SVB failure

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why not just give depositors the HTM assets? They can decide what to do.

Probably most of their assets are tied up in loans not in HTM treasuries

Not true. SVB’s loan book grew by only 15% by end of COVID. Their long term securities holdings grew by something like 100%

They had really bad interest rate timing on when the massive deposits came in. But effed up by buying long term ones, searching for yield, when the rate regime was about to flip.

It's not entirely their fault. Peter Thiel effed them over and deliberately forced a bank run. But they did make an inexplicably bad decision on the duration of their htm securities.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We have most of our cash savings with Wealthfront. It's guaranteed up to $2mln because they spread it across a few different banks to deal with the $250k/account limit:
https://www.wealthfront.com/blog/cash-account-2m-fdic-insurance

That’s pretty cool. How do you like them? I have Boomer parents who have way too much cash and are super spooked right now.

Why do they not have a treasury direct account? I have held hundreds of thousands there, know that its safe and liquid and also significantly protected from simple fraud since it does not have cash checking or such access

DP. Treasuries are risky these days obviously as SVB just found out. So, if you want a deposit equivalent you would need to buy 1 months bills. Does treasuries direct offer to roll them from month to month or you need to buy a new batch every month?

No they aren't. Sorry but that was just ignorant.

You can reinvest treasuries.

Wat? Which part is ignorant bro? If you bought long term treasuries a year ago you are a loser, HTM or no HTM

They only lose money if you sell. They are extremely safe.

Depends what you mean by losing money. Compared to keeping them under the mattress yes, compared to what bank savings accounts pay today, you are losing money tied up in a low yielding security every day

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So are all the SVB execs going to get golden parachutes? Will there be any repercussions?

SVB execs and shareholders get nothing. No “bailout” is being proposed. Depositors need access to their deposit accounts to make payroll and operate their businesses. They didn’t assume any risks in their cash accounts. Watch there be a run on other smaller banks starting tomorrow morning.

They assumed risk by being above insurance limits.

How many businesses have more than $250k per account? Most need more than that just to meet their payroll demands on 3/15. These are not consumer accounts. I know my firm’s operating accounts all by necessity have significantly more than $250k per account and that we couldn’t make payroll if we were locked out of our cash on Friday.

Corporations manage this risk with a treasurer. Just because you are too lean to act like a responsible company, that’s how it unfolds.

Good point. Small businesses and entrepreneurship are overrated.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So are all the SVB execs going to get golden parachutes? Will there be any repercussions?

SVB execs and shareholders get nothing. No “bailout” is being proposed. Depositors need access to their deposit accounts to make payroll and operate their businesses. They didn’t assume any risks in their cash accounts. Watch there be a run on other smaller banks starting tomorrow morning.

They assumed risk by being above insurance limits.

How many businesses have more than $250k per account? Most need more than that just to meet their payroll demands on 3/15. These are not consumer accounts. I know my firm’s operating accounts all by necessity have significantly more than $250k per account and that we couldn’t make payroll if we were locked out of our cash on Friday.

Is there a lesson to a small business owner here? Bank only with too big to fail banks?

So I guess we should expect a run on small banks tomorrow? No big deal.

Why would it be a big deal? Most consumers are below $250k so this will hardly be bread lines

[Anonymous]

(Cross post)

Federal Reserve announce new liquidity program for banks

"To support American businesses and households, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy.

The Federal Reserve is prepared to address any liquidity pressures that may arise.

The financing will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress.

With approval of the Treasury Secretary, the Department of the Treasury will make available up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP. The Federal Reserve does not anticipate that it will be necessary to draw on these backstop funds."

https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So are all the SVB execs going to get golden parachutes? Will there be any repercussions?

SVB execs and shareholders get nothing. No “bailout” is being proposed. Depositors need access to their deposit accounts to make payroll and operate their businesses. They didn’t assume any risks in their cash accounts. Watch there be a run on other smaller banks starting tomorrow morning.

They assumed risk by being above insurance limits.

How many businesses have more than $250k per account? Most need more than that just to meet their payroll demands on 3/15. These are not consumer accounts. I know my firm’s operating accounts all by necessity have significantly more than $250k per account and that we couldn’t make payroll if we were locked out of our cash on Friday.

Corporations manage this risk with a treasurer. Just because you are too lean to act like a responsible company, that’s how it unfolds.

