SVB failure

[Anonymous]

Anonymous wrote:All of tech has their accounts at svb this is bad, time to cut the rates, tech is being destroyed in all fronts, the jobs numbers prove it

Ridiculous, the whole point of raising rates is to discourage the SVB risk strategy. This bank failure is proof that the fed was right, and hopefully we are catching it in time. Small pains now are necessary to catch these brittle cracks before we have real problems. Did you really think we could just print more money forever?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:UK authorities are scrambling.

https://www.ft.com/content/258d0732-d37b-49d6-8de8-b230a6568965

Likely behind a paywall for most. Some snippets:


UK chancellor Jeremy Hunt was on Saturday locked in talks over how to stop the collapse of Silicon Valley Bank from dealing a heavy blow to Britain’s tech sector.

More than 200 UK-based tech company executives have urged Downing Street to step in, warning that many companies faced an “existential threat” because they banked with the UK arm of SVB.

One London-based venture capitalist said: “There is growing confidence that the UK government will step in with liquidity measures on Monday.”

The Bank of England moved to put the UK arm of SVB into insolvency late on Friday following the shutdown earlier in the day of the bank’s US entity, but said it had “a limited presence in the UK and no critical functions supporting the financial system”.

On Saturday around 210 start-up founders and leaders signed an open letter to Hunt, warning that “the majority of us as tech founders are running numbers to see if we are potentially technically insolvent”.

This is why I’m laughing at all the “this is not a big deal” / “it’s just some small bank in California” takes. This collapse will have an impact worldwide for months, potentially even years to come.

Yes. The people who think this is “just California” seem ignorant.

It will have an impact on tech companies who should have been smarter and in most cases serve no important societal purpose. In the US we have resolution procedures to unwind failed banks and fairly distribute assets. There is no guarantee for uninsured deposits. I assume UK has a similar structure. There’s zero reason to treat the tech companies any differently from what the law already prescribes. Tough luck.

Bad take. It’s going to hit nearly everyone’s retirement accounts, for a start.

Can someone explain to me why this is a rational argument for the continuation of allowing these institutions to get in these precarious situations to begin with and then we use taxpayer money or government money to essentially bail them out or stop the bleeding and then they know that they can do these risky things again over and over and over again I mean it's a pattern of behavior at this point.
And it doesn't seem like most Americans really care that much about it as long as they're not losing from their retirement correct like it's not a they are seen it taken from them directly.

This isn’t a “bailout” that’s happening with SVB. A “bailout” means that the public shareholders and debt investors would be compensated by the government. That’s not happening with SVB.

The government needs to step in and make whole all depositors. Why? Because it will cause people - like my Boomer parents - to pull the excess $100K out of their current bank account to try to deposit it somewhere else. That would start a wide scale run on banks of all sizes. The government won’t be able to fix that situation and it’s basically financial Armageddon.

Making depositors whole isn’t a bailout.

[Anonymous]

I don’t think the govt will need to use a cent of taxpayer money to make the depositors whole. There are enough assets to do it, even after the haircut of selling them at discounts. The depositors earned the cash, why should they not get it back? Bondholders and shareholders may get nothing, but that is a risk they took.

I feel like it is unreasonable for the tech start-up industry to collapse as a result of this. If it does it means poor management on the part of the FDIC. No reason not to negotiate some quick asset sales to get cash back to depositors. It’s dumb to let them fail because of a technicality like missing payroll or vendor payments because their cash is locked up.

[Anonymous]

Anonymous wrote:I’m on page 5 of this thread and 80% of the people in this thread have no clue what they’re talking about.

In fact, the ones who are claiming “omg you’re wrong about this” are the ones who are themselves, completely aloof to what happened.


Remind me to not come to DCUM for anything financial. Yikes.

but you have not said anything to justify your distain.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Seems like the regulators were asleep on the wheel with this bank. How could you allow customer deposits to be used to loan out in risky venture debt or long term duration MBS that dont need to marked to market to conceal losses?

There's got to be alot of collateral damage if they dont come up with a mechanism to give company's deposits back in a timely manner so they can make payroll. The equity and debt holders of the bank should be wiped out for their incompetence for risk management.

When these long duration securities were purchased, rates were at 0. This is what happens when you starve the system of yield for too long- you force institutions to take more risk.

Maybe banks don’t need to chase “yield.” Maybe their primary job is to be safe and sound.

It's a balance. A bank's first line defense against losses is strong earnings, which, yes, does involve getting reasonable yield.

