© Reuters. FILE PHOTO: Federal Reserve Chair Jerome Powell holds a press conference in Washington, U.S, May 3, 2023. REUTERS/Kevin Lamarque
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(Reuters) – Federal Reserve Chair Jerome Powell held a phone call with the head of UBS Group AG (SIX:UBSG) in the days before the bank was propelled by Swiss authorities to buy smaller rival Credit Suisse, just one of the dozens of calls and meetings Powell held from mid-March as a banking crisis unfolded.
Powell’s monthly meeting logs for March, released by the Fed on May 5, showed the U.S. central bank chief spoke with Ralph Hamers, then the UBS chief executive, for 30 minutes on March 14. That was five days before UBS agreed to buy Credit Suisse in a deal engineered by Swiss authorities to avoid more market-shaking turmoil in global banking.
Powell’s calendar shows the abruptness with which the banking sector problems – which have since triggered three U.S. bank failures in addition to the UBS-Credit Suisse deal – erupted nearly three months ago.
The banking troubles kicked off in the second week of March when Silicon Valley Bank was forced to attempt an emergency capital raising that set off a record run on deposits. The bank failed March 10 and a smaller bank, Signature Bank (OTC:SBNY), was taken over by banking regulators on March 12. A third bank, First Republic, would fail weeks later.
Powell’s calendar entries in the first week of March were a typical mix of interactions with staff, augmented by a bevy of calls and meetings with key U.S. lawmakers sitting on the pair of congressional committees that Powell was slated to appear before on March 7 and 8.
The tempo abruptly changed shortly after the second of the two congressional hearings, with Powell involved in a 40-minute meeting with officials from the Treasury, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp and a regional Federal Reserve bank on March 10, the day SVB failed.
The schedule shows Powell working two weeks straight from that point. Meetings were scheduled through both of the following weekends to come up with backstops to prevent the turmoil from cascading into a system-wide crisis with wider economic fallout. The pace was reminiscent of his schedule in March 2020, when the onset of the coronavirus pandemic forced the Fed onto a crisis footing.
(This story has been corrected to change the release date of the meeting logs to May 5 in paragraph 2)