Good point. Small businesses and entrepreneurship are overrated.

Exactly. They should chalk this up a “break things” lesson, pivot to a lean stance, and treat their failure as a success. It’s the tech way, if they have a good idea and execution, this will not keep them down.

[Anonymous]

Anonymous wrote:(Cross post)

Federal Reserve announce new liquidity program for banks

"To support American businesses and households, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy.

The Federal Reserve is prepared to address any liquidity pressures that may arise.

The financing will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress.

With approval of the Treasury Secretary, the Department of the Treasury will make available up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP. The Federal Reserve does not anticipate that it will be necessary to draw on these backstop funds."

https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm

Valued at par. So we ignore that they have dropped 20% and cut a check?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So are all the SVB execs going to get golden parachutes? Will there be any repercussions?

SVB execs and shareholders get nothing. No “bailout” is being proposed. Depositors need access to their deposit accounts to make payroll and operate their businesses. They didn’t assume any risks in their cash accounts. Watch there be a run on other smaller banks starting tomorrow morning.

They assumed risk by being above insurance limits.

How many businesses have more than $250k per account? Most need more than that just to meet their payroll demands on 3/15. These are not consumer accounts. I know my firm’s operating accounts all by necessity have significantly more than $250k per account and that we couldn’t make payroll if we were locked out of our cash on Friday.

Is there a lesson to a small business owner here? Bank only with too big to fail banks?

So I guess we should expect a run on small banks tomorrow? No big deal.

Why would it be a big deal? Most consumers are below $250k so this will hardly be bread lines

And the consumers who were dumb enough to work for smaller businesses who don’t have a Treasurer don’t deserve to get paid next week. They should known better than to work someone who kept their cash deposits at SVP, Signature Bank, and whoever comes next.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So are all the SVB execs going to get golden parachutes? Will there be any repercussions?

SVB execs and shareholders get nothing. No “bailout” is being proposed. Depositors need access to their deposit accounts to make payroll and operate their businesses. They didn’t assume any risks in their cash accounts. Watch there be a run on other smaller banks starting tomorrow morning.

They assumed risk by being above insurance limits.

How many businesses have more than $250k per account? Most need more than that just to meet their payroll demands on 3/15. These are not consumer accounts. I know my firm’s operating accounts all by necessity have significantly more than $250k per account and that we couldn’t make payroll if we were locked out of our cash on Friday.

Is there a lesson to a small business owner here? Bank only with too big to fail banks?

So I guess we should expect a run on small banks tomorrow? No big deal.

Why would it be a big deal? Most consumers are below $250k so this will hardly be bread lines

And the consumers who were dumb enough to work for smaller businesses who don’t have a Treasurer don’t deserve to get paid next week. They should known better than to work someone who kept their cash deposits at SVP, Signature Bank, and whoever comes next.

We have unemployment insurance for that. No economic actor (from the individual to the largest corp) has a right to be indemnified against all risk. The Fed's move to provide liquidity is to prevent systemic impacts.

[Anonymous]

Anonymous wrote:

Anonymous wrote:(Cross post)

Federal Reserve announce new liquidity program for banks

"To support American businesses and households, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy.

The Federal Reserve is prepared to address any liquidity pressures that may arise.

The financing will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress.

With approval of the Treasury Secretary, the Department of the Treasury will make available up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP. The Federal Reserve does not anticipate that it will be necessary to draw on these backstop funds."

https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm

Valued at par. So we ignore that they have dropped 20% and cut a check?

Well, they are not buying the securities just lending against them. Normal discount window would haircut the collateral.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So are all the SVB execs going to get golden parachutes? Will there be any repercussions?

SVB execs and shareholders get nothing. No “bailout” is being proposed. Depositors need access to their deposit accounts to make payroll and operate their businesses. They didn’t assume any risks in their cash accounts. Watch there be a run on other smaller banks starting tomorrow morning.

SVB execs deserve less than nothing - they need their comp clawed back.

Lol, in the real world they got bonuses right before the bankruptcy. Now they will get retention bonuses and such to wind it all down.

How do I know, it happened to me. When a public company I worked for as an Exec went bankrupt I had the best earning year of my life. I felt bad for the lower level people that got nothing, but they kept throwing money at me and other execs to stay for a while. Expect the same here.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So are all the SVB execs going to get golden parachutes? Will there be any repercussions?

