SVB failure

[Anonymous]

Anonymous wrote:

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Anonymous wrote:You have to love finance! When big banks buckle they are too big to fail. When regional banks buckle now they are too small to fail, this is brilliant!

When profits soar it’s all due to their skill and big bonuses are deserved/earned. When things go bad it’s the system and risk and govt/tax payers need to solve/bail them out. I mean they paid out bonuses the day they went bankrupt, and I guarantee they will keep them (maybe the CEO will give back like 5% of what he earned over the past decade). In 2 years they will be arguing for less taxes and burdensome regulations!

The owners of SVB (the equity holders) were the ones paying the big bonuses and they have been duly punished.

how were they punished?

Those who held stock into SVB have had their entire investment wiped out. PP is correct that the SBV stockholders, who are the owners of the bank, agreed to SBV compensation terms for senior management.

The value of the stock is considered at zero.

[Anonymous]

[Anonymous]

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Anonymous wrote:Lots of people who work at startups like SVB are doing so to put food on the table for their families; not all are rich techbros.

Also being a rich techbro is okay.

So bailing out rich techbro with public money because they ignored FDIC insurance limits is okay?

Bailing out a bank so that employees of startups that bank with SVB can eat next week is okay.

Follow the money, these were not all small startups. ROKU had almost $500M, which was only 25% of their cash. You telling me Roku taking maybe a 10% haircut, $50M on what seems to be close to 2B in cash, is somehow unmanageable? Now their investors and execs who wouldn’t be making bonus may not like it but there is no material effect here.

Even the smaller companies, there is equity and we were looking at only a small hit to them, maybe even less than 5%. Why not give everyone access to 80% of their funds and figure out the loss after that.

The whole payroll story is such a joke, this is how the public is manipulated. If these companies need 100% of their cash just to make payroll they were going under regardless. The original plan was the fdic insurance plus a large percentage of the rest which would have paid out this week, this almost every company would have made payroll. But that wasn’t enough, full bailout basically extending fdic insurance to all deposits.

Maybe someone should start a bank today, guarantee like a 8% CD rate to suck in all the deposits. If things go well you make a ton of money, once things crash just have the govt payout since it’s all quasi insured now. Billionaires could just buy billion dollar CD’s with a no risk guaranteed rate better than the market. No moral hazard here folks, this will all work out great long term….at least for the bankers!

Thank you. I feel like I’m tilting at windmills. There was no desperation for putting food on the table; the existing FDIC dividend plan and expected 10%-20% deposit holder haircut was hardly the start of breadlines. But now the billionaires who got juiced returns from SVB accounts are made hole despite ignoring the risk of being above FDIC limits.

I agree with you that the depositors wouldn’t go bankrupt from a 10-20% haircut, but the FDIC’s position is that even a 10-20% haircut would create a contagion effect and cause deposit runs at other small banks. And it seems other banks agree, since I haven’t seen too many protests against paying the special assessment that the FDIC will levy. Why do you care if the depositors bear the burden of the 10-20% loss vs. if other banks bear it? This is not a rhetorical question. I am genuinely curious.

[Anonymous]

Anonymous wrote:[random YouTube clickbait]

Like I’m gonna waste my time.

[Anonymous]

Anonymous wrote:

Great video!

[Anonymous]

Anonymous wrote:

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Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Lots of people who work at startups like SVB are doing so to put food on the table for their families; not all are rich techbros.

Also being a rich techbro is okay.

So bailing out rich techbro with public money because they ignored FDIC insurance limits is okay?

Bailing out a bank so that employees of startups that bank with SVB can eat next week is okay.

Follow the money, these were not all small startups. ROKU had almost $500M, which was only 25% of their cash. You telling me Roku taking maybe a 10% haircut, $50M on what seems to be close to 2B in cash, is somehow unmanageable? Now their investors and execs who wouldn’t be making bonus may not like it but there is no material effect here.

Even the smaller companies, there is equity and we were looking at only a small hit to them, maybe even less than 5%. Why not give everyone access to 80% of their funds and figure out the loss after that.

The whole payroll story is such a joke, this is how the public is manipulated. If these companies need 100% of their cash just to make payroll they were going under regardless. The original plan was the fdic insurance plus a large percentage of the rest which would have paid out this week, this almost every company would have made payroll. But that wasn’t enough, full bailout basically extending fdic insurance to all deposits.

Maybe someone should start a bank today, guarantee like a 8% CD rate to suck in all the deposits. If things go well you make a ton of money, once things crash just have the govt payout since it’s all quasi insured now. Billionaires could just buy billion dollar CD’s with a no risk guaranteed rate better than the market. No moral hazard here folks, this will all work out great long term….at least for the bankers!

