Silicon Valley Bank is made up of a relatively small set of venture capital firms, startups and other large investors, many of whom held deposits that far exceeded $250,000. In turn, those depositors risked losing a portion of or all of their money that exceeded that threshold.

“Everybody panicked,” Admati said. “They were anxious all weekend long about whether they could make payroll and pull money out because it’s stuck there.”

In response to the outcry and fearing wider spread of the crisis, the FDIC, the Treasury Department and the Fed took further action on Sunday, telling depositors in Silicon Valley Bank and Signature Bank that the FDIC would protect all of their funds, including those that exceed the $250,000 limit.

Later on Sunday, the Fed announced an emergency lending program to cover the deposits at issue and restore wider confidence in the financial system.

Under the program, the Federal Reserve will allow distressed banks to borrow funds on favorable terms directly from the Fed, instead of generating cash by selling underwater securities, as Silicon Valley Bank had done. Those funds will equip banks to pay depositors who may want to quickly pull out funds amid the turmoil.

Now, the banks can use distressed securities as collateral to borrow from the emergency lending program as if the securities had retained their full value, allowing the banks to raise cash and ensuring the Fed will take on much of the risk tied to the banks’ declining assets.

Returning to the analogy of a home mortgage in a declining housing market, Admati said the program resembles a homeowner getting a loan against their mortgage as if conditions had remained as strong as they were when the house was purchased rather than taking into account the new, worse market.

“They’re lending to the bank more than the assets are worth,” Admati said.

The federal agencies behind the emergency response refuted notions that the moves amount to a taxpayer bailout. “No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer,” said the official statement from Treasury, the Fed, and the FDIC.

Prominent critics have asserted instead that the government response should be considered a bailout, including the editorial board at The Wall Street Journal.

Has the Silicon Valley Bank collapse triggered a banking crisis?

The collapse of Silicon Valley Bank and Signature Bank has prompted fears of a wider contagion throughout the financial industry.

However, the spread of financial distress remains limited, in part because Silicon Valley Bank served a narrow swathe of the economy concentrated in startup tech firms, some experts told ABC News. Other experts cautioned that the situation continues to be in flux and could escalate significantly.
Chittenden, who downplayed the risk of a wider financial crisis, said Silicon Valley Bank serves a niche market set apart from the economy as a whole.

“It really is relatively isolated,” he said. “It doesn’t have all those interchangeable relationships.”

“It’s not a systemic problem that lots and lots of banks are going to be facing,” he added.

Darrell Duffie, a professor at Stanford’s Graduate School of Business, echoed the sentiment, citing the relatively small size of the failed banks compared to the largest in the sector.

“At this point, it doesn’t look like a broadspread crisis,” Duffie said. “The affected banks have taken more risks than most others and they are not among the very biggest banks, which are more heavily regulated and have a lot more small depositors.”

Admati disagreed, saying recent events should be considered a financial crisis and the outcome remains uncertain.

In rescuing depositors in Silicon Valley Bank, federal agencies invoked the “systemic risk exception,” a stipulation that allows the government to intervene on behalf of depositors.

“It’s certainly a crisis because the bank wasn’t considered systemic and all of a sudden it is considered systemic,” Admati said. “They themselves defined it as bigger than just one failed bank.”

“These things are very hard to predict,” she added, noting that the outcome depends in part on the emotional response and behavior of depositors, which stands apart from the underlying financial damage.

What does the current banking emergency mean for you?

The vast majority of banking customers hold deposits below the FDIC insurance threshold of $250,000, ensuring the protection of funds, regardless of a potential bank collapse, Lynyak said.

The recent bank collapses offer an important reminder that customers should scrutinize the banks that hold their money.

“People should probably be careful about looking at the capital levels and the business plan of their particular bank,” Lynyak said. “Some small inquiry is always very useful.”

As depositors big and small monitor a financial emergency, their assessment ultimately determines the outcome for the wider economy, he added.

