SVB failure

[Anonymous]

Anonymous wrote:I mean... anyone paying attention could have seen something like this coming. Several financial experts I follow have been talking about the Fed eventually "breaking something" for months due to the pace of the rate hikes. The same thing happened in 2018 when the Fed started raising rates- this is just on a larger scale.

Off topic but I find it so weird when I read that the Fed is annoyed with a positive jobs report.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is bad. For those of you that are going to say “this is a west coast big tech problem” it’s going to be felt nationwide, especially given the remote work environment.

How does remote work relate to this?

This was not about remote work. It was about SVB who handed out loans like crazy during the 2020-21 tech boom. Then when tech started falling apart the last year, they took the money out the bank. Combined with bonds falling and rising interest rates, more investors pulled out. The writing was on the wall 2 years ago. Basically; the Freddie/Fannie/Lehman 2007 situation all over again except instead of housing, it was tech startups.

Virtually every word you wrote is wrong.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I mean... anyone paying attention could have seen something like this coming. Several financial experts I follow have been talking about the Fed eventually "breaking something" for months due to the pace of the rate hikes. The same thing happened in 2018 when the Fed started raising rates- this is just on a larger scale.

Off topic but I find it so weird when I read that the Fed is annoyed with a positive jobs report.

They have a dual mandate and are clearly failing at one of their mandates.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is bad. For those of you that are going to say “this is a west coast big tech problem” it’s going to be felt nationwide, especially given the remote work environment.

How does remote work relate to this?

This was not about remote work. It was about SVB who handed out loans like crazy during the 2020-21 tech boom. Then when tech started falling apart the last year, they took the money out the bank. Combined with bonds falling and rising interest rates, more investors pulled out. The writing was on the wall 2 years ago. Basically; the Freddie/Fannie/Lehman 2007 situation all over again except instead of housing, it was tech startups.

Virtually every word you wrote is wrong.

LOL +100. That post is just a completely randomized slapping together of words from the financial press.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is bad. For those of you that are going to say “this is a west coast big tech problem” it’s going to be felt nationwide, especially given the remote work environment.

How does remote work relate to this?

This was not about remote work. It was about SVB who handed out loans like crazy during the 2020-21 tech boom. Then when tech started falling apart the last year, they took the money out the bank. Combined with bonds falling and rising interest rates, more investors pulled out. The writing was on the wall 2 years ago. Basically; the Freddie/Fannie/Lehman 2007 situation all over again except instead of housing, it was tech startups.

Virtually every word you wrote is wrong.

LOL +100. That post is just a completely randomized slapping together of words from the financial press.

I bet it was written by ChatGPT

[Anonymous]

SVB could have survived. This is a perfect case of a panic reaction and run to the bank amplified by social media.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is bad. For those of you that are going to say “this is a west coast big tech problem” it’s going to be felt nationwide, especially given the remote work environment.

How does remote work relate to this?

This was not about remote work. It was about SVB who handed out loans like crazy during the 2020-21 tech boom. Then when tech started falling apart the last year, they took the money out the bank. Combined with bonds falling and rising interest rates, more investors pulled out. The writing was on the wall 2 years ago. Basically; the Freddie/Fannie/Lehman 2007 situation all over again except instead of housing, it was tech startups.

Virtually every word you wrote is wrong.

Well, the bonds falling and rates rising was true (though they mixed up cause and effect).

[Anonymous]

Anonymous wrote:SVB could have survived. This is a perfect case of a panic reaction and run to the bank amplified by social media.

The bank has an incredibly small & savvy customer base for a bank with $200B in assets, most of whom know each other. This wouldn’t have happened with a boring retail bank; deposits are a lot stickier.

[Anonymous]

I think some of you should read more books.

1. SVB had a liquidity problem, not an asset problem. Failure had nothing to do with “bad loans” to Tech or Crypto. (If anything they were locked into “bad loans” to the US Govt in low rate Treasuries, which all banks hold at ridiculous levels because the law says USG debt is infallible and safe so banks must hold a lot… hmmm.)
2. Depositors insured and uninsured will recoup all of the money. Insured by Monday. Uninsured 50%+ next week, the remainder to follow.
3. 97% uninsured deposits is a lot. But it has nothing to do with brokered deposits. Tech, VC, etc kept their cash there because SVB catered to those sectors and until the last few weeks SVB was adored for doing so.
4. Systemic risk is minimal. This ain’t Lehman. There will be some ripples, but that’s it. No need to panic.

[Anonymous]

Anonymous wrote:I think some of you should read more books.

1. SVB had a liquidity problem, not an asset problem. Failure had nothing to do with “bad loans” to Tech or Crypto. (If anything they were locked into “bad loans” to the US Govt in low rate Treasuries, which all banks hold at ridiculous levels because the law says USG debt is infallible and safe so banks must hold a lot… hmmm.)
2. Depositors insured and uninsured will recoup all of the money. Insured by Monday. Uninsured 50%+ next week, the remainder to follow.
3. 97% uninsured deposits is a lot. But it has nothing to do with brokered deposits. Tech, VC, etc kept their cash there because SVB catered to those sectors and until the last few weeks SVB was adored for doing so.
4. Systemic risk is minimal. This ain’t Lehman. There will be some ripples, but that’s it. No need to panic.

