Tag: crisis

Election officials have ideas for stopping a 2024 crisis before it even starts

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“Election officials do want elections to become boring again,” said Rachel Orey, the associate director of the BPC’s Elections Project and an author of the report. “We need to think more realistically about what it is that we actually need to do to improve elections.”
They might have their work cut out for them.
The explosion of election denialism, Orey says, has distracted “from the actual challenges that are undermining elections. If legislators’ attention is so focused on appeasing critics, they end up doing things that aren’t actually solving problems.”
One longtime recommendation they reup is to urge states to join or remain in the Electronic Registration Information Center — an interstate organization that helps states maintain their voter rolls — in an effort to make roll maintenance “a regular and uncontroversial part of the elections process.”
But what’s happening on the ground is the opposite. Several Republican-led states have left the organization over the last year after it was attacked by former President Donald Trump and his allies. Some affiliated with the organization fear more departures are coming.
BPC recommends improving funding for elections, a bugaboo for some in the field. The report’s first set of recommendations call for the state and federal government to supply more reliable funding for election officials.
The report argues that it is needed because “an increasingly interconnected, complicated, and contentious political environment means that vulnerabilities in one jurisdiction could cast doubt on the election and, ultimately, on American democracy as a whole.”
The report says states should “consider requiring that all ballots be in hand [of election officials] by the close of polls to be counted,” in an effort to expedite the amount of time it takes results to be tabulated. Election officials have become increasingly concerned about the window between when polls close and when a winner is clear, a time they say is ripe for bad actors to spread disinformation.

The idea would likely be unpopular with some Democrats who advocate letting ballots that are postmarked by Election Day and are received by officials days later to count.
That recommendation is part of one of the report’s other major goals, which is looking to have election results that are “trusted by candidates and the general public.”
That and other recommendations look to speed up ballot counting timelines, an effort to counteract “today’s rapid-information culture [that] perceives longer waits as inherently suspect.”
There is also a recognition that post-election work is just as important as what happens on Election Day.
BPC believes holding “cross-partisan” election audits could curb the misinformation that stemmed from states like Arizona, where the Republican-led state Senate ran a post-election review of Maricopa County that was widely panned by election experts as amateurish and fueling conspiracy theories.
“Getting some sort of agreed-upon, trusted approach to audit the process can really then enhance [elections],” said Scott Jarrett, who is co-elections director in Maricopa and a BPC elections task force member. “Not only for the near-term, but then for decades and decades of elections to come.”
The election certification process has been revealed as a weak point in American democracy. In the immediate aftermath of the 2020 election, allies of Trump targeted election certification in Michigan and elsewhere. And a handful of counties across the country had to be ordered by courts to certify some results during the midterms. “Certification challenges might increase in the days after the 2024 presidential election,” the report warns.
Among other things, the report urges lawmakers to allow state election officials to step in if a local jurisdiction does not certify, and allowing for “courts [to] expediently intervene” if officials refuse to certify.
The ultimate goal of the entire report, officials say, is to have elections run smoothly. The thinking there is that if voters have a positive individual experience, they will be more trusting of the system overall.
But they acknowledge that the heat on election officials likely isn’t going away anytime soon.
“I would love for it to be boring again, and people aren’t paying attention, and they just show up, vote and are confident that their vote has been counted,” said Monica Holman Evans, another BPC task force member and the executive director of the D.C. board of elections. “But I don’t know if that’s likely to happen.”
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#Election #officials #ideas #stopping #crisis #starts
( With inputs from : www.politico.com )

April 10, 2023
Europe must resist pressure to become ‘America’s followers,’ says Macron