This guy gets it. A bank must be profitable to be healthy. This is banking 101.

No they just have to cover their expenses and be nonprofits, like Credit Unions. VCs should have setup a commercial credit union for their portcos.

Credit unions fail as well.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:UK authorities are scrambling.

https://www.ft.com/content/258d0732-d37b-49d6-8de8-b230a6568965

Likely behind a paywall for most. Some snippets:


UK chancellor Jeremy Hunt was on Saturday locked in talks over how to stop the collapse of Silicon Valley Bank from dealing a heavy blow to Britain’s tech sector.

More than 200 UK-based tech company executives have urged Downing Street to step in, warning that many companies faced an “existential threat” because they banked with the UK arm of SVB.

One London-based venture capitalist said: “There is growing confidence that the UK government will step in with liquidity measures on Monday.”

The Bank of England moved to put the UK arm of SVB into insolvency late on Friday following the shutdown earlier in the day of the bank’s US entity, but said it had “a limited presence in the UK and no critical functions supporting the financial system”.

On Saturday around 210 start-up founders and leaders signed an open letter to Hunt, warning that “the majority of us as tech founders are running numbers to see if we are potentially technically insolvent”.

This is why I’m laughing at all the “this is not a big deal” / “it’s just some small bank in California” takes. This collapse will have an impact worldwide for months, potentially even years to come.

Yes. The people who think this is “just California” seem ignorant.

It will have an impact on tech companies who should have been smarter and in most cases serve no important societal purpose. In the US we have resolution procedures to unwind failed banks and fairly distribute assets. There is no guarantee for uninsured deposits. I assume UK has a similar structure. There’s zero reason to treat the tech companies any differently from what the law already prescribes. Tough luck.

Bad take. It’s going to hit nearly everyone’s retirement accounts, for a start.

Can someone explain to me why this is a rational argument for the continuation of allowing these institutions to get in these precarious situations to begin with and then we use taxpayer money or government money to essentially bail them out or stop the bleeding and then they know that they can do these risky things again over and over and over again I mean it's a pattern of behavior at this point.
And it doesn't seem like most Americans really care that much about it as long as they're not losing from their retirement correct like it's not a they are seen it taken from them directly.

This isn’t a “bailout” that’s happening with SVB. A “bailout” means that the public shareholders and debt investors would be compensated by the government. That’s not happening with SVB.

The government needs to step in and make whole all depositors. Why? Because it will cause people - like my Boomer parents - to pull the excess $100K out of their current bank account to try to deposit it somewhere else. That would start a wide scale run on banks of all sizes. The government won’t be able to fix that situation and it’s basically financial Armageddon.

Making depositors whole isn’t a bailout.

Maybe but making a bunch of wealthy tech companies and VC depositors whole by giving them $20B from Federal coffers because they did not perform due diligence corporate treasury work sure looks REALLY shady.

The only people who will run to move money will be those who have assets in cash accounts about FDIC limit — and guess what, they are moving their money no matter WHAT happens — remember last time they bailed out Bear Sterns, and then the next bank fail (Lehman) so precedent is weak.

Are you saying your boomers parents have more $500k in a single bank? Otherwise they won’t care, because all FDIC insured accounts will be fine.

A run on the banks by over $250k corp accounts is happening Monday no matter what happens. No one wants to risk that their bank will be the Lehman.

And it should happen; as corporations they should be managing this risk themselves, such as purchasing short term T-bills etc or have brokered cash accounts.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:UK authorities are scrambling.

https://www.ft.com/content/258d0732-d37b-49d6-8de8-b230a6568965

Likely behind a paywall for most. Some snippets:


UK chancellor Jeremy Hunt was on Saturday locked in talks over how to stop the collapse of Silicon Valley Bank from dealing a heavy blow to Britain’s tech sector.

More than 200 UK-based tech company executives have urged Downing Street to step in, warning that many companies faced an “existential threat” because they banked with the UK arm of SVB.

One London-based venture capitalist said: “There is growing confidence that the UK government will step in with liquidity measures on Monday.”

The Bank of England moved to put the UK arm of SVB into insolvency late on Friday following the shutdown earlier in the day of the bank’s US entity, but said it had “a limited presence in the UK and no critical functions supporting the financial system”.

On Saturday around 210 start-up founders and leaders signed an open letter to Hunt, warning that “the majority of us as tech founders are running numbers to see if we are potentially technically insolvent”.

This is why I’m laughing at all the “this is not a big deal” / “it’s just some small bank in California” takes. This collapse will have an impact worldwide for months, potentially even years to come.