Thank you. I feel like I’m tilting at windmills. There was no desperation for putting food on the table; the existing FDIC dividend plan and expected 10%-20% deposit holder haircut was hardly the start of breadlines. But now the billionaires who got juiced returns from SVB accounts are made hole despite ignoring the risk of being above FDIC limits.

I agree with you that the depositors wouldn’t go bankrupt from a 10-20% haircut, but the FDIC’s position is that even a 10-20% haircut would create a contagion effect and cause deposit runs at other small banks. And it seems other banks agree, since I haven’t seen too many protests against paying the special assessment that the FDIC will levy. Why do you care if the depositors bear the burden of the 10-20% loss vs. if other banks bear it? This is not a rhetorical question. I am genuinely curious.

So are we ok now with unlimited FDIC insurance at all banks now? Because that is the new reality. Do we not see that a much larger crisis is already in the works for the future? Will other banks actually pay for this, when is congress passing that special assessment to cover all future moral hazard that was just created? Reality is they will put some band aid small fees to make it look like they did something. They will significantly underfund any type of “insurance” then when things boom and lending goes full tilt (because there are no more private loses) and there are major bankruptcies….who picks up the tab?

If the govt is basically guaranteeing against all future bank loses why not just eliminate all private banks and just have govt banks like in China? What happened to capitalism? Isn’t finance supposed to be the most capitalist sector of the economy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:[random YouTube clickbait]

Like I’m gonna waste my time.

Why do people believe this type of nonsense, like the media doesn’t want a good story. I don’t even have to watch it to know it’s just propaganda.

[Anonymous]

Between 2001 and 2023 there were 563 bank failures. Was everyone made whole in all/most of these cases?

If small banks are now at a competitive disadvantage, because regional and large are TBTF, won’t that further concentrate baking leading to more bailout, less competition etc? The top 6 already hold over half of US deposits. Is the only solution either a break up of all larger banks or extreme regulation to where they are basically govt entities?

[Anonymous]

Anonymous wrote:Between 2001 and 2023 there were 563 bank failures. Was everyone made whole in all/most of these cases?

If small banks are now at a competitive disadvantage, because regional and large are TBTF, won’t that further concentrate baking leading to more bailout, less competition etc? The top 6 already hold over half of US deposits. Is the only solution either a break up of all larger banks or extreme regulation to where they are basically govt entities?

In almost all cases they were because the FDIC was able to resolve those banks by finding a buyer that assumed all the deposits.

A story circulating in the press today (like WSJ) is that the US Treasury and Federal Reserve Board preferred to sell SVB to a private buyer, but the FDIC vetoed whoever the buyer was and, so, we ended up with the guarantees of insured deposits.

[Anonymous]

Like this comparison to the S&L crisis from the 80s, Paul Krugman:

In banking, insuring deposits means that depositors have no reason to concern themselves with how the banks are using their money. This in turn creates an incentive for banks to engage in bad behavior, such as making highly risky but high-yielding loans. If the loans pay off, the bank makes a lot of money; if they don’t, the owners just walk away. Heads, they win; tails, the taxpayers lose.

This isn’t a hypothetical case; it’s pretty much what happened during the S.&L. crisis of the 1980s, when savings and loan associations, especially but not only in Texas, effectively gambled on a huge scale with other people’s money. When the bets went bad, taxpayers had to compensate depositors, with the total cost amounting to as much as $124 billion — which, as an equivalent share of gross domestic product, would be something like $500 billion today.

The thing is, it’s not news that guaranteeing depositors creates moral hazard. That moral hazard is one of the reasons banks are regulated….

[Anonymous]

Tell me again how this was not a bailout for the wealthy? This bank was subsidizing loans for the rich as a recruitment tool. Where were these loans for the poor?

“Silicon Valley Bank was also deeply entangled in the personal finances of high net worth tech executives. It offered low-interest loans to investors and start-up founders who banked with it, so they were able to secure such loans — which traditional banks declined — for multimillion dollar homes, said three people who banked with Silicon Valley Bank.

Austin Petersmith, an investor and vice president of growth at Vendr, a software subscription company, tweeted his thanks last week to Silicon Valley Bank for giving him a mortgage for his home.

“Without SVB, my family literally wouldn’t be sitting in this home today,” he wrote, adding that 15 banks and lenders had rejected him for a mortgage while Silicon Valley Bank “approved us in less than a week.” He did not respond to a request for comment.

One start-up founder, who spoke on the condition of anonymity because he was not comfortable revealing his personal finances, said Silicon Valley Bank gave him a $4 million loan for his San Francisco home with an interest rate of 2.2 percent, while other banks were offering rates of 3 percent and higher.”

