SVB failure

[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?

No ban. But FR culture is very economist dominated and economists tend to disdain unions.

I have not seen any evidence that unions at the FDIC and OCC have done anything to make their examiners feel free to speak up without retaliation.

All of the agencies' supervisory areas suffer from group think among a few in power and an insufficient culture of challenge, even as they criticize banks for lack of a challenge function.

[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?

No ban. But FR culture is very economist dominated and economists tend to disdain unions.

I have not seen any evidence that unions at the FDIC and OCC have done anything to make their examiners feel free to speak up without retaliation.

All of the agencies' supervisory areas suffer from group think among a few in power and an insufficient culture of challenge, even as they criticize banks for lack of a challenge function.

Very true. A union can help, though.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: Ashley Tyrner, CEO of Boston wellness firm FarmboxRx, said she had at least $10m deposited with SVB and has been frantically calling her banker. She called it 'the worst 18 hours of my life.'

'Clutching my pearls' for her right now.

Using insurance money to fund CSA boxes seems wildly inefficient

SVB won’t have any clients too big to fail

https://www.forbes.com/sites/robinseatonjefferson/2020/01/16/insurance-company-provides-free-fruits--vegetables-to-members-with-new-farmboxrx-program/amp/

What a ridiculous company. FRom grocery store deliveries to ammazon whole foods I just don't see the point of that business. 33 counties in PA and let's find the food desert. So the Boston person sold a fresh fruit+veggie delivery service to a medicare wrap company. That BS in the premium? Here's vibra https://www.cms.gov/files/document/vibrahealthcmp02252022.pdf

I wonder how many supremely junk companies were funded by SVB.

[Anonymous]

[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.

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.

I don’t think this is completely correct. It is true that a couple can have $1 mil in FDIC insured deposits at any bank. It doesn’t matter if it is a checking or savings account or CD. The way to do it is to have 250 in individual accounts of each spouse and 500 in joint 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.

I think you are right. Banks on average have 40-50% of uninsured deposits, a much smaller number of withdrawals would be enough to collapse a bank.

[Anonymous]

Silicone Valley/tech is screwed for years over this. The amount of VC money and depositors like Roku… the money evaporated overnight. Poof, gone.

[Anonymous]

Anonymous wrote:Silicone Valley/tech is screwed for years over this. The amount of VC money and depositors like Roku… the money evaporated overnight. Poof, gone.

The money isn't gone. SVB has plenty of assets, the bank was shut down because they lost their cushion due to an old-fashioned bank run (started by Peter Thiel, who may have other motives as someone who enjoys creating chaos).

Maybe I'm just old, but it seems like one of the biggest problems right now is that there are a lot of people who made a lot of money very fast, but have very little business common sense.

[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.

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.

I don’t think this is completely correct. It is true that a couple can have $1 mil in FDIC insured deposits at any bank. It doesn’t matter if it is a checking or savings account or CD. The way to do it is to have 250 in individual accounts of each spouse and 500 in joint accounts

A joint account (checking, savings, CD, etc) can get up to $500K in FDIC insurance - $250 per person.

So if you have a joint checking and a joint savings account, that’s $1m in insured funds rights there.

https://www.fdic.gov/resources/deposit-insurance/brochures/deposits-at-a-glance/#:~:text=The%20standard%20insurance%20amount%20is,in%20different%20account%20ownership%20categories.

“FDIC Deposit Insurance Coverage Limits by Account Ownership Category

Joint Accounts (Owned by Two or More Persons) - $250,000 per account owner”

[Anonymous]

Anyone notice how the NYTimes has majorly subdued its coverage today? They probably got a call from Yellen.

[Anonymous]

Anonymous wrote:Anyone notice how the NYTimes has majorly subdued its coverage today? They probably got a call from Yellen.

The only article I'm seeing on the NYTimes front page (online) is basically summarizing Yellen: https://www.nytimes.com/2023/03/12/business/janet-yellen-silicon-valley-bank.html?

[Anonymous]

Anonymous wrote:Anyone notice how the NYTimes has majorly subdued its coverage today? They probably got a call from Yellen.

Good point. There’s 4 or 5 articles above the Yellen article on their home page.

I bet the agencies have a buyer lined up and it’s probably embargoed info until noon or 6pm. If they decide to approve a sale + open discount window access + the Fed’s emergency rate meeting tomorrow…..this crisis is over before the open bell. And that’s what should happen to soothe depositors.

[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.

Do you work? How do you propose a small business ever make payroll?

[Anonymous]

Anonymous wrote:

No COVID bailouts? Were you asleep during the multitrillion dollar PPP bailout?

[Anonymous]

Anonymous wrote:Anyone notice how the NYTimes has majorly subdued its coverage today? They probably got a call from Yellen.

WaPo, WSJ, The Trib and LA Times, too? They all have one article on the front pages of their apps. It's because no new news has happened. What else is there to say at this point?