Yes. The people who think this is “just California” seem ignorant.

It will have an impact on tech companies who should have been smarter and in most cases serve no important societal purpose. In the US we have resolution procedures to unwind failed banks and fairly distribute assets. There is no guarantee for uninsured deposits. I assume UK has a similar structure. There’s zero reason to treat the tech companies any differently from what the law already prescribes. Tough luck.

Bad take. It’s going to hit nearly everyone’s retirement accounts, for a start.

Can someone explain to me why this is a rational argument for the continuation of allowing these institutions to get in these precarious situations to begin with and then we use taxpayer money or government money to essentially bail them out or stop the bleeding and then they know that they can do these risky things again over and over and over again I mean it's a pattern of behavior at this point.
And it doesn't seem like most Americans really care that much about it as long as they're not losing from their retirement correct like it's not a they are seen it taken from them directly.

This isn’t a “bailout” that’s happening with SVB. A “bailout” means that the public shareholders and debt investors would be compensated by the government. That’s not happening with SVB.

The government needs to step in and make whole all depositors. Why? Because it will cause people - like my Boomer parents - to pull the excess $100K out of their current bank account to try to deposit it somewhere else. That would start a wide scale run on banks of all sizes. The government won’t be able to fix that situation and it’s basically financial Armageddon.

Making depositors whole isn’t a bailout.

Since Cyprus banks "bailed in" depositors, that has been the model deemed less likely to cause systemic risk.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:UK authorities are scrambling.

https://www.ft.com/content/258d0732-d37b-49d6-8de8-b230a6568965

Likely behind a paywall for most. Some snippets:


UK chancellor Jeremy Hunt was on Saturday locked in talks over how to stop the collapse of Silicon Valley Bank from dealing a heavy blow to Britain’s tech sector.

More than 200 UK-based tech company executives have urged Downing Street to step in, warning that many companies faced an “existential threat” because they banked with the UK arm of SVB.

One London-based venture capitalist said: “There is growing confidence that the UK government will step in with liquidity measures on Monday.”

The Bank of England moved to put the UK arm of SVB into insolvency late on Friday following the shutdown earlier in the day of the bank’s US entity, but said it had “a limited presence in the UK and no critical functions supporting the financial system”.

On Saturday around 210 start-up founders and leaders signed an open letter to Hunt, warning that “the majority of us as tech founders are running numbers to see if we are potentially technically insolvent”.

This is why I’m laughing at all the “this is not a big deal” / “it’s just some small bank in California” takes. This collapse will have an impact worldwide for months, potentially even years to come.

Yes. The people who think this is “just California” seem ignorant.

It will have an impact on tech companies who should have been smarter and in most cases serve no important societal purpose. In the US we have resolution procedures to unwind failed banks and fairly distribute assets. There is no guarantee for uninsured deposits. I assume UK has a similar structure. There’s zero reason to treat the tech companies any differently from what the law already prescribes. Tough luck.

Bad take. It’s going to hit nearly everyone’s retirement accounts, for a start.

Can someone explain to me why this is a rational argument for the continuation of allowing these institutions to get in these precarious situations to begin with and then we use taxpayer money or government money to essentially bail them out or stop the bleeding and then they know that they can do these risky things again over and over and over again I mean it's a pattern of behavior at this point.
And it doesn't seem like most Americans really care that much about it as long as they're not losing from their retirement correct like it's not a they are seen it taken from them directly.

This isn’t a “bailout” that’s happening with SVB. A “bailout” means that the public shareholders and debt investors would be compensated by the government. That’s not happening with SVB.

The government needs to step in and make whole all depositors. Why? Because it will cause people - like my Boomer parents - to pull the excess $100K out of their current bank account to try to deposit it somewhere else. That would start a wide scale run on banks of all sizes. The government won’t be able to fix that situation and it’s basically financial Armageddon.

Making depositors whole isn’t a bailout.

Since Cyprus banks "bailed in" depositors, that has been the model deemed less likely to cause systemic risk.

Does a bail in mean the depositors just take a haircut and get the rest of their money back??