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Cet article est aussi disponible en français.
ABOARD COTAM UNITÉ (FRANCE’S AIR FORCE ONE) — Europe must reduce its dependency on the United States and avoid getting dragged into a confrontation between China and the U.S. over Taiwan, French President Emmanuel Macron said in an interview on his plane back from a three-day state visit to China.
Speaking with POLITICO and two French journalists after spending around six hours with Chinese President Xi Jinping during his trip, Macron emphasized his pet theory of “strategic autonomy” for Europe, presumably led by France, to become a “third superpower.”
He said “the great risk” Europe faces is that it “gets caught up in crises that are not ours, which prevents it from building its strategic autonomy,” while flying from Beijing to Guangzhou, in southern China, aboard COTAM Unité, France’s Air Force One.
Xi Jinping and the Chinese Communist Party have enthusiastically endorsed Macron’s concept of strategic autonomy and Chinese officials constantly refer to it in their dealings with European countries. Party leaders and theorists in Beijing are convinced the West is in decline and China is on the ascendant and that weakening the transatlantic relationship will help accelerate this trend.
“The paradox would be that, overcome with panic, we believe we are just America’s followers,” Macron said in the interview. “The question Europeans need to answer … is it in our interest to accelerate [a crisis] on Taiwan? No. The worse thing would be to think that we Europeans must become followers on this topic and take our cue from the U.S. agenda and a Chinese overreaction,” he said.
Just hours after his flight left Guangzhou headed back to Paris, China launched large military exercises around the self-ruled island of Taiwan, which China claims as its territory but the U.S. has promised to arm and defend.
Those exercises were a response to Taiwanese President Tsai Ing-Wen’s 10-day diplomatic tour of Central American countries that included a meeting with Republican U.S. House Speaker Kevin McCarthy while she transited in California. People familiar with Macron’s thinking said he was happy Beijing had at least waited until he was out of Chinese airspace before launching the simulated “Taiwan encirclement” exercise.

Beijing has repeatedly threatened to invade in recent years and has a policy of isolating the democratic island by forcing other countries to recognize it as part of “one China.”
Taiwan talks
Macron and Xi discussed Taiwan “intensely,” according to French officials accompanying the president, who appears to have taken a more conciliatory approach than the U.S. or even the European Union.
“Stability in the Taiwan Strait is of paramount importance,” European Commission President Ursula von der Leyen, who accompanied Macron for part of his visit, said she told Xi during their meeting in Beijing last Thursday. “The threat [of] the use of force to change the status quo is unacceptable.”
Chinese President Xi Jinping and French President Emmanuel Macron in Guangdong on April 7, 2023 | Pool Photo by Jacques Witt / AFP via Getty Images
Xi responded by saying anyone who thought they could influence Beijing on Taiwan was deluded.
Macron appears to agree with that assessment.
“Europeans cannot resolve the crisis in Ukraine; how can we credibly say on Taiwan, ‘watch out, if you do something wrong we will be there’? If you really want to increase tensions that’s the way to do it,” he said.
“Europe is more willing to accept a world in which China becomes a regional hegemon,” said Yanmei Xie, a geopolitics analyst at Gavekal Dragonomics. “Some of its leaders even believe such a world order may be more advantageous to Europe.”
In his trilateral meeting with Macron and von der Leyen last Thursday in Beijing, Xi Jinping went off script on only two topics — Ukraine and Taiwan — according to someone who was present in the room.
“Xi was visibly annoyed for being held responsible for the Ukraine conflict and he downplayed his recent visit to Moscow,” this person said. “He was clearly enraged by the U.S. and very upset over Taiwan, by the Taiwanese president’s transit through the U.S. and [the fact that] foreign policy issues were being raised by Europeans.”
In this meeting, Macron and von der Leyen took similar lines on Taiwan, this person said. But Macron subsequently spent more than four hours with the Chinese leader, much of it with only translators present, and his tone was far more conciliatory than von der Leyen’s when speaking with journalists.
‘Vassals’ warning
Macron also argued that Europe had increased its dependency on the U.S. for weapons and energy and must now focus on boosting European defense industries.
He also suggested Europe should reduce its dependence on the “extraterritoriality of the U.S. dollar,” a key policy objective of both Moscow and Beijing.
Macron has long been a proponent of strategic autonomy for Europe | Ludovic Marin/AFP via Getty Images
“If the tensions between the two superpowers heat up … we won’t have the time nor the resources to finance our strategic autonomy and we will become vassals,” he said.
Russia, China, Iran and other countries have been hit by U.S. sanctions in recent years that are based on denying access to the dominant dollar-denominated global financial system. Some in Europe have complained about “weaponization” of the dollar by Washington, which forces European companies to give up business and cut ties with third countries or face crippling secondary sanctions.
While sitting in the stateroom of his A330 aircraft in a hoodie with the words “French Tech” emblazoned on the chest, Macron claimed to have already “won the ideological battle on strategic autonomy” for Europe.
He did not address the question of ongoing U.S. security guarantees for the Continent, which relies heavily on American defense assistance amid the first major land war in Europe since World War II.
As one of the five permanent members of the U.N. Security Council and the only nuclear power in the EU, France is in a unique position militarily. However, the country has contributed far less to the defense of Ukraine against Russia’s invasion than many other countries.
As is common in France and many other European countries, the French President’s office, known as the Elysée Palace, insisted on checking and “proofreading” all the president’s quotes to be published in this article as a condition of granting the interview. This violates POLITICO’s editorial standards and policy, but we agreed to the terms in order to speak directly with the French president. POLITICO insisted that it cannot deceive its readers and would not publish anything the president did not say. The quotes in this article were all actually said by the president, but some parts of the interview in which the president spoke even more frankly about Taiwan and Europe’s strategic autonomy were cut out by the Elysée.

