SVB failure

[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.

Oh but then they wouldn’t get to sponsor fancy steak dinners at SXSW or be a job creator for uselessly wealthy bank execs. Credit unions lack glamour.

[Anonymous]

Anonymous wrote: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.

SVB has to pay back its FHLB advances before its assets can be used for uninsured deposits. Will there really be enough left?

The mismanagement of the FHLB system is the only argument I see for the govt making depositors whole here.

[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.

This is stupid. If you are smart enough to accumulate over $250k in cash you should be smart enough to understand what FDIC insurance means already.

[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.

This is stupid. If you are smart enough to accumulate over $250k in cash you should be smart enough to understand what FDIC insurance means already.

Well yes, this is what the short sellers are arguing on Twitter. They are salivating at the thought of cascading bank runs this week as equity values plunge, while Everyday Americans hold the bag.

Frankly, I find this mentality of wanting to destroy the banking system a lot more disturbing than the “moral hazard” of bailing in depositors.

Hopefully the Fed and FDIC shut down this nonsense tomorrow and drive a stake through the heart of the short sellers.

[Anonymous]

Anonymous wrote:

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.

This is stupid. If you are smart enough to accumulate over $250k in cash you should be smart enough to understand what FDIC insurance means already.

Well yes, this is what the short sellers are arguing on Twitter. They are salivating at the thought of cascading bank runs this week as equity values plunge, while Everyday Americans hold the bag.

Frankly, I find this mentality of wanting to destroy the banking system a lot more disturbing than the “moral hazard” of not bailing in depositors.

Hopefully the Fed and FDIC shut down this nonsense tomorrow and drive a stake through the heart of the short sellers.

Fixed

[Anonymous]

Anonymous wrote:

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.

This is stupid. If you are smart enough to accumulate over $250k in cash you should be smart enough to understand what FDIC insurance means already.

Well yes, this is what the short sellers are arguing on Twitter. They are salivating at the thought of cascading bank runs this week as equity values plunge, while Everyday Americans hold the bag.

Frankly, I find this mentality of wanting to destroy the banking system a lot more disturbing than the “moral hazard” of bailing in depositors.

Hopefully the Fed and FDIC shut down this nonsense tomorrow and drive a stake through the heart of the short sellers.

Right so banks get to do whatever they want then cry “the banking system will be destroyed if you don’t save us!” then wait a decent amount of time before they start lobbying against financial reform again.

Tell me again about the moral hazard of forgiving student loans?

[Anonymous]

Ok bear with me here. This is why the FRB needs a union, pronto. We don’t know why supervision failed here, but it did. We know historically (and I know personally) that retaliation against bank examiners happens. I’ll bet anything that there were FRB examiners trying to raise alarm bells who were silenced, either directly or due to a culture of fear/retaliation. A union will help ensure examiners can speak freely and press their concerns forward.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

This is stupid. If you are smart enough to accumulate over $250k in cash you should be smart enough to understand what FDIC insurance means already.

Well yes, this is what the short sellers are arguing on Twitter. They are salivating at the thought of cascading bank runs this week as equity values plunge, while Everyday Americans hold the bag.

Frankly, I find this mentality of wanting to destroy the banking system a lot more disturbing than the “moral hazard” of bailing in depositors.

Hopefully the Fed and FDIC shut down this nonsense tomorrow and drive a stake through the heart of the short sellers.

Right so banks get to do whatever they want then cry “the banking system will be destroyed if you don’t save us!” then wait a decent amount of time before they start lobbying against financial reform again.

Tell me again about the moral hazard of forgiving student loans?

All animals are equal, but some animals are more equal than others. Have you not figured this out yet?

This crisis is not about poor credit quality. It’s about an internet-fueled bank run stemming from poor management of asset-liability mismatch. Your desire to inflict pain on depositors is sadistic. We don’t need a world where depositors have to constantly due underlying financial analysis of their banks; such an inefficiency and recipe for disaster.

[Anonymous]

Anonymous wrote:Ok bear with me here. This is why the FRB needs a union, pronto. We don’t know why supervision failed here, but it did. We know historically (and I know personally) that retaliation against bank examiners happens. I’ll bet anything that there were FRB examiners trying to raise alarm bells who were silenced, either directly or due to a culture of fear/retaliation. A union will help ensure examiners can speak freely and press their concerns forward.

FRBSF is a disaster right now. They had FTX/Moonstone, Silvergate, and now SVB on their watch. I believe a number of SVB execs are FRBSF alums.

A union starts to make sense if there are legit complaints of retaliation and silencing. But I bet the banks & Congress would fight it tooth & nail. Is there a statutory ban on a union within the FRS?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

This is stupid. If you are smart enough to accumulate over $250k in cash you should be smart enough to understand what FDIC insurance means already.

Well yes, this is what the short sellers are arguing on Twitter. They are salivating at the thought of cascading bank runs this week as equity values plunge, while Everyday Americans hold the bag.