[Anonymous]

In the Cyprus situation, large depositors at one bank (Bank of Cyprus) had 47.5% of their uninsured money (any amount over €100,000) converted into shares of the financial institution. At anothe failed bank (Laiki Bank) all uninsured deposits were wiped out, and the lender was wound down and its operations folded into Bank of Cyprus.

https://www.reuters.com/article/us-cyprus-banks-idUKKBN1K3242

[Anonymous]

This is a good article on the Cyprus bail in and the pros/cons of bail outs vs bail ins.

https://cepr.org/voxeu/columns/failing-banks-bail-ins-and-central-bank-independence-lessons-cyprus

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:UK authorities are scrambling.

https://www.ft.com/content/258d0732-d37b-49d6-8de8-b230a6568965

Likely behind a paywall for most. Some snippets:


UK chancellor Jeremy Hunt was on Saturday locked in talks over how to stop the collapse of Silicon Valley Bank from dealing a heavy blow to Britain’s tech sector.

More than 200 UK-based tech company executives have urged Downing Street to step in, warning that many companies faced an “existential threat” because they banked with the UK arm of SVB.

One London-based venture capitalist said: “There is growing confidence that the UK government will step in with liquidity measures on Monday.”

The Bank of England moved to put the UK arm of SVB into insolvency late on Friday following the shutdown earlier in the day of the bank’s US entity, but said it had “a limited presence in the UK and no critical functions supporting the financial system”.

On Saturday around 210 start-up founders and leaders signed an open letter to Hunt, warning that “the majority of us as tech founders are running numbers to see if we are potentially technically insolvent”.

This is why I’m laughing at all the “this is not a big deal” / “it’s just some small bank in California” takes. This collapse will have an impact worldwide for months, potentially even years to come.

Yes. The people who think this is “just California” seem ignorant.

It will have an impact on tech companies who should have been smarter and in most cases serve no important societal purpose. In the US we have resolution procedures to unwind failed banks and fairly distribute assets. There is no guarantee for uninsured deposits. I assume UK has a similar structure. There’s zero reason to treat the tech companies any differently from what the law already prescribes. Tough luck.

Bad take. It’s going to hit nearly everyone’s retirement accounts, for a start.

Can someone explain to me why this is a rational argument for the continuation of allowing these institutions to get in these precarious situations to begin with and then we use taxpayer money or government money to essentially bail them out or stop the bleeding and then they know that they can do these risky things again over and over and over again I mean it's a pattern of behavior at this point.
And it doesn't seem like most Americans really care that much about it as long as they're not losing from their retirement correct like it's not a they are seen it taken from them directly.

This isn’t a “bailout” that’s happening with SVB. A “bailout” means that the public shareholders and debt investors would be compensated by the government. That’s not happening with SVB.

The government needs to step in and make whole all depositors. Why? Because it will cause people - like my Boomer parents - to pull the excess $100K out of their current bank account to try to deposit it somewhere else. That would start a wide scale run on banks of all sizes. The government won’t be able to fix that situation and it’s basically financial Armageddon.

Making depositors whole isn’t a bailout.

Maybe but making a bunch of wealthy tech companies and VC depositors whole by giving them $20B from Federal coffers because they did not perform due diligence corporate treasury work sure looks REALLY shady.

The only people who will run to move money will be those who have assets in cash accounts about FDIC limit — and guess what, they are moving their money no matter WHAT happens — remember last time they bailed out Bear Sterns, and then the next bank fail (Lehman) so precedent is weak.

Are you saying your boomers parents have more $500k in a single bank? Otherwise they won’t care, because all FDIC insured accounts will be fine.

A run on the banks by over $250k corp accounts is happening Monday no matter what happens. No one wants to risk that their bank will be the Lehman.

And it should happen; as corporations they should be managing this risk themselves, such as purchasing short term T-bills etc or have brokered cash accounts.

DP. It wouldn’t all be from federal coffers. There are probably buyers for SVB — they have a lot of assets — the question is the losses and how to handle them.

There are a LOT of ordinary people with accounts over $250,000, many of them Boomers who are risk adverse. If they see early Monday morning that depositors are safe (probably through some combination of federal funds and a private buyer), they may not spook the same way. But if communication is unclear, if the depositors are a total loss, then by the end of the week we could be in a very, very different world.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:UK authorities are scrambling.

https://www.ft.com/content/258d0732-d37b-49d6-8de8-b230a6568965

Likely behind a paywall for most. Some snippets:


UK chancellor Jeremy Hunt was on Saturday locked in talks over how to stop the collapse of Silicon Valley Bank from dealing a heavy blow to Britain’s tech sector.

More than 200 UK-based tech company executives have urged Downing Street to step in, warning that many companies faced an “existential threat” because they banked with the UK arm of SVB.

One London-based venture capitalist said: “There is growing confidence that the UK government will step in with liquidity measures on Monday.”