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( With inputs from : www.politico.eu )

April 4, 2023
There’s Already a Solution to the Crisis of Local News. Just Ask This Founding Father.

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The key to making this policy work — logistically, constitutionally and politically — was its content-neutrality. Benjamin Franklin did not sit around in the Postmaster General’s Office deciding whether the New York Gazetteer was wittier than the Massachusetts Spy. All newspapers benefited.
But that’s not to say political factors didn’t shape policy. Urban and rural interests viewed the postal subsidy differently. It cost a New York City-based newspaper the same amount to ship to Missouri as to New Jersey, so residents away from the coasts feared that the morally dubious sin-city newspapers would infiltrate their towns.
“The poisoned sentiments of the cities,” warned Rep. Abraham Venable of Virginia, “concentrated in their papers, with all the aggravations of such a moral and political cesspool, will invade the simple, pure, conservative atmosphere of the country, and meeting with no antidote in a rural press, will contaminate and ultimately destroy that purity of sentiment and of purpose, which is the only true conservatism.” Another lawmaker said that this system would “annihilate at least one half of our village newspapers.”
But, notably, these skeptics did not urge curtailing the subsidy. Instead, the Jacksonian Democrats that represented more agrarian areas pushed for a second subsidy — giving an extra break to help sustain local publishers. In 1845, Congress agreed that newspapers would be free if they were delivered within 30 miles of the office of publication.
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#Solution #Crisis #Local #News #Founding #Father
( With inputs from : www.politico.com )

April 2, 2023
Sri Lanka’s inflation drops further to 50.3% amid economic crisis

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Colombo: Sri Lanka’s inflation decreased to 50.3 per cent in March from 50.6 per cent the previous month amid the ongoing economic crisis, official statistics revealed.
The year-on-year inflation of the food group dropped to 47.6 per cent in March from 54.4 per cent in February, and inflation in the non-food group increased to 51.7 per cent from 48.8 per cent in February, reports Xinhua news agency.
Inflation in the country has been dropping in the last few months.
Inflation fell to 54.2 per cent in January from 57.2 per cent in December 2022.
The country’s central bank said that inflation will be reduced to single digit by the end of the year.
As Sri Lanka is still undergoing its worst ever economic crisis since independence in 1948, the island nation last month had finally secured a $2.9 billion bailout from the International Monetary Fund (IMF), which came as a lifeline for the island nation that has billions of dollars in loans.
The Covid-19 pandemic, rising energy prices, populist tax cuts and inflation of more than 50 per cent has battered Sri Lanka.
A shortage of medicines, fuel and other essentials also pushed the cost of living to record highs, triggering violent nationwide protests which overthrew the Gotabaya Rajapaksa government in 2022.

