Checkout_my_Six
Touchdown! Greaser!
and .....Jim Cramer was pumping this bank stock weeks ago.
My concern is that this collapse could reach further than initially expected. The multitude of tech startups that banked with SVB may be unable to pay employees in the coming days and these venture investors may struggle to raise funds. Now that Yellen says a bailout is off the table, it’ll be interesting to see how markets react this week if they don’t get a buyer to assume their obligations.
Saw that yesterday…the same question arises with 737Max, the CAF midair in September, and a host of other agencies with regulatory oversight. Without going in to politics, if those responsible for oversight are incompetent at, or incapable of, performing their duties, that’s a huge risk problem.
I see this as being a big difference. You can sell Treasuries for cash albeit at a loss. Loans, not so much so.Bank runs are psychological; except for the fact SVB’s deposits were tied up in securities (Treasuries) instead of loans,
I'm ready....I got my shorts in and am ready for the great collapse.My concern is that this collapse could reach further than initially expected. The multitude of tech startups that banked with SVB may be unable to pay employees in the coming days and these venture investors may struggle to raise funds. Now that Yellen says a bailout is off the table, it’ll be interesting to see how markets react this week if they don’t get a buyer to assume their obligations.
I see this as being a big difference. You can sell Treasuries for cash albeit at a loss. Loans, not so much so.
This is behind a paywall, but I have pasted the introductory portion below.
https://www.wsj.com/articles/where-were-the-regulators-as-svb-crashed-35827e1a
Where Were the Regulators as SVB Crashed?
Silicon Valley Bank grew too fast using borrowed money—and the risks were lurking in plain sight
Silicon Valley Bank’s failure boils down to a simple misstep: It grew too fast using borrowed short-term money from depositors who could ask to be repaid at any time, and invested it in long-term assets that it was unable, or unwilling, to sell.
When interest rates rose quickly, it was saddled with losses that ultimately forced it to try to raise fresh capital, spooking depositors who yanked their funds in two days. The question following the bank’s takeover Friday: How could regulators have allowed it to grow so quickly and take on so much interest-rate risk?
And it wasn’t the only problem bank last week. Just days before SVB collapsed, Silvergate Capital Corp., one of the crypto industry’s biggest banks, said it would shut down.
“The aftermath of these two cases is evidence of a significant supervisory problem,” said Karen Petrou, managing partner of Federal Financial Analytics, a regulatory advisory firm for the banking industry. “That’s why we have fleets of bank examiners, and that’s what they’re supposed to be doing.”...
Peak, you are joking right?
Tim
Where is George Bailey when you need him?
Au Contrarie. Corporations do have ‘inherent rights.’ That’s what 5 out of 9 of the supreme cats with the long robes and the big wooden hammers said. Citizens United, 2010. There was a previous decision back in the 1800’s that said the same thing. Can’t find it right now, don’t want to spend the time searching. Maybe someone knows it off the top of their head.We need to not only be OK with corporations taking the hit from their own mistakes, we need to embrace it. It's part of the natural Darwinism of corporations. FDIC's purpose is to protect individual people, and ensure trust in the banking industry by citizens. If a bank fails and it takes out some other corporations along the way, then the fix for that is either or both of: stronger regulation of banks, better due diligence of banks by corporations.
Corporations exist to take risk and make money. The first is required for the second to work right. Without that, we end up with corporations that are as inefficient as governments are. Bloated and poor performing. Corporations have no inherent rights, and should have no expectation of being protected from anything except unfair competition, and protections of smaller corporations from larger ones. They should exist as long as they're run well, with no expectation that this will be forever.
We have a mechanism to deal with the distributions of assets of a failed corporation, bankruptcy; a mechanism to deal with the fallout to those employed by a failed company, unemployment insurance; and a mechanism to deal with individual assets lost in failed regulated banks, FDIC. If we have companies that are "too big to fail", that represent a national risk, they need to be split up into little pieces that aren't until that risk goes away. Not relegate them to the status of nationally supported, unless we truly want to nationalize them. That last one should be incredibly rare, and the only example that comes to mind that has ever made sense is perhaps Amtrak.
Oh, so you’re just going pick your own generational orientation just like that…I’m technically at the tail end of the boomers but certainly don’t feel like I’ma part of that group. Hell I was a child during the summer of love lol.
