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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]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”.

[/quote]

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.[/quote]

Yes. The people who think this is “just California” seem ignorant. [/quote]

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. [/quote]

Bad take. It’s going to hit nearly everyone’s retirement accounts, for a start. [/quote]

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. 
[/quote]

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. [/quote]

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. [/quote]

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. [/quote]

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