Anonymous
Post 03/10/2023 22:09     Subject: SVB failure
Anonymous wrote:This is bad. For those of you that are going to say “this is a west coast big tech problem” it’s going to be felt nationwide, especially given the remote work environment.


Has approximately zero to do with the new work-from-anywhere norm.
Anonymous
Post 03/10/2023 22:07     Subject: SVB failure
I mean... anyone paying attention could have seen something like this coming. Several financial experts I follow have been talking about the Fed eventually "breaking something" for months due to the pace of the rate hikes. The same thing happened in 2018 when the Fed started raising rates- this is just on a larger scale.
Anonymous
Post 03/10/2023 22:06     Subject: SVB failure
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Lots of tech companies that have loans at SVC have all their deposits there and can't move them because of loan covenants. Some are very stressed about being able to make payroll on 3/15 because accounts are frozen.


Well they couldn’t move their deposits regardless, so.

Maybe these genius Californians should be smarter about doing all their banking in the same place.


Californians? It's much bigger than a California problem. It affects the entire tech industry. I've you've got any money invested in a venture fund, reach out and ask them what percentage of their portfolio is affected. I'd wager it's over 50%.


My venture fund sent out an email this evening - minimal exposure. Got lucky there.

I am surprised 90% of the money isn’t FDIC-insured. Don’t they have brokered deposits?


This is what I don’t get - brokered deposits are incredibly common and the brokers will parse them out among various banks in custody. Very easy to break up the deposits into insurable amounts.

There must have been some sort of incentive or restriction by SVB that kept such a huge amount of uninsured deposits.

My prediction is that there will end up being a future rule on an allowable amount of uninsured deposits at an institution.


Yeah they probably thought they could get away with it - too cheap to pay the premiums.

Also I re-read the email from my VC fund and I am an idiot. They themselves don’t have direct exposure to SVB, but the portfolio companies likely do. Watch and wait.
Anonymous
Post 03/10/2023 22:01     Subject: SVB failure
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Lots of tech companies that have loans at SVC have all their deposits there and can't move them because of loan covenants. Some are very stressed about being able to make payroll on 3/15 because accounts are frozen.


Well they couldn’t move their deposits regardless, so.

Maybe these genius Californians should be smarter about doing all their banking in the same place.


Californians? It's much bigger than a California problem. It affects the entire tech industry. I've you've got any money invested in a venture fund, reach out and ask them what percentage of their portfolio is affected. I'd wager it's over 50%.


My venture fund sent out an email this evening - minimal exposure. Got lucky there.

I am surprised 90% of the money isn’t FDIC-insured. Don’t they have brokered deposits?


This is what I don’t get - brokered deposits are incredibly common and the brokers will parse them out among various banks in custody. Very easy to break up the deposits into insurable amounts.

There must have been some sort of incentive or restriction by SVB that kept such a huge amount of uninsured deposits.

My prediction is that there will end up being a future rule on an allowable amount of uninsured deposits at an institution.
Anonymous
Post 03/10/2023 21:56     Subject: SVB failure
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Lots of tech companies that have loans at SVC have all their deposits there and can't move them because of loan covenants. Some are very stressed about being able to make payroll on 3/15 because accounts are frozen.


Well they couldn’t move their deposits regardless, so.

Maybe these genius Californians should be smarter about doing all their banking in the same place.


Californians? It's much bigger than a California problem. It affects the entire tech industry. I've you've got any money invested in a venture fund, reach out and ask them what percentage of their portfolio is affected. I'd wager it's over 50%.


My venture fund sent out an email this evening - minimal exposure. Got lucky there.

I am surprised 90% of the money isn’t FDIC-insured. Don’t they have brokered deposits?
Anonymous
Post 03/10/2023 21:48     Subject: SVB failure
Anonymous wrote:
Anonymous wrote:I think we can let the 18th largest bank, which is primarily a commercial bank, in the US fail. The moral hazard of not letting it fail is worse.

