SVB: Deja vu, all over again?

Discussion in 'Politics & Current Events' started by Deadtigers, Mar 13, 2023.

  1. Deadtigers

    Deadtigers Member+

    Jul 23, 2015
    Independent Republic of the Bronx, NY
    Club:
    Manchester United FC
    Nat'l Team:
    Ghana
    Liz link please?
     
  2. rslfanboy

    rslfanboy Member+

    Jul 24, 2007
    Section 26
    That's what I'm getting at. I don't think people understand the difference between "the bank" and the people that deposited their money there. They are confusing "the bank" management and share holders with depositors. There's a HUGE difference!!! If SiVB had taken appropriate steps to hedge and diversify last summer/fall, and the shareholders & board had shown appropriate interest in governing, there would have been limited losses (<$1billion instead of almost $2billion) and no bank rush.

    What you are seeing now is that shareholders and boards are looking to see if they made the same mistake and are in a similar position, and they are divesting or realizing that the bank is going to suffer some losses they hadn't considered.

    I mostly bank with a credit union now after being burned by Wells&Fargo, and the credit union is probably even "less safe" than SiVB was, except I don't have over $250k with them!
     
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  3. Cascarino's Pizzeria

    Apr 29, 2001
    New Jersey, USA
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  4. xtomx

    xtomx Member+

    Chicago Fire
    Sep 6, 2001
    Northern Wisconsin, but not far from civilization
    Club:
    Chicago Fire
    Got it. Thanks for the clarification
     
  5. usscouse

    usscouse BigSoccer Supporter

    May 3, 2002
    Orygun coast
    I’m posting this because NYT has a paywall. Greedy people led by the fat orange arsehole “On both sides” precipitated this shit. But they’re not the ones who will pay.

    Elizabeth Warren: 'We know who's responsible' for startling SVB implosion

    It's no secret what caused the sudden implosion of the once-mighty Silicon Valley Bank, Sen. Elizabeth Warren (D-MA) wrote Monday in a New York Times op-ed. "We know who is responsible," she declared.

    The name of a key person behind the mess starts with a "T" — but he was backed by members of both parties who worked to weaken bank regulations aimed at protecting customers and the nation, Warren argued.

    Lawmakers, with a massive push from bank lobbyists, did their best to dismantle what they could of the Dodd-Frank Act enacted after the 2008 financial crisis to avoid a repeat of that disaster, Warren noted. "With support from both parties, President Donald Trump signed a law to roll back critical parts" of the law. "Regulators, including Federal Reserve chair Jerome Powell, then made a bad situation worse, letting financial institutions load up on risk," she added.


    https://www.rawstory.com/elizabeth-warren-we-know-who-s-responsible-for-svb-implosion/
     
  6. usscouse

    usscouse BigSoccer Supporter

    May 3, 2002
    Orygun coast
    I’ve been looking at getting into CDs 5.25 is pretty good. I haven’t seen that with banks or CUs here. I’m planning on setting up a ladder keeping it moving every 3-4 months. I’m pretty naive about CDs but reading into it seems a pretty safe way to go.

    Thanks for your post.
     
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  7. Funkfoot

    Funkfoot Member+

    May 18, 2002
    New Orleans, LA
    My brother in law, who knows nothing about rugby, was working in Rhodesia at the time (building a highway) and was astonished to see the headline "South Africa Welcomes All Blacks."
     
  8. ceezmad

    ceezmad Member+

    Mar 4, 2010
    Chicago
    Club:
    Chicago Red Stars
    Nat'l Team:
    United States
    This guy helped bring over Democrat votes.


    https://www.commondreams.org/news/barney-frank-signature-bank-deregulation
     
  9. soccernutter

    soccernutter Moderator
    Staff Member

    Tottenham Hotspur
    Aug 22, 2001
    Near the mountains.
    Club:
    Tottenham Hotspur FC
    Nat'l Team:
    United States
    https://archive.is/kJjuT
     
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  10. QuakeAttack

    QuakeAttack Member+

    Apr 10, 2002
    California - Bay Area
    Club:
    San Jose Earthquakes
    Nat'l Team:
    United States
    Let me clarify. SVB was negligent and should be prosecuted. They also were immoral with their recent payments and operations. I hope all that money goes to their customers and/or tax payers. Bastards are too nice of a word for them.
     