Frankly, I find this mentality of wanting to destroy the banking system a lot more disturbing than the “moral hazard” of bailing in depositors.

Hopefully the Fed and FDIC shut down this nonsense tomorrow and drive a stake through the heart of the short sellers.

Right so banks get to do whatever they want then cry “the banking system will be destroyed if you don’t save us!” then wait a decent amount of time before they start lobbying against financial reform again.

Tell me again about the moral hazard of forgiving student loans?

All animals are equal, but some animals are more equal than others. Have you not figured this out yet?

This crisis is not about poor credit quality. It’s about an internet-fueled bank run stemming from poor management of asset-liability mismatch. Your desire to inflict pain on depositors is sadistic. We don’t need a world where depositors have to constantly due underlying financial analysis of their banks; such an inefficiency and recipe for disaster.

Ok then, are you in favor of robust financial reform so this doesn’t happen again?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Ok bear with me here. This is why the FRB needs a union, pronto. We don’t know why supervision failed here, but it did. We know historically (and I know personally) that retaliation against bank examiners happens. I’ll bet anything that there were FRB examiners trying to raise alarm bells who were silenced, either directly or due to a culture of fear/retaliation. A union will help ensure examiners can speak freely and press their concerns forward.

FRBSF is a disaster right now. They had FTX/Moonstone, Silvergate, and now SVB on their watch. I believe a number of SVB execs are FRBSF alums.

A union starts to make sense if there are legit complaints of retaliation and silencing. But I bet the banks & Congress would fight it tooth & nail. Is there a statutory ban on a union within the FRS?

Absolutely no ban that I know of. There is a strong federal policy right now in favor of federal unions. And of course we need much stronger revolving door rules, like a 5-year ban.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Ok bear with me here. This is why the FRB needs a union, pronto. We don’t know why supervision failed here, but it did. We know historically (and I know personally) that retaliation against bank examiners happens. I’ll bet anything that there were FRB examiners trying to raise alarm bells who were silenced, either directly or due to a culture of fear/retaliation. A union will help ensure examiners can speak freely and press their concerns forward.

FRBSF is a disaster right now. They had FTX/Moonstone, Silvergate, and now SVB on their watch. I believe a number of SVB execs are FRBSF alums.

A union starts to make sense if there are legit complaints of retaliation and silencing. But I bet the banks & Congress would fight it tooth & nail. Is there a statutory ban on a union within the FRS?

The entire FR system is a disaster right now. Attrition is incredibly high and the overlords don’t care or don’t know. It’s amazing to me how they simply shrug their shoulders when talent continues to walk out the door.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Ok bear with me here. This is why the FRB needs a union, pronto. We don’t know why supervision failed here, but it did. We know historically (and I know personally) that retaliation against bank examiners happens. I’ll bet anything that there were FRB examiners trying to raise alarm bells who were silenced, either directly or due to a culture of fear/retaliation. A union will help ensure examiners can speak freely and press their concerns forward.

FRBSF is a disaster right now. They had FTX/Moonstone, Silvergate, and now SVB on their watch. I believe a number of SVB execs are FRBSF alums.

A union starts to make sense if there are legit complaints of retaliation and silencing. But I bet the banks & Congress would fight it tooth & nail. Is there a statutory ban on a union within the FRS?

The entire FR system is a disaster right now. Attrition is incredibly high and the overlords don’t care or don’t know. It’s amazing to me how they simply shrug their shoulders when talent continues to walk out the door.

I know what will keep them! Super restrictive telework policies.

I wonder how many are leaving for fully remote jobs or jobs at unionized FIRREAs.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Ok bear with me here. This is why the FRB needs a union, pronto. We don’t know why supervision failed here, but it did. We know historically (and I know personally) that retaliation against bank examiners happens. I’ll bet anything that there were FRB examiners trying to raise alarm bells who were silenced, either directly or due to a culture of fear/retaliation. A union will help ensure examiners can speak freely and press their concerns forward.

FRBSF is a disaster right now. They had FTX/Moonstone, Silvergate, and now SVB on their watch. I believe a number of SVB execs are FRBSF alums.

A union starts to make sense if there are legit complaints of retaliation and silencing. But I bet the banks & Congress would fight it tooth & nail. Is there a statutory ban on a union within the FRS?

The entire FR system is a disaster right now. Attrition is incredibly high and the overlords don’t care or don’t know. It’s amazing to me how they simply shrug their shoulders when talent continues to walk out the door.

I know what will keep them! Super restrictive telework policies.

I wonder how many are leaving for fully remote jobs or jobs at unionized FIRREAs.

Butts in seats! Who cares if talent leaves. We can replace them with employees without any experience who will come into the office 5 days a pay period. We need to collaborate and we can’t do that with reserve banks unless we are in the office. You need to be in the office to hold a teams call with the Chicago Fed.

[Anonymous]

Anonymous wrote:

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.

Right. And try raising capital if you are a credit union....