By Victoria Guida and Zachary Warmbrodt

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Seven months ago, Silicon Valley Bank needed cash, so it sold off a bunch of assets at a loss and then tried to raise funding from the stock market. You know the rest: Depositors panicked, pulled their money, and the bank collapsed.

Since then, regulators have proposed an increase in big bank capital requirements that’s unleashed the biggest financial lobbying fight in years. But there’s been no move yet to update cash management rules, a central piece of the SVB story.

Regional lenders have a whole host of bonds that were supposed to be liquid — that is, easily sellable — that effectively aren’t. Newer bonds are more attractive because they offer higher yields, so selling older assets means taking a loss. The upshot? Banks are hoarding lots of cash to ensure they can handle unexpected turbulence, making credit less available.

It’s a problem that will continue to loom over the banking industry as long as interest rates stay elevated; unrealized losses on securities held by banks totaled $558.4 billion in the second quarter, according to the FDIC, an increase of $42.9 billion from the prior quarter as rates have climbed higher.

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The agencies, industry and observers have floated a range of options on how to improve the guardrails over the long term:

— Regional banks could be required, as their bigger counterparts are, to be realistic about market pricing when planning how they might raise funds fast.

— Uninsured deposits could be treated differently. For example, a senior Fed official told reporters in April that the central bank would consider treating venture capital deposits as more likely to flee in times of trouble, as they did from SVB.

— The FDIC also suggested earlier this year that Congress could offer more generous deposit insurance for companies’ payroll accounts, reducing their incentive to pull cash at the first sign of trouble.

— The Fed and its fellow regulators have already begun to do more to encourage banks to be willing and ready to take out loans from the central bank if they run into cash flow issues, though banks want to see more on that front.

— Federal Financial Analytics managing partner Karen Petrou said there needed to be more rigorous planning and stress testing of banks’ plans for funding in an emergency, which would help them weather the kind of social media-fueled run that brought down SVB.

But it’s unclear how quickly agencies will move on these rules, which might also need a broader rethink.

“The public does not have access to detailed information about the uninsured deposits held in the U.S. banking system,” said Daniel Tarullo, who spearheaded the design of post-2008 crisis liquidity rules as the Fed’s top regulatory official under President Barack Obama. “Without that information, it is hard to know how vulnerable the system is to the kinds of runs we saw last March. So I don’t feel I can yet say how broad an overhaul of liquidity regulation or deposit insurance may be needed.”

But Tarullo told MM that the mini banking crisis suggested regulators should be taking some specific steps already, such as to require regional banks have loss-absorbing capital that reflects market pricing of not just assets that they are likely to sell, as they’ve already proposed, but also for other bonds that they might use to raise cash.

Fed regulatory chief Michael Barr has put numerous options on the table, but it’s gonna take a while. “Any adjustments to our liquidity rules would, of course, go through normal notice and comment rulemaking and have appropriate transition rules, and thus would not be effective for several years,” he said in his postmortem report on SVB’s failure.

It’s Tuesday — What do you think of the possibility of Speaker Jim Jordan? Does it make you more or less bearish about a government shutdown? Send your thoughts: [email protected].

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House Republicans plan to hold a speaker vote … Bank of America and Goldman Sachs report earnings ... Fed board member Michelle Bowman gives a speech on “responsible innovation in money and payments” at a Harvard CBDC roundtable in Washington at 9:20 a.m. … Rep. French Hill speaks to the Exchequer Club of Washington at 11:30 a.m. … Senate Banking has a CDFI hearing at 2:30 p.m.

Tim Scott’s campaign falters — The super PAC supporting Scott’s presidential bid is canceling most of its remaining TV spending, after reserving $40 million in ads for the South Carolina Republican ahead of the Iowa caucuses.

Scott, the top Republican on the Senate Banking Committee, is introducing a bill today that his office said would permanently freeze $6 billion in Iranian funds tied to an American prisoner release deal, our Eleanor Mueller reports. The legislation would also direct the Treasury Department to report to Congress on other Iranian assets blocked by U.S. sanctions. It has 21 GOP co-sponsors.

Jordan inches toward speakership — Rep. Jim Jordan on Monday made headway in flipping Republicans who opposed his bid for House speaker. A speaker vote is planned for today.

House GOP presses Powell on possible leaks — Two dozen Republican lawmakers are demanding that Fed Chair Jerome Powell explain whether central bank officials leaked information behind Bloomberg News stories on bank oversight and unreleased capital rules. The Fed says it plans to respond.

Deval Patrick-led tech hub torn by Israel-Hamas turmoil — Sam Sutton reports that an incubator for Israeli-Palestinian startups chaired by former Massachusetts Gov. Deval Patrick is facing internal turmoil over its response to Israel’s war with Hamas.

Record scratch — Goldman Sachs CEO David Solomon has decided to stop DJing at high-profile events following criticism that his hobby was a distraction, the FT reports.

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Fannie, Freddie regulator sticks with credit score revamp — FHFA Director Sandra Thompson said Monday that the agency is moving “full steam ahead” with a plan to require mortgage lenders to pull two credit reports instead of three, Katy O’Donnell reports.

Senate Banking Republicans led by Scott have urged the FHFA to scrap the proposal, arguing it would produce an incomplete snapshot of creditworthiness. TransUnion, one of the big three credit reporting companies, said Monday that the FHFA’s plan could result in 2 million consumers becoming ineligible for a GSE-backed mortgage because of data gaps.

The transition, Thompson said at a mortgage conference in Philadelphia, “is expected to maintain accuracy and increase competitive forces — findings that are supported by both internal and external analysis.”

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Former FTX exec links stolen funds to political spending — One-time FTX executive Nishad Singh testified Monday that the company made political donations in employee names using customer funds, WSJ reports. Singh is the latest FTX insider to testify against FTX founder Sam Bankman-Fried at his fraud trial.

"Singh told the jury that former FTX executive Ryan Salame, who has pleaded guilty to his role in the campaign-finance scheme, logged into his bank account and entered the details for the money to be sent to political causes. Then Salame would ask Singh to approve the transaction in an encrypted Signal chat, he said."

Fool me for the … umpteenth time? — Declan Harty reports that crypto traders sent bitcoin soaring Monday following a Cointelegraph post that said the SEC had finally signed off on a BlackRock bitcoin exchange-traded fund. There was just one small problem: No such approval apparently existed.

A BlackRock spokesperson said the investment giant’s filing was still pending. A person close to the SEC similarly dismissed the rumor. Cointelegraph later posted an apology for "the dissemination of inaccurate information" regarding the ETF.

"It’s an example of the pent-up interest in crypto,” BlackRock CEO Larry Fink said Monday on FOX Business when talking about the bitcoin spike that followed the report. “The rally today is about a flight to quality with all the issues around the Israeli world [and] global terrorism. And I think there’s more people running in a flight to quality — whether that is in Treasurys, gold or crypto, depending on how you think about it.”

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