“As long as the public believes their deposits are safe, our system is safe,” Lynyak said.

Copyright © 2023, ABC Audio. All rights reserved.

(WASHINGTON) — Americans lost $10.3 billion to a wide variety of internet scams last year, according to an FBI report released this month.

The losses were the highest in five years, according to the annual report from the FBI. The bureau’s Internet Crime Complaint Center (IC3) lodged more than 2,000 complaints per day.

The most highly reported crimes were phishing expeditions, with 300,497 victims reporting over $52 million in losses in 2022, according to the bureau. Phishing, defined as “the use of unsolicited email, text messages, and telephone calls purportedly from a legitimate company requesting personal, financial, and/or login credentials,” is frequently successful because phishing emails will often resemble those from people victims know personally, prompting them to click on unsecured links.

Data breaches and non-payment scams were the next most common internet scams in 2022, claiming 58,859 and 51,679 victims, respectively, per the report.

Ransomware, a type of cyber intrusion which locks up a device’s data until a ransom is paid, is of particular concern for cybersecurity professionals due to the underreporting of ransomware attacks by victims. In 2022, the FBI “received 2,385 complaints identified as ransomware with adjusted losses of more than $34.3 million,” according to the report.

“The IC3 has seen an increase in an additional extortion tactic used to facilitate ransomware. The threat actors pressure victims to pay by threatening to publish the stolen data if they do not pay the ransom,” the IC3 warns.

By far, the most heavily targeted industry for ransomware attacks was the healthcare industry, followed by critical manufacturing’ and government.

“The FBI does not encourage paying a ransom to criminal actors,” the report says. “Paying a ransom may embolden adversaries to target additional organizations, encourage other criminal actors to engage in the distribution of ransomware, and/or fund illicit activities. Paying the ransom also does not guarantee that a victim’s files will be recovered.”

Earlier this year, the Justice Department disrupted a ransomware gang called HIVE, which was responsible for 87 incidents targeting critical infrastructure, the report says.

Call center scams, which emanate from India primarily, are responsible for over $1 billion in losses to victims.

“Call centers overwhelmingly target the elderly, with devastating effects,” the report says. “Almost half the victims report to be over 60 (46%), and experience 69% of the losses (over $724 million).”

In total, the elderly lost $3.1 billion to internet scams in 2022, the most of any age group.

The FBI has a 73% success rate in getting victims their funds back, according to the report.

Copyright © 2023, ABC Audio. All rights reserved.

(WASHINGTON) — The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation announced Sunday that they will make additional funding available to ensure all Silicon Valley Bank deposits, both insured and uninsured, will be paid in full.

“After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary [Janet] Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors,” the said in a joint statement. “Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”

The Fed also announced it will make additional funding available to “to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.”

Silicon Valley Bank, the 16th largest bank in the country, failed on Friday and was taken over by the FDIC, after a run on the bank Wednesday and customers withdrew $42 billion of deposits by the end of Thursday. SVB mostly served technology workers and startups, including some of Silicon Valley’s biggest names, such as Roku.

The trio also announced Sunday a “similar systemic risk exception” for New York-based Signature Bank, “which was closed today by its state chartering authority,” according to the joint statement. “All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.”

“Shareholders and certain unsecured debtholders will not be protected,” the statement read. “Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”

President Joe Biden issued a statement Sunday on his administration’s action to protect depositors at both banks, expressing his approval for the actions but stressing he will hold those responsible for “this mess” accountable for their actions.

“Over the weekend, and at my direction, the Treasury Secretary and my National Economic Council Director worked diligently with the banking regulators to address problems at Silicon Valley Bank and Signature Bank,” Biden said. “I am pleased that they reached a prompt solution that protects American workers and small businesses, and keeps our financial system safe. The solution also ensures that taxpayer dollars are not put at risk.”