SVB execs and shareholders get nothing. No “bailout” is being proposed. Depositors need access to their deposit accounts to make payroll and operate their businesses. They didn’t assume any risks in their cash accounts. Watch there be a run on other smaller banks starting tomorrow morning.

They assumed risk by being above insurance limits.

How many businesses have more than $250k per account? Most need more than that just to meet their payroll demands on 3/15. These are not consumer accounts. I know my firm’s operating accounts all by necessity have significantly more than $250k per account and that we couldn’t make payroll if we were locked out of our cash on Friday.

Is there a lesson to a small business owner here? Bank only with too big to fail banks?

So I guess we should expect a run on small banks tomorrow? No big deal.

Why would it be a big deal? Most consumers are below $250k so this will hardly be bread lines

And the consumers who were dumb enough to work for smaller businesses who don’t have a Treasurer don’t deserve to get paid next week. They should known better than to work someone who kept their cash deposits at SVP, Signature Bank, and whoever comes next.

We have unemployment insurance for that. No economic actor (from the individual to the largest corp) has a right to be indemnified against all risk. The Fed's move to provide liquidity is to prevent systemic impacts.

It’s about confidence in the commercial banking system. It’s a really big deal. Fed has just agreed to backstop depositors for this reason.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So are all the SVB execs going to get golden parachutes? Will there be any repercussions?

SVB execs and shareholders get nothing. No “bailout” is being proposed. Depositors need access to their deposit accounts to make payroll and operate their businesses. They didn’t assume any risks in their cash accounts. Watch there be a run on other smaller banks starting tomorrow morning.

They assumed risk by being above insurance limits.

How many businesses have more than $250k per account? Most need more than that just to meet their payroll demands on 3/15. These are not consumer accounts. I know my firm’s operating accounts all by necessity have significantly more than $250k per account and that we couldn’t make payroll if we were locked out of our cash on Friday.

Is there a lesson to a small business owner here? Bank only with too big to fail banks?

So I guess we should expect a run on small banks tomorrow? No big deal.

Why would it be a big deal? Most consumers are below $250k so this will hardly be bread lines

And the consumers who were dumb enough to work for smaller businesses who don’t have a Treasurer don’t deserve to get paid next week. They should known better than to work someone who kept their cash deposits at SVP, Signature Bank, and whoever comes next.

I consciously chose not to work at startups and small companies because they are inherently more risky.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:(Cross post)

Federal Reserve announce new liquidity program for banks

"To support American businesses and households, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy.

The Federal Reserve is prepared to address any liquidity pressures that may arise.

The financing will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress.

With approval of the Treasury Secretary, the Department of the Treasury will make available up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP. The Federal Reserve does not anticipate that it will be necessary to draw on these backstop funds."

https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm

Valued at par. So we ignore that they have dropped 20% and cut a check?

Well, they are not buying the securities just lending against them. Normal discount window would haircut the collateral.

“Lending” at 0% right?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So are all the SVB execs going to get golden parachutes? Will there be any repercussions?

SVB execs and shareholders get nothing. No “bailout” is being proposed. Depositors need access to their deposit accounts to make payroll and operate their businesses. They didn’t assume any risks in their cash accounts. Watch there be a run on other smaller banks starting tomorrow morning.

They assumed risk by being above insurance limits.

How many businesses have more than $250k per account? Most need more than that just to meet their payroll demands on 3/15. These are not consumer accounts. I know my firm’s operating accounts all by necessity have significantly more than $250k per account and that we couldn’t make payroll if we were locked out of our cash on Friday.

Is there a lesson to a small business owner here? Bank only with too big to fail banks?

So I guess we should expect a run on small banks tomorrow? No big deal.

Why would it be a big deal? Most consumers are below $250k so this will hardly be bread lines

And the consumers who were dumb enough to work for smaller businesses who don’t have a Treasurer don’t deserve to get paid next week. They should known better than to work someone who kept their cash deposits at SVP, Signature Bank, and whoever comes next.

We have unemployment insurance for that. No economic actor (from the individual to the largest corp) has a right to be indemnified against all risk. The Fed's move to provide liquidity is to prevent systemic impacts.

It’s about confidence in the commercial banking system. It’s a really big deal. Fed has just agreed to backstop depositors for this reason.

We clearly have no confidence in commercial banking unless a govt entity backstops it. How is that confidence?