The Bank of England moved to put the UK arm of SVB into insolvency late on Friday following the shutdown earlier in the day of the bank’s US entity, but said it had “a limited presence in the UK and no critical functions supporting the financial system”.

On Saturday around 210 start-up founders and leaders signed an open letter to Hunt, warning that “the majority of us as tech founders are running numbers to see if we are potentially technically insolvent”.

This is why I’m laughing at all the “this is not a big deal” / “it’s just some small bank in California” takes. This collapse will have an impact worldwide for months, potentially even years to come.

Yes. The people who think this is “just California” seem ignorant.

It will have an impact on tech companies who should have been smarter and in most cases serve no important societal purpose. In the US we have resolution procedures to unwind failed banks and fairly distribute assets. There is no guarantee for uninsured deposits. I assume UK has a similar structure. There’s zero reason to treat the tech companies any differently from what the law already prescribes. Tough luck.

Bad take. It’s going to hit nearly everyone’s retirement accounts, for a start.

Can someone explain to me why this is a rational argument for the continuation of allowing these institutions to get in these precarious situations to begin with and then we use taxpayer money or government money to essentially bail them out or stop the bleeding and then they know that they can do these risky things again over and over and over again I mean it's a pattern of behavior at this point.
And it doesn't seem like most Americans really care that much about it as long as they're not losing from their retirement correct like it's not a they are seen it taken from them directly.

This isn’t a “bailout” that’s happening with SVB. A “bailout” means that the public shareholders and debt investors would be compensated by the government. That’s not happening with SVB.

The government needs to step in and make whole all depositors. Why? Because it will cause people - like my Boomer parents - to pull the excess $100K out of their current bank account to try to deposit it somewhere else. That would start a wide scale run on banks of all sizes. The government won’t be able to fix that situation and it’s basically financial Armageddon.

Making depositors whole isn’t a bailout.

Maybe but making a bunch of wealthy tech companies and VC depositors whole by giving them $20B from Federal coffers because they did not perform due diligence corporate treasury work sure looks REALLY shady.

The only people who will run to move money will be those who have assets in cash accounts about FDIC limit — and guess what, they are moving their money no matter WHAT happens — remember last time they bailed out Bear Sterns, and then the next bank fail (Lehman) so precedent is weak.

Are you saying your boomers parents have more $500k in a single bank? Otherwise they won’t care, because all FDIC insured accounts will be fine.

A run on the banks by over $250k corp accounts is happening Monday no matter what happens. No one wants to risk that their bank will be the Lehman.

And it should happen; as corporations they should be managing this risk themselves, such as purchasing short term T-bills etc or have brokered cash accounts.

DP. It wouldn’t all be from federal coffers. There are probably buyers for SVB — they have a lot of assets — the question is the losses and how to handle them.

There are a LOT of ordinary people with accounts over $250,000, many of them Boomers who are risk adverse. If they see early Monday morning that depositors are safe (probably through some combination of federal funds and a private buyer), they may not spook the same way. But if communication is unclear, if the depositors are a total loss, then by the end of the week we could be in a very, very different world.

A boomer couple has a limit of $500k, right?

Honestly, if they are risk adverse and have a bunch of cash tied up in one bank, they should move their money.

I just doubt there are that many in cash for that amount.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:UK authorities are scrambling.

https://www.ft.com/content/258d0732-d37b-49d6-8de8-b230a6568965

Likely behind a paywall for most. Some snippets:


UK chancellor Jeremy Hunt was on Saturday locked in talks over how to stop the collapse of Silicon Valley Bank from dealing a heavy blow to Britain’s tech sector.

More than 200 UK-based tech company executives have urged Downing Street to step in, warning that many companies faced an “existential threat” because they banked with the UK arm of SVB.

One London-based venture capitalist said: “There is growing confidence that the UK government will step in with liquidity measures on Monday.”

The Bank of England moved to put the UK arm of SVB into insolvency late on Friday following the shutdown earlier in the day of the bank’s US entity, but said it had “a limited presence in the UK and no critical functions supporting the financial system”.

On Saturday around 210 start-up founders and leaders signed an open letter to Hunt, warning that “the majority of us as tech founders are running numbers to see if we are potentially technically insolvent”.

This is why I’m laughing at all the “this is not a big deal” / “it’s just some small bank in California” takes. This collapse will have an impact worldwide for months, potentially even years to come.

Yes. The people who think this is “just California” seem ignorant.

