Anonymous wrote:"If you work in banking, you definitely should be panicking. This could be the catalyst that could collapse the entire American financial system as we know it. This is a major deal. Our economy is basically hanging by a thread and the phony false economy that’s been touted as “great” is finally starting to fall apart. We are in major trouble."

You don't know much about systemic financial risk. You probably have a political bias. But be careful. The next bank to fail will be Signature. That will have significant political impact.

Anonymous wrote:SVB could have survived. This is a perfect case of a panic reaction and run to the bank amplified by social media.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think some of you should read more books.

1. SVB had a liquidity problem, not an asset problem. Failure had nothing to do with “bad loans” to Tech or Crypto. (If anything they were locked into “bad loans” to the US Govt in low rate Treasuries, which all banks hold at ridiculous levels because the law says USG debt is infallible and safe so banks must hold a lot… hmmm.)
2. Depositors insured and uninsured will recoup all of the money. Insured by Monday. Uninsured 50%+ next week, the remainder to follow.
3. 97% uninsured deposits is a lot. But it has nothing to do with brokered deposits. Tech, VC, etc kept their cash there because SVB catered to those sectors and until the last few weeks SVB was adored for doing so.
4. Systemic risk is minimal. This ain’t Lehman. There will be some ripples, but that’s it. No need to panic.

Looks a bit like Continental Illinois

TITCR

No quite seeing the analogy to Continental Illinois--that bank failed owing to bad loans.

SVB was caught in the interest rate squeeze that they did not manage well. Good management, however, would have pointed to modifying their business model by diversifying and focusing on making loans (preferably to nontechs) instead of buying securities. It is unclear, however, whether the bank would have contemplated abandoning its all tech all the time model.

I think the Continental Illinois analogy was based on SVB being a bank with massive concentrated exposure to a single client/narrow sector and unlikely to pose a systemic risk.

OP. Yes. With the somewhat related question of whether there other financial institutions out there that look like the 80s S&Ls - with a significant fraction of their assets locked up in long/low interest rate assets...

Anonymous wrote: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 wrote:

Anonymous wrote:

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.

Virtually every word you wrote is wrong.

Well, the bonds falling and rates rising was true (though they mixed up cause and effect).

Anonymous wrote:

Anonymous wrote:I think some of you should read more books.

1. SVB had a liquidity problem, not an asset problem. Failure had nothing to do with “bad loans” to Tech or Crypto. (If anything they were locked into “bad loans” to the US Govt in low rate Treasuries, which all banks hold at ridiculous levels because the law says USG debt is infallible and safe so banks must hold a lot… hmmm.)
2. Depositors insured and uninsured will recoup all of the money. Insured by Monday. Uninsured 50%+ next week, the remainder to follow.
3. 97% uninsured deposits is a lot. But it has nothing to do with brokered deposits. Tech, VC, etc kept their cash there because SVB catered to those sectors and until the last few weeks SVB was adored for doing so.
4. Systemic risk is minimal. This ain’t Lehman. There will be some ripples, but that’s it. No need to panic.

This is completely not what happened at all. Wow SMH

Is anyone intelligent in this thread? Anyone???

Anonymous wrote:I think some of you should read more books.

1. SVB had a liquidity problem, not an asset problem. Failure had nothing to do with “bad loans” to Tech or Crypto. (If anything they were locked into “bad loans” to the US Govt in low rate Treasuries, which all banks hold at ridiculous levels because the law says USG debt is infallible and safe so banks must hold a lot… hmmm.)
2. Depositors insured and uninsured will recoup all of the money. Insured by Monday. Uninsured 50%+ next week, the remainder to follow.
3. 97% uninsured deposits is a lot. But it has nothing to do with brokered deposits. Tech, VC, etc kept their cash there because SVB catered to those sectors and until the last few weeks SVB was adored for doing so.
4. Systemic risk is minimal. This ain’t Lehman. There will be some ripples, but that’s it. No need to panic.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think some of you should read more books.

1. SVB had a liquidity problem, not an asset problem. Failure had nothing to do with “bad loans” to Tech or Crypto. (If anything they were locked into “bad loans” to the US Govt in low rate Treasuries, which all banks hold at ridiculous levels because the law says USG debt is infallible and safe so banks must hold a lot… hmmm.)
2. Depositors insured and uninsured will recoup all of the money. Insured by Monday. Uninsured 50%+ next week, the remainder to follow.
3. 97% uninsured deposits is a lot. But it has nothing to do with brokered deposits. Tech, VC, etc kept their cash there because SVB catered to those sectors and until the last few weeks SVB was adored for doing so.
4. Systemic risk is minimal. This ain’t Lehman. There will be some ripples, but that’s it. No need to panic.