I’m more of a gen X.
Actually, people forget that every time the Building and Loan ran short of money, it was Mary not George who got it bailed out.Where is George Bailey when you need him?
Also the Ohio train wreck.Saw that yesterday…the same question arises with 737Max, the CAF midair in September, and a host of other agencies with regulatory oversight. Without going in to politics, if those responsible for oversight are incompetent at, or incapable of, performing their duties, that’s a huge risk problem.
Au Contrarie. Corporations do have ‘inherent rights.’ That’s what 5 out of 9 of the supreme cats with the long robes and the big wooden hammers said. Citizens United, 2010. There was a previous decision back in the 1800’s that said the same thing. Can’t find it right now, don’t want to spend the time searching. Maybe someone knows it off the top of their head.
Oh, so you’re just going pick your own generational orientation just like that…
"More than three hundred venture capital firms have signed a joint statement vowing to do business again with Silicon Valley Bank if it is 'purchased and appropriately capitalized,' after the financial institution failed on Friday."
https://www.cnbc.com/2023/03/12/hundreds-of-vcs-vow-to-work-with-svb-again-if-new-owner-found.html
I see this as being a big difference. You can sell Treasuries for cash albeit at a loss. Loans, not so much so.
Banks should borrow money from the Fed for investments such as mortgages and keep the spread. Using deposits is really unfair. Banks earn a lot of profit not to mention the high C level salaries, to be risking deposits.
<sigh>
If banks can't use the deposits (e.g., offer car loans, etc), then why would banks offer accounts?
I took it as more of a statement that if the problems that caused the failure in the first place are properly dealt with, then the effort will be rewarded.There-in lies the problem.
These firms pretty much just wrote a note saying: "if you can go back to the status quo and give us our old bank back, but make it a little safer so that I personally am not in this disadvantaged position again, then I'm all about it -- I would love to pretend this whole thing didn't happen". It is rare that you would see such a clear-cut case of advocating for moral hazard. If the government backstopped something like this and made those investors whole at the expense of the gov't/FDIC then there would be zero incentive to ever do business with a well run bank. You'll just go to any place that makes your life the easiest or pays the most in interest/gives you the best lending terms, and that's almost ALWAYS synonymous with "the most risky". That risk has to be borne by somebody and it shouldn't be the public.
It's just abundantly clear those firms who signed that doc have not learned the lesson: the bank was NOT run well, was NOT a good financial partner, did NOT make good investing decisions and had AWFUL risk management. They do NOT deserve a second chance and the VCs should NOT be talking about how they'd be excited to re-engage with SIVB. They should be banding together writing notes about how they want to move their money to a safe bank, they feel misled by SIVB mgmt and that they're launching lawsuits against the banks former management team. That would send a much better message that they've learned their lesson about financial due diligence than asking for a mulligan with the same bank.
All institutions are run by people, and are therefore fallible.
I include government in the category of "institutions."gummint is run by people too....
Apps are used by people.Give it a couple years, we’ll have an app for that.
Yes, you are covered separately at each bank. Also you can add a beneficiary or beneficiaries to each account get up to $1 million coverage at one bank. Google FDIC insurance and they tell you how to do it.if I had $250k in bank A and $250k in bank B would FDIC pay me $500k
I’ll be waiting to see how the top of the food chain, you know, the C*O types and directors et al fare in this before I think it unfathomable. Betcha some of them didn’t lose a penny and many probably will have made money on the fiasco.That’s exactly what SVB did. They took deposits (for 4 decades) from a client base that usually needed all the deposit back in short order and used those deposits to buy 10-30yr Treasuries, which like a Savings Bond are a loan to the government, instead. When the depositors came calling, their money was tied up in long term notes, so SCB sold the Treasuries at a loss to pay them.
Unfathomable that a bank specializing is this business would do something like that. A
You're thinking of this place all wrong. As if I had the money back in a safe. You're money's not here. You're money's in Joe's house... right next to yours, and in all those NFT monkeys that Bill bought, and Randy's Etherium coins.
More parody of It's a Wonderful Life. Sorry.Actually, I have a pretty good idea where a bank has money.
I have absolutely no idea why your post had anything to do with what I wrote.