As a result the country defaulted on its debts with international lenders last May for the first time in its history.
(Except for the headline, the story has not been edited by Siasat staff and is published from a syndicated feed.)
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( With inputs from www.siasat.com )

April 1, 2023
Swiss prosecutors open probe into UBS takeover of Credit Suisse

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Swiss prosecutors have opened an investigation into possible illegal activity in connection with government support for UBS’s rushed takeover of Credit Suisse.
The two banks agreed to merge in March as part of an emergency deal targeted at avoiding a national financial crisis that could have had a knock-on effect globally.
“The Federal Prosecutor’s office wants to proactively fulfill its mission and responsibility to contribute to a clean Swiss financial center and has set up monitoring in order to take immediate action in any situation that falls within its field of activity,” the authority said in a statement.
Last month, Zurich-based UBS was forced by Swiss authorities to take over its longtime domestic rival Credit Suisse in a deal that creates a new bank.
The prosecutor’s statement said that the intention of the probe was to “analyze and identify any criminal offenses” associated with the deal, adding that various bodies had been contacted to provide clarifications and information.
The deal has been unpopular locally and on Sunday, Swiss daily Tages-Anzeiger reported that the new entity could slash jobs by up to 30 percent.
“If we had done nothing, [Credit Suisse] shares would have been worthless on Monday and the shareholders would have gone home empty-handed,” Swiss Finance Minister Karin Keller-Sutter said last weekend in justifying the deal.

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#Swiss #prosecutors #open #probe #UBS #takeover #Credit #Suisse
( With inputs from : www.politico.eu )

April 1, 2023
Karnataka: Rollback of Muslim quota likely to turn into crisis

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Bengaluru: Withdrawal of 4 per cent reservation for Muslim community by the ruling BJP government is likely to snowball into a crisis-situation in the poll-bound Karnataka.
As the major political parties engage in a war of words over the issue, members of the Muslim community came out in the open on Tuesday to protest against the BJP government’s decision.
The ruling BJP had withdrawn reservation of Muslims under 2B category and sent a proposal to the Centre. Chief Minister Basavaraj Bommai has announced that the 4 per cent quota for Muslim will be given to Lingayats and Vokkaligas.
Chief Minister Bommai maintained that the reservation quota for Muslims will be intact as they will be moved to the Economically Weaker Section (EWS) quota.
Muslim groups and political parties have come to the streets lately demanding that their quota should remain untouched. The protests have been staged in Belagavi, Chitradurga and Mandya cities of Karnataka.
The Minority Unit of Karnataka Pradesh Congress Committee (KPCC) and Muslim community members had taken out a protest march in Belagavi. The agitators raised slogans against the ruling BJP party. They had also submitted a memorandum to the District Commissioner’s office.
Members of the Social Democratic Party of India (SDPI) staged a protest on the road in Chitradurga raising slogans against the government. SDPI had built a platform near DC Circle for the protest. As the police denied permission, the protest was staged on the road.
Various Muslim organisations and SDPI staged a protest against withdrawal of reservation. The protest was staged near the Vishveshvaraya statue in Mandya.

Former CM and JD (S) leader H.D. Kumaraswamy raised a concern that what if Muslim community takes to the streets like the Banjara community? Who will be responsible for the consequences?
“I appreciate the conduct of Muslim community at this hour. The BJP government had taken decisions as per whims and fancies. If Muslim community members had come to streets angered by withdrawal of their 4 per cent reservation, innocent people would have lost their lives,” he reiterated.
Kumaraswamy further stated that the national parties should not indulge in creating conflicting situations between castes. Both parties are indulging in this, he added.
The protest by Banjara community members over a new reservation decision by the BJP government turned violent in Shikaripura of Shivamogga district. The agitators had pelted stones on former chief minister B.S. Yediyurappa’s residence and even attacked police.
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#Karnataka #Rollback #Muslim #quota #turn #crisis
( With inputs from www.siasat.com )

March 28, 2023
France braces for another day of mayhem and violence

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PARIS — France is bracing for fresh chaos Tuesday with a day of protests planned against Emmanuel Macron’s detested pensions reform, and trade unions calling for a general strike.
Protests last Thursday descended into turmoil with clashes between police and protesters, and scenes of violence across the country. In the wake of the unrest, which resulted in more than 450 arrests, the French president was forced to cancel a state visit by King Charles III amid security concerns.
Public transport, universities, schools and public services are expected to be disrupted again Tuesday. The impact of the industrial action is being felt across all sectors and areas of public life. A rolling strike of waste collectors in Paris has meant that trash is still piled high in parts of the French capital, and a strike at refineries has led to fuel shortages at some petrol pumps.