“The American people and American businesses can have confidence that their bank deposits will be there when they need them,” the president added. “I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”

A senior Treasury official and Federal Reserve officials on calls with reporters Sunday night insisted these moves to pay the deposits of Silicon Valley Bank are not a bailout.

The officials stressed that the funds used to pay depositors of Silicon Valley Bank and Signature Bank will come from the FDIC’s Deposit Insurance Fund (DIF). The DIF is funded by fees on banks, and then from earnings on their investments such as Treasury securities, and currently has more than $100 billion in it, according to officials.

“The Deposit Insurance Fund is bearing the risk. This is not funds from the taxpayer,” a senior Treasury official said.

The senior Treasury official also stressed that taxpayers are not paying for these moves — the banks’ shareholders are.

“The bank’s equity and bondholders are being wiped out. They took a risk as owners of the securities, they will take the losses,” the senior Treasury official said.

Officials were repeatedly pressed by reporters on if these moves on Silicon Valley Bank and Signature Bank would establish a precedent to cover uninsured funds and leave taxpayers vulnerable in the future if FDIC funds were not sufficient.

“Right now, we are very focused on addressing the current issue and taking care of the current system and stabilizing the banking systems — or the uninsured, and assuring uninsured depositors that they will be made whole. But I do think we will be looking back with time and reassess and assess whether any changes should be made,” the senior Treasury official said.

Regulators took the unusual step of designating both Silicon Valley Bank and Signature Bank as “systemic risks” to the financial system, a designation that has not been used since 2008.

“I’m grateful that the Federal regulators have taken steps to do just that, and I hope that these actions will provide increased confidence in the stability of our banking system,” New York Gov. Kathy Hochul said in a statement. “Many depositors at these banks are small businesses, including those driving the innovation economy, and their success is key to New York’s robust economy.”

Sen. Mark Warner, D-Va., told told ABC News’ This Week co-anchor Martha Raddatz earlier Sunday, “Let’s see what happens today,” pumping the breaks on a potential SVB bailout.

“I know I’ve been in conversations with the regulators, the administration, the Fed; the best outcome will be can they find a buyer for this SVB bank today before the markets open in Asia later in the day. That would be the best making sure that depositors — remember that shareholders in the bank are going to lose their money, let’s be clear about that — but the depositors can be taken care of. And the best outcome will be an acquisition of SVB,” he said.

“Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and we’re certainly not looking. And the reforms that have been put in place mean that we’re not going to do that again. But we are concerned about depositors and are focused on trying to meet their needs,” Treasury Secretary Janet Yellen said on CBS’ Face the Nation Sunday.

Copyright © 2023, ABC Audio. All rights reserved.

(WASHINGTON) — The Department of Transportation will send proposed legislation to Congress Monday asking legislators to ban so-called family seating fees on flights.

The proposal follows calls from President Joe Biden to get rid of “junk fees” — including extra costs on airline tickets so families can sit together. The proposal would prohibit airlines from charging a fee or additional costs on kid’s seats in the same service class as an accompanying adult.

DOT officials conducted a review last year of airline seating policies, encouraging carriers to “review and improved” their policies to ensure kids can sit near parents at no additional cost.

“Upon review of the airlines’ seating policies, DOT remains concerned that airlines’ policies do not guarantee adjacent seats for young children traveling with a family member and that airlines do not guarantee the adjacent seating at no additional cost,” Transportation Secretary Pete Buttigieg said in a letter to House Speaker Kevin McCarthy.

The proposed legislation also follows DOT’s recently released a family seating dashboard, which outlines which airlines will allow parents to sit with their kids at no extra cost.

To receive a “green check” on DOT’s dashboard, an airline must guarantee that parents can sit next to children aged 13 and younger at no additional cost if adjacent seats are available when they book. Airlines must include that guarantee as part of their customer service plan so that it is backstopped by USDOT enforcement if they fail to deliver, DOT said.

Alaska Airlines, American Airlines and Frontier Airlines have the green light from DOT on their family seating policies.