It will have an impact on tech companies who should have been smarter and in most cases serve no important societal purpose. In the US we have resolution procedures to unwind failed banks and fairly distribute assets. There is no guarantee for uninsured deposits. I assume UK has a similar structure. There’s zero reason to treat the tech companies any differently from what the law already prescribes. Tough luck.

Bad take. It’s going to hit nearly everyone’s retirement accounts, for a start.

Can someone explain to me why this is a rational argument for the continuation of allowing these institutions to get in these precarious situations to begin with and then we use taxpayer money or government money to essentially bail them out or stop the bleeding and then they know that they can do these risky things again over and over and over again I mean it's a pattern of behavior at this point.
And it doesn't seem like most Americans really care that much about it as long as they're not losing from their retirement correct like it's not a they are seen it taken from them directly.

This isn’t a “bailout” that’s happening with SVB. A “bailout” means that the public shareholders and debt investors would be compensated by the government. That’s not happening with SVB.

The government needs to step in and make whole all depositors. Why? Because it will cause people - like my Boomer parents - to pull the excess $100K out of their current bank account to try to deposit it somewhere else. That would start a wide scale run on banks of all sizes. The government won’t be able to fix that situation and it’s basically financial Armageddon.

Making depositors whole isn’t a bailout.

Maybe but making a bunch of wealthy tech companies and VC depositors whole by giving them $20B from Federal coffers because they did not perform due diligence corporate treasury work sure looks REALLY shady.

The only people who will run to move money will be those who have assets in cash accounts about FDIC limit — and guess what, they are moving their money no matter WHAT happens — remember last time they bailed out Bear Sterns, and then the next bank fail (Lehman) so precedent is weak.

Are you saying your boomers parents have more $500k in a single bank? Otherwise they won’t care, because all FDIC insured accounts will be fine.

A run on the banks by over $250k corp accounts is happening Monday no matter what happens. No one wants to risk that their bank will be the Lehman.

And it should happen; as corporations they should be managing this risk themselves, such as purchasing short term T-bills etc or have brokered cash accounts.

DP. It wouldn’t all be from federal coffers. There are probably buyers for SVB — they have a lot of assets — the question is the losses and how to handle them.

There are a LOT of ordinary people with accounts over $250,000, many of them Boomers who are risk adverse. If they see early Monday morning that depositors are safe (probably through some combination of federal funds and a private buyer), they may not spook the same way. But if communication is unclear, if the depositors are a total loss, then by the end of the week we could be in a very, very different world.

A boomer couple has a limit of $500k, right?

Honestly, if they are risk adverse and have a bunch of cash tied up in one bank, they should move their money.

I just doubt there are that many in cash for that amount.

You get $250K each for checking and savings accounts. And you get it per person in the case of a joint account. So a boomer couple with joint checking and savings accounts at one bank would get $1m in FDIC insurance for their personal banking. Business accounts get separate deposit insurance.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Seems like the regulators were asleep on the wheel with this bank. How could you allow customer deposits to be used to loan out in risky venture debt or long term duration MBS that dont need to marked to market to conceal losses?

There's got to be alot of collateral damage if they dont come up with a mechanism to give company's deposits back in a timely manner so they can make payroll. The equity and debt holders of the bank should be wiped out for their incompetence for risk management.

When these long duration securities were purchased, rates were at 0. This is what happens when you starve the system of yield for too long- you force institutions to take more risk.

Maybe banks don’t need to chase “yield.” Maybe their primary job is to be safe and sound.

It's a balance. A bank's first line defense against losses is strong earnings, which, yes, does involve getting reasonable yield.

This guy gets it. A bank must be profitable to be healthy. This is banking 101.

There’s a WIDE variance between “profitable” and “safe and sound.” This is the whole concept of risk management. There is an inherent conflict between protecting depositors and “reaching for yield” for investors.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Bigger than SVB because if uninsured deposits are not made whole within a day or two, every business in America with accounts at banks that are not too big to fail (so, like 3-4, Bank of America, chase, citi, wells) are going to be pulling funds and opening accounts at those big banks. That will create similar bank runs everywhere.

It seems people are having trouble seeing the differences between protecting depositors and ‘bailing out’ the bank itself and its investors.

depositors are protected by our existing system.

Depositors are protected up to $250k per account. That protection is meaningless to even a small business, not to mention medium or large ones.

And so? So your answer is that banks should be permitted to take maximum risk with minimum regulation, then the government steps in to protect depositors?

I don’t want to see the term “moral hazard” come out of anyone’s mouth ever again.