Despite widespread unrest, the French president pledged last week that he would not backtrack on the pensions reform which raises the age of retirement to 64 from 62, saying it was “necessary” for the country to balance the books of its generous pensions scheme.
The French government sparked outrage when it invoked article 49.3 of the French constitution to pass its pensions reform, in a controversial move that bypassed a vote in parliament it was expected to lose. The government narrowly survived two motions of no confidence in the National Assembly after the controversial move.
Tuesday’s protest could be an indicator of whether Macron’s inflexibility whips up more discontent on the street or whether the protest movement is starting to subside. French police have been accused of using heavy-handed tactics and it is likely that students and pupils will join protests in greater numbers. On Saturday, a man was left in a critical condition after clashes with police at a French water reservoir project.
Stalemate over pensions reform
Ahead of the protests on Tuesday, Prime Minister Elisabeth Borne called for talks with trade unions and announced she would no longer use article 49.3 except when it comes to budgetary measures.
“Obviously there are tensions over the reform, we need to listen,” she told AFP on Sunday. “[We need] to calm the country and give the French some answers promptly.”
A demonstration of Totalenergies striking employees outside the Gronfreville-l’Orcher refinery | Lou Benoist/AFP via Getty Images
However, talks between the government and trade unions over the pensions reforms are at a standstill. Macron has said he is open to discussing a range of issues including working conditions, pay and work-related strain, but not the pensions reform. Trade unions say they would agree to talks only if the government agreed to re-examine the legal age of retirement.
With no clear way out and in the wake of a string of violent incidents over the last weeks, there are fears within the trade unions that France may be facing a socio-political crisis similar to the Yellow Jackets movement that rocked the country in 2018-2019.
Trade union leader Laurent Berger warned Monday that France was in “a total state of tension.”
“There is a common will [with the government] to find an exit for this protest movement and not descend into a madness that might take hold of the country, with violence and resentment,” he warned in an interview with French channel France 2.

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( With inputs from : www.politico.eu )

March 23, 2023
Ukraine crisis: Putin visits Russia-occupied Mariupol

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Moscow: Russian President Vladimir Putin has paid a surprise visit to Mariupol — the Ukrainian port city captured by Russian forces, the media reported. The visit is believed to be Putin’s first to a newly-occupied Ukrainian territory.
In a video, Putin is seen driving a car through streets at night and speaking to people, the BBC reported on Sunday. It was, however, not known when the footage was taken.
During the visit, the Russian President is also reported to have met top military commanders in Rostov-on-Don city.
Putin travelled to Mariupol by helicopter. In the video, he is in the car with Russia’s Deputy Prime Minister Marat Khusnullin, who explains how the city is being rebuilt, Tass news agency reported.
Putin also appears to visit the Philharmonic Hall, which was used to stage trials of defenders of the Azovstal iron and steel plant, a huge industrial complex where Ukrainian troops held out before eventually surrendering.
Mariupol has been under Russian occupation for more than 10 months after being devastated in one of the longest and bloodiest battles of the conflict.
Ukraine said more than 20,000 people were killed there.
UN analysis estimates that 90 per cent of the buildings were damaged and around 3,50,000 people were forced to leave, our of a pre-war population of about 5,00,000.