Also, this will be an organized collapse. Equity and debt holders will be wiped out, as they should be. Customers will end up with 90%+ on the dollar, a very small haircut. The only issue is the time, payouts will rollout quickly but some companies may get hit because they don’t have the cushion to handle it. Some weak startups will likely fail, most would have anyways but just a bit quicker now.


You have no idea what you’re talking about. Luckily no one is trusting you to make decisions.


Lol, well, whoever they are, they sound directly on point.
Anonymous
Post 03/10/2023 21:46     Subject: SVB failure
The best article I’ve read on SVB (and I read a lot today):
https://www.netinterest.co/p/the-demise-of-silicon-valley-bank

It really digs into the technicalities of why the bank failed in an easy to understand manner.
Anonymous
Post 03/10/2023 21:11     Subject: SVB failure
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:This is bad. For those of you that are going to say “this is a west coast big tech problem” it’s going to be felt nationwide, especially given the remote work environment.


How does remote work relate to this?


Among other things it makes it less regional. I’m PP whose SIL lives on East coast, but works for SVB. My DH and I live in CA, but he works for a tech company based in the Boston / Cambridge area with global staff that has money with SVB.


Less regional? Okay. But still mostly regional. And not across as many industries as the Great Recession.
Anonymous
Post 03/10/2023 21:08     Subject: SVB failure
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:This is bad. For those of you that are going to say “this is a west coast big tech problem” it’s going to be felt nationwide, especially given the remote work environment.


How does remote work relate to this?



This was not about remote work. It was about SVB who handed out loans like crazy during the 2020-21 tech boom. Then when tech started falling apart the last year, they took the money out the bank. Combined with bonds falling and rising interest rates, more investors pulled out. The writing was on the wall 2 years ago. Basically; the Freddie/Fannie/Lehman 2007 situation all over again except instead of housing, it was tech startups.


There’s a much better analogy, and we can expect economic fallout to mirror it: dot com bust
Anonymous
Post 03/10/2023 20:40     Subject: Re:SVB failure
Anonymous wrote:
Anonymous wrote:Will this finally kill crypto so we don't have to hear about that scam anymore?


No it won’t.


Don't know, but Silvergate Bank also collapsed. Silvergate held a lot of crypto.
Anonymous
Post 03/10/2023 20:25     Subject: SVB failure
Anonymous wrote:This is bad. For those of you that are going to say “this is a west coast big tech problem” it’s going to be felt nationwide, especially given the remote work environment.


Some people are scoffing at this, not realizing this may directly impact them.
Anonymous
Post 03/10/2023 19:54     Subject: SVB failure
Anonymous wrote:
Anonymous wrote:This is bad. For those of you that are going to say “this is a west coast big tech problem” it’s going to be felt nationwide, especially given the remote work environment.


How does remote work relate to this?


Among other things it makes it less regional. I’m PP whose SIL lives on East coast, but works for SVB. My DH and I live in CA, but he works for a tech company based in the Boston / Cambridge area with global staff that has money with SVB.
Anonymous
Post 03/10/2023 19:53     Subject: SVB failure
Anonymous wrote:
Anonymous wrote:This is bad. For those of you that are going to say “this is a west coast big tech problem” it’s going to be felt nationwide, especially given the remote work environment.


How does remote work relate to this?



This was not about remote work. It was about SVB who handed out loans like crazy during the 2020-21 tech boom. Then when tech started falling apart the last year, they took the money out the bank. Combined with bonds falling and rising interest rates, more investors pulled out. The writing was on the wall 2 years ago. Basically; the Freddie/Fannie/Lehman 2007 situation all over again except instead of housing, it was tech startups.
Anonymous
Post 03/10/2023 19:53     Subject: Re:SVB failure
Anonymous wrote:Will this finally kill crypto so we don't have to hear about that scam anymore?


No it won’t.
Anonymous
Post 03/10/2023 19:52     Subject: SVB failure
Anonymous wrote:I want to know what it means for Boston Private, which is a wealth manager acquired by SVB


Good assets get sold off. If it’s a fairly self contained unit, very easy to sell.