1. Agree. Disagree with parenthetical--no law required them to hold all those Treasuries. And SVB was not subject to liquidity rules which more or less cause banks to hold a lot of governments.
2. Agree with insured, but have no idea why you think uninsured will get 50% by next week. What they will get has not been determined yet and is pending FDIC estimates of recovery value of assets.
3. Uninsured was probably more like 90 to 93%. But just a quibble, either hay the percentage is extraordinarily high.
4. Agree with respect to systemic financial risk. Agree with a previous PP that the more apt comparison is likely the 2000 bursting of the tech bubble.

The FDIC already announced they will pay an advance dividend to uninsured depositors next week.

The ratio of uninsured deposits is public. It was 97.3% on what I read, though that could have been 12/31. Either way it’s in that range.

They did, but no where have I seen the amount of the dividend. I think it is TBD.

Some banking experts on Friday pointed out that a bank as large as Silicon Valley Bank might have managed its interest rate risks better had parts of the Dodd-Frank financial-regulatory package, put in place after the 2008 crisis, not been rolled back under President Trump.

In 2018, Mr. Trump signed a bill that lessened regulatory scrutiny for many regional banks. Silicon Valley Bank’s chief executive, Greg Becker, was a strong supporter of the change, which reduced how frequently banks with assets between $100 billion and $250 billion had to submit to stress tests by the Fed.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think some of you should read more books.

1. SVB had a liquidity problem, not an asset problem. Failure had nothing to do with “bad loans” to Tech or Crypto. (If anything they were locked into “bad loans” to the US Govt in low rate Treasuries, which all banks hold at ridiculous levels because the law says USG debt is infallible and safe so banks must hold a lot… hmmm.)
2. Depositors insured and uninsured will recoup all of the money. Insured by Monday. Uninsured 50%+ next week, the remainder to follow.
3. 97% uninsured deposits is a lot. But it has nothing to do with brokered deposits. Tech, VC, etc kept their cash there because SVB catered to those sectors and until the last few weeks SVB was adored for doing so.
4. Systemic risk is minimal. This ain’t Lehman. There will be some ripples, but that’s it. No need to panic.

Looks a bit like Continental Illinois

TITCR

No quite seeing the analogy to Continental Illinois--that bank failed owing to bad loans.

SVB was caught in the interest rate squeeze that they did not manage well. Good management, however, would have pointed to modifying their business model by diversifying and focusing on making loans (preferably to nontechs) instead of buying securities. It is unclear, however, whether the bank would have contemplated abandoning its all tech all the time model.

I think the Continental Illinois analogy was based on SVB being a bank with massive concentrated exposure to a single client/narrow sector and unlikely to pose a systemic risk.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think some of you should read more books.

1. SVB had a liquidity problem, not an asset problem. Failure had nothing to do with “bad loans” to Tech or Crypto. (If anything they were locked into “bad loans” to the US Govt in low rate Treasuries, which all banks hold at ridiculous levels because the law says USG debt is infallible and safe so banks must hold a lot… hmmm.)
2. Depositors insured and uninsured will recoup all of the money. Insured by Monday. Uninsured 50%+ next week, the remainder to follow.
3. 97% uninsured deposits is a lot. But it has nothing to do with brokered deposits. Tech, VC, etc kept their cash there because SVB catered to those sectors and until the last few weeks SVB was adored for doing so.
4. Systemic risk is minimal. This ain’t Lehman. There will be some ripples, but that’s it. No need to panic.

Looks a bit like Continental Illinois

TITCR

No quite seeing the analogy to Continental Illinois--that bank failed owing to bad loans.

SVB was caught in the interest rate squeeze that they did not manage well. Good management, however, would have pointed to modifying their business model by diversifying and focusing on making loans (preferably to nontechs) instead of buying securities. It is unclear, however, whether the bank would have contemplated abandoning its all tech all the time model.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think some of you should read more books.

1. SVB had a liquidity problem, not an asset problem. Failure had nothing to do with “bad loans” to Tech or Crypto. (If anything they were locked into “bad loans” to the US Govt in low rate Treasuries, which all banks hold at ridiculous levels because the law says USG debt is infallible and safe so banks must hold a lot… hmmm.)
2. Depositors insured and uninsured will recoup all of the money. Insured by Monday. Uninsured 50%+ next week, the remainder to follow.
3. 97% uninsured deposits is a lot. But it has nothing to do with brokered deposits. Tech, VC, etc kept their cash there because SVB catered to those sectors and until the last few weeks SVB was adored for doing so.
4. Systemic risk is minimal. This ain’t Lehman. There will be some ripples, but that’s it. No need to panic.

Looks a bit like Continental Illinois

TITCR