Copyright © 2023, ABC Audio. All rights reserved.

(LONDON) — Silicon Valley Bank UK is being acquired by HSBC in a £1 deal that will protect deposits, the United Kingdom’s chancellor and HSBC said on Monday.

“This morning, the Government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC,” Chancellor of the Exchequer Jeremy Hunt said on Twitter. “Deposits will be protected, with no taxpayer support.”

The deal for the United Kingdom branch of the collapsed Silicon Valley Bank comes as Washington considers how much help to extend to the U.S. institution, the 16th largest in the country.

After the bank failed on Friday, the U.S. Treasury Department, The Federal Reserve and the Federal Deposit Insurance Corporation said they would make sure U.S. deposits were paid in full.

HSBC, which is headquartered in London, said in a statement that SVB UK had deposits totalling about £6.7 billion, or about $8 billion. The bank has loans totalling about £5.5 billion and had a pre-tax profit of about £88 billion in 2022.

HSBC Group CEO Noel Quinn said in a statement that the acquisition “makes excellent strategic sense.”

“It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the UK and internationally,” Quinn said.

Hunt, the U.K. finance minister, said, “I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise.”

HSBC said it would update shareholders on the status of the acquisition in May.

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — You could say the Internal Revenue Service is undergoing a Renaissance. After years of criticism for being inefficient and antiquated, the IRS has spent nearly $1 billion to improve its service.

“So far, so good,” Ted Rossman, senior industry analyst at Bankrate.com, told ABC News about the current tax-filing season.

As of the end of February, the IRS had processed 1.9 million more returns and issued 5.4 million more refunds than the same time last year.

“That suggests to me that the gains are coming from faster turnarounds, not more filers,” said Rossman.

The IRS is also answering 90% of calls to its customer service line this year compared to just 13% a year ago, according to the agency. Tax pros say the IRS is on track for its first “normal” tax season in years after the COVID-19 pandemic upended the agency’s efforts to process returns and disburse refunds in an orderly and timely manner.

The IRS has spent nearly $848 million of the $80 billion granted to the agency over the next decade through the Inflation Reduction Act, according to Treasury Department data. The money is meant to give the agency the resources its needs to improve customer service and technology systems and to finally become a 21st century tax service.

Among the upgrades so far are new online tax-filing tools that include allowing filers to upload follow-up documents online, making the IRS more competitive with private-sector tax prep software. The agency also debuted a program that lets businesses file information reports for independent contractors through a secure portal on its website and it rolled out updated software that let’s taxpayers who filed amended returns receive refunds via direct deposit.

“It seems that most refunds are being delivered in a timely fashion this year. There’s still a paper backlog at the IRS. Even though it’s not nearly as bad as last year,” said Rossman.

Tax experts still recommend filing and requesting your refund electronically, if possible, to give yourself the best odds of getting your refund quickly. Barring any special exceptions, you should get your refund in two to three weeks in most cases. Sending a paper return or requesting a paper check could take much longer.

So far, the IRS has hired more than 5,000 employees to ramp up its customer service division and is looking to hire another 5,300 this year, according to agency officials.

The massive federal funding allocated to the IRS over the next 10 years is also meant to tighten tax enforcement on high-income earners and major corporations, something Republicans have argued would “supersize” the agency and lead IRS agents to harass taxpayers.

Treasury Secretary Janet Yellen has instructed the agency not to use any of the money to increase audits of taxpayers earning less than $400,000 a year and incoming IRS chief Daniel Werfel has promised to abide by that order.

Rossman said it is important for the IRS to “get this filing season right” after years of disarray and poor customer service.

“I think it’s important for consumer confidence and for avoiding additional regulatory scrutiny,” Rossman said. “The IRS has a monopoly on America’s taxes – it’s not like we can choose to do business with one of their competitors instead – but I still think it’s important for the IRS to start turning its reputation around.”

Copyright © 2023, ABC Audio. All rights reserved.