SVB failure

[Anonymous]

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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.

They aren't backstopping depositors. They are providing liquidity to financial institutions that failed to properly manage risk.

[Anonymous]

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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?

They don't say. Safe to say it won't be a usorious rate.

[Anonymous]

If we are socializing the loses for all large banks then shouldn’t we do the same for the profits?

Maybe a 50% surtax on all TBTF bank profits, which seems to be at least the top 20 now.

[Anonymous]

Anonymous wrote:If we are socializing the loses for all large banks then shouldn’t we do the same for the profits?

Maybe a 50% surtax on all TBTF bank profits, which seems to be at least the top 20 now.

The largest banks don't need this facility. This is for confidence at smaller banks where many small businesses have deposits > $250,000.

[Anonymous]

Joint statement of Treasury, FDIC and Federal Reserve saying that a systemic risk exception is being made to make all depositors of SVB and Signature Bank whole.

https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm

[Anonymous]

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Anonymous wrote:No one is advocating for bailing out shareholders or SVB executives. Depositors, who deposited their cash in good faith, need access to their operating accounts tomorrow to meet payroll and pay their trade accounts. If they can’t access their cash deposits, Americans lose faith in the banking system, and there is a risk of contagion. How would everyone on here feel if your company’s operating accounts suddenly vanished and they can’t make your next paycheck? Most Americans rely on their next paycheck to eat, pay rent and keep the heat on.

SVB account holders will have access to $250k starting tomorrow. FDIC insurance works.

Lol. SVB is not a consumer bank. $250k for a business? That won’t get many through even their next payroll. They need access to their operating accounts.

Of course they do, but they also chose to put their money in accounts that are not insured.

$250k on a 2-week payroll is $500k/month = $6mln/year. Let's say avg salary of $150k net (so $180-200k gross) = $250k can cover one 2-week payroll for a company of about 40. They can delay paying the taxes portion, so it's jsut $250k needed in net payments.

OMG. You obviously have no idea how small business works. My God.

DP. I have no idea how small businesses work. Can you tell us?

Okay. Typically they do not have sophisticated people with deep banking experience on staff. They don’t have the ability to shop different banks or run a complex scheme where payroll is aggregated across multiple banks. They are very cash conservative so keep it in low-yield accounts that are supposed to be safe. They have ongoing outbound payment commitments that their business relies on, so they can’t cut expenses easily to make payroll. What else do you want to know?

I think the people in this thread who are advocating for the widespread failure of small businesses and small banks are entitled nihilists.

I find it pretty laughable that you think Silicon Tech companies 1. Are cash conservative 2. Don’t have the ability to shop different banks 3. don’t have sophisticated staff that should have known to protect assets over 250k 4. Can’t run a complex scheme to aggregate payroll snd 5. Don’t have the ability to cut any expenses.

You are so wildly ignorant.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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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.

But let me guess, you want all your student loans wiped away, right?

[Anonymous]

The copium is real with the SVB folks

https://www.linkedin.com/posts/gary-tomczak-10916531_note-to-all-the-bank-senior-executives-out-activity-7040076119923990529-wOrf?utm_source=share&utm_medium=member_ios

[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.

But let me guess, you want all your student loans wiped away, right?

No, I paid mine. But yes, I think nobody should end up with student loans that consume a significant portion of their income. That's just stupid for the economy and nation in so many ways.

[Anonymous]

Anonymous wrote:Joint statement of Treasury, FDIC and Federal Reserve saying that a systemic risk exception is being made to make all depositors of SVB and Signature Bank whole.

https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm

"No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer ... senior management has been removed."

[Anonymous]

The fee should follow up with a significant increase in the amount of insured deposits for commercial accounts.

[Anonymous]

Anonymous wrote:Joint statement of Treasury, FDIC and Federal Reserve saying that a systemic risk exception is being made to make all depositors of SVB and Signature Bank whole.

https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm

Good job Federal reserve. Looks like all future losses from this if any will be collected from bank shareholders (not just SVB)

[Anonymous]

Anonymous wrote:The fee should follow up with a significant increase in the amount of insured deposits for commercial accounts.

...which would require larger fees paid by the banks to FDIC. Do you really think they will agree to that?

[Anonymous]

“Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”

Is this like cancelling recess for the whole class 😂

[Anonymous]

Anonymous wrote:

Anonymous wrote:The fee should follow up with a significant increase in the amount of insured deposits for commercial accounts.

...which would require larger fees paid by the banks to FDIC. Do you really think they will agree to that?

Do they have a choice? I doubt the FDIC is going to go all King John on them. But maybe they will require banks to insure a higher amount for deposit accounts owned by unsophisticated investors (consumers and small businesses)