A group of local residents has told the BBC that “Russia is conducting an expensive campaign to rebuild the city and win over the hearts and minds of its people”.
The purpose is to assimilate Mariupol and make it Russia’s own. Russian authorities say 3,00,000 people are now living there.
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( With inputs from www.siasat.com )

March 19, 2023
No Teachers, No Classwork: A Crisis in A Peripheral College Explained

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by Tawseef Bashir Mir
SRINAGAR: Students of Government Women’s Degree College, Sopore are facing an acute shortage of teachers, a crisis which has brought their academic progress to a standstill.
Government Degree College for Women Sopore
Out of the required 33 positions that the college requires, only 11 permanent faculty members are present. The college has not renewed contracts for or hired new contractual lecturers to make up for the staffing needs.
The College’s Arts faculty has less than one-fourth of the required teaching staff.
Despite several years of pleas from students and college administration alike, the issue is long impending.
The students had also staged a protest in the college premises on Monday last complaining about understaffing, mostly in the arts faculty of the college. The students took to social media to state their concerns regarding their studies having to suffer due to a lack of faculty.
“The matter has been taken up with the Director of Colleges and the Principal Secretary as well,” Principal GWDC, Sopore, Bashir Ahmad Parray said, confirming the lack of adequate staff. They have verbally assured swift action in the matter. We are awaiting further progress.”
However, the students from the college alleged oversight of their concerns from the administration. “We have not studied even a single word since February 15 due to a lack of staff. Our careers are getting ruined,” a student from BA History, second semester said. “Certain departments are being handled by single personnel. The arts faculty is the one which is suffering the most due to this shortage of teachers.”

“The college has only one English teacher who teaches both the faculties (Arts and Science) throughout all semesters. There is no teacher for history, economics, political science, and such major subjects. We used to have contractual lecturers but the administration hasn’t even hired them for the current session,” the student added.
“We talked to our Principal but he said there wasn’t much he could do about the matter as it is out of his hands to hire the staff. He is trying though,” another student, enrolled in BSc second semester, said. “We wanted to use social media to voice our concerns but nothing came out of it as well.”
Director of Colleges, Yasmeen Ashai also admitted the problem. “An advertisement has been issued regarding the hiring of contractual staff. We have sent a number of contractual teachers to the said college to teach minor subjects and the application evaluation process for the posts of major subjects is underway,” Ms Ashai said. “Due to the applications being in bulk, the hiring process is taking time but the process is already underway.”
However, students insist that no teaching faculty has been hired for the current session. “As per our knowledge, the last permanent teacher hired was way back in 2016. Contractual staff is a come-and-go trend but even they haven’t been hired for the current session,” a group of students said.
Besides, the students also voiced their concerns regarding transport and college infrastructural issues. “Our College is situated at an off-road location. We have to travel from far-flung areas and then walk long distances from the bus stand to reach the college,” one student said. “The two buses provided by the government aren’t functional. There are no drivers.”
The college buildings and other infrastructure are in a near-dilapidated state, the students alleged. “We have repeatedly taken up this matter with the principal but to no regard. Maybe the issue lies in this being a college for women,” one student commented.
DC Baramulla Dr Syed Sehrish Asgar had taken note of the matter regarding the college being understaffed and in a notice, directed the Principal Government Women’s Degree College Sopore to resolve the matter immediately. She had also ordered the principal to communicate the progress to her office. It was not immediately known if the college management has responded to the order or sought her help in addressing the issues.
Established in 2005, the college operated from the premises of Government Boys Degree College, Sopore till 2010, when it got its own building. Currently, it has around 1100 students on its rolls.
(Tawseef Bashir Mir is an intern.)

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#Teachers #Classwork #Crisis #Peripheral #College #Explained
( With inputs from : kashmirlife.net )

