The Fed increased its benchmark interest rate by 25 basis points on Wednesday to between 4.75% and 5%, its highest level since September 2007. The increase marks the Fed’s ninth straight rate hike since the central bank began raising rates in March 2022. More: - Fed Chair Jerome Powell said officials considered delaying a rate hike following weeks of stress with the banking sector.
- Powell signaled the central bank could suspend future hikes until the dust settles.
- All 11 Fed officials on the Federal Open Market Committee agreed to the 0.25% rate increase.
- U.S. stocks fell on Wednesday following the rate hike.
- The Dow lost 530.49 points, or 1.63%, the S&P 500 fell 1.65%, and the Nasdaq lost 1.6%.
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U.S. Treasury Secretary Janet Yellen said during an appearance before the Senate Appropriations Committee that federal bank regulators were not considering any plans to insure all U.S. bank deposits. On Tuesday, while speaking to the American Bankers Association, Yellen signaled that U.S. regulators are looking into a way to guarantee all bank deposits. More: - One idea being discussed is a tiered pricing system where depositors would pay extra to guarantee deposits over $250,000.
- On Wednesday, Yellen said there could be reasoned discussions on whether the current $250,000 limit for insured deposits should be lifted as part of long-term systemic reforms.
- Yellen noted that currently, the Biden Administration was not considering increasing the deposit insurance.
- Yellen added that uninsured deposits above $250,000 could be protected only if the failed bank posed a systemic risk to the financial system.
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U.S. bondholders plan to sue the Swiss government over its decision to write down $17B of Credit Suisse bonds as part of the bank’s forced merger with UBS. Over the weekend, Switzerland used an emergent ordinance to write down Credit Suisse’s bonds to zero in a deal where UBS acquired the bank for $3.25B. More: - AT1 bonds are generally believed to rank higher than equity on a balance sheet.
- However, Credit Suisse’s AT1 bonds warned that Swiss regulators might not be required to follow any order of priority.
- Under the UBS-Credit Suisse purchase agreement, AT1 bondholders would receive nothing, while Credit Suisse shareholders would get 3B Swiss francs ($3.2B).
- On Monday, Credit Suisse bondholders protested the UBS deal, and the European Central Bank said the deal went against debt recovery norms and undermined confidence in the financial market.
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The SEC has issued a Wells notice to Coinbase, its second warning to the crypto exchange this year. The SEC said it has identified potential violations of U.S. securities law. Following news of the notice, Coinbase shares closed ~8% lower on Wednesday, then fell an additional ~16% during extended trading. More: - A Wells notice is usually one of the final steps before the SEC formally issues charges.
- Responding to the notice, Coinbase CEO Brian Armstrong said the company is “right on the law, confident in the facts, and welcomes the opportunity for Coinbase to go before a court.”
- Coinbase Chief Legal Officer Paul Grewal said the company is very confident in the way it runs its business.
- The SEC has increased scrutiny of the crypto sector following the high-profile collapse of multiple firms, including 3AC, Celsius, Voyager, and FTX.
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Shares of Carvana rose on Wednesday after the company released plans to restructure some of its $9B debt load. Carvana said it expects a Q1 loss of between $50M and $100M, down from a loss of $348M previously reported. More: - In a recent SEC filing, Carvana is offering its noteholders the option to exchange their unsecured notes at a premium to current trading prices in exchange for new secured notes.
- The move would reduce Carvana’s cash interest expense while providing the company’s noteholders with collateral.
- The offer, if fully subscribed, would reduce Carvana’s outstanding $5.7B of unsecured bond debt by $1.3B and its annual cash interest bill by about $100M.
- Carvana expects Q1 unit sales to be between 76,000 and 79,000, down from 105,185 reported last year.
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The SEC has charged crypto founder Justin Sun and his company Tron Foundation Limited with fraud and the sale of unregistered securities. The SEC also charged celebrities who backed and promoted the crypto assets that Sun’s company offered: TRX and BTT. More: - The SEC alleges that Sun engaged in fraud by manipulating the trading activity of the two tokens, creating the appearance of active trading when it did not exist.
- Tron is alleged to have engaged in at least 609,790 fake trades, or about 2,449 a day, over an eight-month period.
- Eight celebrities and influencers promoted the tokens, including actress Lindsay Lohan, boxer Jake Paul, musicians Akon, Austin Mahone, and Soulja Boy.
- All the celebrities except Soulja Boy and Mahone agreed to pay a collective $400,000 in disgorgement, interest, and penalties to settle the charges.
- The group did not admit or deny any wrongdoing.
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- The FAA plans to reduce flight requirements at airports serving the New York City and D.C. areas this summer to help limit congestion and disruptions.
- Trump Media SPAC Digital World Acquisition Corp has fired its CEO and chairman Patrick Orlando. Last month, the Nasdaq stock exchange warned the company that it risks being delisted over unpaid fees.
- The Bank of England said it warned U.S. regulators about the risks at Silicon Valley Bank before its sudden collapse.
- Several TikTok influencers arrived in Washington, D.C., on Wednesday ahead of the company’s CEO’s congressional testimony on Thursday.
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 |  | Vanessa Omeokachie writes the daily Inside Business newsletter. Her interests include finance, technology, and entrepreneurship. In her free time, she enjoys reading, hiking, attending concerts and music festivals, traveling, and exploring. Connect with her on Twitter @VanessaOmeo or on LinkedIn. |   | | Editor | Aaron Crutchfield is based in the high desert of California. Over the last two decades, he has spent time writing and editing at various local newspapers and defense contractors in California. When he's not working, he can often be found looking at the latest memes with his kids or working on his 1962 and 1972 Fords. | |
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