1. Agree. Disagree with parenthetical--no law required them to hold all those Treasuries. And SVB was not subject to liquidity rules which more or less cause banks to hold a lot of governments.
2. Agree with insured, but have no idea why you think uninsured will get 50% by next week. What they will get has not been determined yet and is pending FDIC estimates of recovery value of assets.
3. Uninsured was probably more like 90 to 93%. But just a quibble, either hay the percentage is extraordinarily high.
4. Agree with respect to systemic financial risk. Agree with a previous PP that the more apt comparison is likely the 2000 bursting of the tech bubble.

[Anonymous]

Even if SVB was subject to LCR/NSFR, those promote short-dated Treasuries not long-term ones.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think some of you should read more books.

1. SVB had a liquidity problem, not an asset problem. Failure had nothing to do with “bad loans” to Tech or Crypto. (If anything they were locked into “bad loans” to the US Govt in low rate Treasuries, which all banks hold at ridiculous levels because the law says USG debt is infallible and safe so banks must hold a lot… hmmm.)
2. Depositors insured and uninsured will recoup all of the money. Insured by Monday. Uninsured 50%+ next week, the remainder to follow.
3. 97% uninsured deposits is a lot. But it has nothing to do with brokered deposits. Tech, VC, etc kept their cash there because SVB catered to those sectors and until the last few weeks SVB was adored for doing so.
4. Systemic risk is minimal. This ain’t Lehman. There will be some ripples, but that’s it. No need to panic.

1. Agree. Disagree with parenthetical--no law required them to hold all those Treasuries. And SVB was not subject to liquidity rules which more or less cause banks to hold a lot of governments.
2. Agree with insured, but have no idea why you think uninsured will get 50% by next week. What they will get has not been determined yet and is pending FDIC estimates of recovery value of assets.
3. Uninsured was probably more like 90 to 93%. But just a quibble, either hay the percentage is extraordinarily high.
4. Agree with respect to systemic financial risk. Agree with a previous PP that the more apt comparison is likely the 2000 bursting of the tech bubble.

The FDIC already announced they will pay an advance dividend to uninsured depositors next week.

The ratio of uninsured deposits is public. It was 97.3% on what I read, though that could have been 12/31. Either way it’s in that range.

[Anonymous]

Anonymous wrote:I think some of you should read more books.

1. SVB had a liquidity problem, not an asset problem. Failure had nothing to do with “bad loans” to Tech or Crypto. (If anything they were locked into “bad loans” to the US Govt in low rate Treasuries, which all banks hold at ridiculous levels because the law says USG debt is infallible and safe so banks must hold a lot… hmmm.)
2. Depositors insured and uninsured will recoup all of the money. Insured by Monday. Uninsured 50%+ next week, the remainder to follow.
3. 97% uninsured deposits is a lot. But it has nothing to do with brokered deposits. Tech, VC, etc kept their cash there because SVB catered to those sectors and until the last few weeks SVB was adored for doing so.
4. Systemic risk is minimal. This ain’t Lehman. There will be some ripples, but that’s it. No need to panic.

Looks a bit like Continental Illinois

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think some of you should read more books.

1. SVB had a liquidity problem, not an asset problem. Failure had nothing to do with “bad loans” to Tech or Crypto. (If anything they were locked into “bad loans” to the US Govt in low rate Treasuries, which all banks hold at ridiculous levels because the law says USG debt is infallible and safe so banks must hold a lot… hmmm.)
2. Depositors insured and uninsured will recoup all of the money. Insured by Monday. Uninsured 50%+ next week, the remainder to follow.
3. 97% uninsured deposits is a lot. But it has nothing to do with brokered deposits. Tech, VC, etc kept their cash there because SVB catered to those sectors and until the last few weeks SVB was adored for doing so.
4. Systemic risk is minimal. This ain’t Lehman. There will be some ripples, but that’s it. No need to panic.

Looks a bit like Continental Illinois

TITCR

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think some of you should read more books.

1. SVB had a liquidity problem, not an asset problem. Failure had nothing to do with “bad loans” to Tech or Crypto. (If anything they were locked into “bad loans” to the US Govt in low rate Treasuries, which all banks hold at ridiculous levels because the law says USG debt is infallible and safe so banks must hold a lot… hmmm.)
2. Depositors insured and uninsured will recoup all of the money. Insured by Monday. Uninsured 50%+ next week, the remainder to follow.
3. 97% uninsured deposits is a lot. But it has nothing to do with brokered deposits. Tech, VC, etc kept their cash there because SVB catered to those sectors and until the last few weeks SVB was adored for doing so.
4. Systemic risk is minimal. This ain’t Lehman. There will be some ripples, but that’s it. No need to panic.

1. Agree. Disagree with parenthetical--no law required them to hold all those Treasuries. And SVB was not subject to liquidity rules which more or less cause banks to hold a lot of governments.
2. Agree with insured, but have no idea why you think uninsured will get 50% by next week. What they will get has not been determined yet and is pending FDIC estimates of recovery value of assets.
3. Uninsured was probably more like 90 to 93%. But just a quibble, either hay the percentage is extraordinarily high.
4. Agree with respect to systemic financial risk. Agree with a previous PP that the more apt comparison is likely the 2000 bursting of the tech bubble.

The FDIC already announced they will pay an advance dividend to uninsured depositors next week.

The ratio of uninsured deposits is public. It was 97.3% on what I read, though that could have been 12/31. Either way it’s in that range.

They did, but no where have I seen the amount of the dividend. I think it is TBD.