March 19, 2023
Opinion | FDR Would Hate the Fix to Today’s Banking Crisis

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Second, he knew what it took to deal with a banking crisis, and, specifically, how to restore public confidence in the banking system. At the worst moment of the Great Depression, he faced a much more daunting challenge than the problems of the present — and he succeeded in turning things around almost immediately. In contrast, policymakers and regulators today dither, hoping that empty words and weak measures can restore confidence. The FDR mirror is very revealing of the inadequacies of the current policy response.
Many people are surprised when I tell them that FDR explicitly opposed federal deposit insurance during the 1932 presidential campaign. In the heart of the banking upheaval, with many bank failures producing depositor losses in 1931-1932, his 1932 letter to the New York Sun stated that federal deposit insurance “would lead to laxity in bank management and carelessness on the part of both banker and depositor. I believe that it would be an impossible drain on the Federal Treasury.”
FDR here makes an important, and empirically correct, point: Good bank risk management depends on depositors’ discipline, which depends on their having skin in the game.
Later, Roosevelt reluctantly agreed to create FDIC insurance, at the insistence of Rep. Henry Steagall, as part of a larger political deal, but he kept the agency’s coverage limited to small deposit balances. Furthermore, he had closed all banks in March 1933, and they were permitted to reopen and have access to insurance coverage only after they had undergone a thorough examination to establish that they were in sound financial condition.
FDR did not handle the banking panic by throwing deposit insurance at the problem, or by waiting for more banks to be shut down by worried depositors. He first put an end to runs by closing banks and established a credible process for them to reopen upon demonstrating their strength. Because regulators’ examinations were demonstrably credible to independent observers, and often accompanied by increased capital, confidence in the system was restored and many banks were able to reopen quickly. Runs did not return — not because of the small coverage of the new deposit insurance system, but because FDR had actually addressed the problem of bank weakness that was driving the runs.
What would a similarly effective policy response for the current crisis look like? The problem today is much less severe, making the solution easier.
There are only about 200 U.S. banks that are clearly vulnerable because of securities losses similar to those of Silicon Valley Bank. Regulators should have met with those banks individually last weekend, required them either to immediately come up with credible recapitalization commitments, or put them into conservatorship (beginning Monday morning). In conservatorship, they would have had limits placed on their activities until it was determined whether they could offer adequate recapitalization, or, if not, be placed in receivership. In the meantime, they could have been allowed to pay out all insured deposits, but only to pay out a fraction of uninsured deposits (based on the potential losses of uninsured depositors at each bank). This would have put pressure on those banks to resolve the problem quickly, and would have limited the illiquidity problem to a portion of the uninsured deposits at a small number of banks.
If that had been done, industry and academic experts would have been able to immediately reassure relatively uninformed depositors that the government policy response had been effective and that there was no cause for further alarm. I believe some uninsured depositors would still have wanted to move their funds, as a long-term precaution, but the short-term urgency of these disruptions would have been substantially reduced.

Instead, the Biden administration has done nothing about the 200 vulnerable banks, thereby encouraging continuing panic. The two measures they did undertake last Sunday have clearly failed to calm the market. First, the bailout of uninsured depositors at Signature and SVB has no clear implication for the risk of loss to uninsured depositors at other banks, especially given how much criticism those bailouts have received for being politically motivated and unfair. No uninsured depositor worried about their own potential losses will think that their money is necessarily safe now.
The second policy announcement was also ineffectual. The Federal Reserve created a new special lending facility for banks, allowing them to borrow for up to one year against qualifying Treasury and Agency securities. Banks can borrow an amount equal to the face value of those securities, which exceeds their market value. This implies a partially noncollateralized loan (the opposite of the typical “haircut” applied to collateral in central bank lending).
These loans provide no reason for worried uninsured depositors to rest easy. The decline in the value of securities at vulnerable banks is not temporary but is fundamentally the result of the Fed’s interest rate hikes, which are not only going to persist but will be increased going forward. Securities used as collateral are not going to increase in value as the result of the Fed stepping in here. Second, the loan is only for a year, so after the end of that year, a bank that is insolvent today because its securities have fallen in value will still be insolvent. For these reasons, the Fed lending program will not cause uninsured depositors at an insolvent or deeply weakened bank to decide not to withdraw their funds immediately, if they were already predisposed to do so.
It is time to take FDR’s example to heart, address the banking problem immediately and directly, and give U.S. depositors a real reason to believe that “there is nothing to fear but fear itself.”
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#Opinion #FDR #Hate #Fix #Todays #Banking #Crisis
( With inputs from : www.politico.com )

March 18, 2023