[Anonymous]

Anonymous wrote:Tell me again how this was not a bailout for the wealthy? This bank was subsidizing loans for the rich as a recruitment tool. Where were these loans for the poor?

“Silicon Valley Bank was also deeply entangled in the personal finances of high net worth tech executives. It offered low-interest loans to investors and start-up founders who banked with it, so they were able to secure such loans — which traditional banks declined — for multimillion dollar homes, said three people who banked with Silicon Valley Bank.

Austin Petersmith, an investor and vice president of growth at Vendr, a software subscription company, tweeted his thanks last week to Silicon Valley Bank for giving him a mortgage for his home.

“Without SVB, my family literally wouldn’t be sitting in this home today,” he wrote, adding that 15 banks and lenders had rejected him for a mortgage while Silicon Valley Bank “approved us in less than a week.” He did not respond to a request for comment.

One start-up founder, who spoke on the condition of anonymity because he was not comfortable revealing his personal finances, said Silicon Valley Bank gave him a $4 million loan for his San Francisco home with an interest rate of 2.2 percent, while other banks were offering rates of 3 percent and higher.”

The irony is that the same people that they did these favors for are the ones that killed it.

But today is about Credit Suisse. Global banker to the corrupt.

[Anonymous]

Anonymous wrote:

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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.'

Honest question -- should we care about that?

Should you care about one individual and company? No, probably not.

Should you care that thousands of companies only have access to $250k? Yes. If all of these companies didn't make payroll this week then it would have serious consequences.

There was an interview on NPR yesterday in which a startup that banked with SVB said they chose it because SVB understood the needs of tech startups, and what I hear when I hear that is "We needed financing from someplace that shares our delusions rather than looking for actual financial value."

But that is exactly the nature of a start-up, PP. They're all delusional until they make it. How much would you have given Jeff Bezos to sell heavy books by mail via an internet portal, out of his parents' garage??? It was crazy, and yet he made it.

Investing in risky propositions is not for traditional banking, which is quite conservative. This is a different banking - a necessary one that brings out-of-the-box ideas to market - and it requires an entirely different framework of priorities and beliefs.

It sounds as though you think Bezos is a hero who founded a company that makes most of its money from selling books via ethical business practices.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Tell me again how this was not a bailout for the wealthy? This bank was subsidizing loans for the rich as a recruitment tool. Where were these loans for the poor?

“Silicon Valley Bank was also deeply entangled in the personal finances of high net worth tech executives. It offered low-interest loans to investors and start-up founders who banked with it, so they were able to secure such loans — which traditional banks declined — for multimillion dollar homes, said three people who banked with Silicon Valley Bank.

Austin Petersmith, an investor and vice president of growth at Vendr, a software subscription company, tweeted his thanks last week to Silicon Valley Bank for giving him a mortgage for his home.

“Without SVB, my family literally wouldn’t be sitting in this home today,” he wrote, adding that 15 banks and lenders had rejected him for a mortgage while Silicon Valley Bank “approved us in less than a week.” He did not respond to a request for comment.

One start-up founder, who spoke on the condition of anonymity because he was not comfortable revealing his personal finances, said Silicon Valley Bank gave him a $4 million loan for his San Francisco home with an interest rate of 2.2 percent, while other banks were offering rates of 3 percent and higher.”

The irony is that the same people that they did these favors for are the ones that killed it.

But today is about Credit Suisse. Global banker to the corrupt.

Shut up fool

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Tell me again how this was not a bailout for the wealthy? This bank was subsidizing loans for the rich as a recruitment tool. Where were these loans for the poor?

“Silicon Valley Bank was also deeply entangled in the personal finances of high net worth tech executives. It offered low-interest loans to investors and start-up founders who banked with it, so they were able to secure such loans — which traditional banks declined — for multimillion dollar homes, said three people who banked with Silicon Valley Bank.

Austin Petersmith, an investor and vice president of growth at Vendr, a software subscription company, tweeted his thanks last week to Silicon Valley Bank for giving him a mortgage for his home.

“Without SVB, my family literally wouldn’t be sitting in this home today,” he wrote, adding that 15 banks and lenders had rejected him for a mortgage while Silicon Valley Bank “approved us in less than a week.” He did not respond to a request for comment.

One start-up founder, who spoke on the condition of anonymity because he was not comfortable revealing his personal finances, said Silicon Valley Bank gave him a $4 million loan for his San Francisco home with an interest rate of 2.2 percent, while other banks were offering rates of 3 percent and higher.”

The irony is that the same people that they did these favors for are the ones that killed it.

But today is about Credit Suisse. Global banker to the corrupt.

Shut up fool

Hits a nerve