  11. soccernutter

    soccernutter Moderator
    Staff Member

    Tottenham Hotspur
    Aug 22, 2001
    Near the mountains.
    Club:
    Tottenham Hotspur FC
    Nat'l Team:
    United States
    Yup. The more I'm learning, the less I'm willing to pass off.

    And in thinking about all this, I'm not okay with the FDIC coming in and giving everybody their full amount. It should have been capped, maybe at 50% over the $250k. Or maybe something other. But not the multiple billions repaid in full.
     
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  12. The Jitty Slitter

    The Jitty Slitter Moderator
    Staff Member

    Bayern München
    Germany
    Jul 23, 2004
    Fascist Hellscape
    Club:
    FC Sankt Pauli
    Nat'l Team:
    Belgium
    according to odd lots depositors seldom lose any money in bank collapses. Usually there is a bailout organised by the fed and another bank.

    it is quite likely that SVB will be sold at the end of the day. As the deposits rank ahead of the other creditors and shareholders it is unlikely they would lose much at the end of the day.

    similarly with the feds new programme for bonds. Thought they are offering to accept them as collateral at face value instead of market value in reality the bonds will almost certainly be redeemed for full value at the end of the day

    tldr it is unlikely the SVB depositors would have taken big losses on a historical view
     
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  13. Cascarino's Pizzeria

    Apr 29, 2001
    New Jersey, USA
  14. MattR

    MattR Member+

    Jun 14, 2003
    Reston
    Club:
    DC United
    Nat'l Team:
    United States
  15. soccernutter

    soccernutter Moderator
    Staff Member

    Tottenham Hotspur
    Aug 22, 2001
    Near the mountains.
    Club:
    Tottenham Hotspur FC
    Nat'l Team:
    United States
    If the bank is eventually sold off, I don't have an issue with that. But the Fed doing it up front without having a buyer is something I'm not okay with, particularly since the who mess was started by VCs sparking a bank run.
     
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  16. rslfanboy

    rslfanboy Member+

    Jul 24, 2007
    Section 26
  17. rslfanboy

    rslfanboy Member+

    Jul 24, 2007
    Section 26
    But that's the thing. The VC's you are upset with already got their money out before the Fed took over. Those who were stuck were not contributing to the bank run.
     
  18. Deadtigers

    Deadtigers Member+

    Jul 23, 2015
    Independent Republic of the Bronx, NY
    Club:
    Manchester United FC
    Nat'l Team:
    Ghana
    I believe his last name is China, man! Not he is a Chinaman.
     
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  19. Deadtigers

    Deadtigers Member+

    Jul 23, 2015
    Independent Republic of the Bronx, NY
    Club:
    Manchester United FC
    Nat'l Team:
    Ghana
    Yeah I am starting to get that and that is what I find bullshit. Thiel and co, create a house of cards, see it about to fall, get all their money out to speed up the fall and walk away unscathed.
     
  20. rslfanboy

    rslfanboy Member+

    Jul 24, 2007
    Section 26
    [​IMG]

    Do we know if he pees on rugs?
     
  21. Cascarino's Pizzeria

    Apr 29, 2001
    New Jersey, USA
    #96 Cascarino's Pizzeria, Mar 14, 2023
    Last edited: Mar 14, 2023
    This Frontline comes at a perfect time for these bank failures and how easy Fed money for a decade plus has gotten us here. Starting with Bernanke's quantitative easing after 2008 thru Jerome Powell. And the times the Fed wanted to tighten things up, Wall St wigged out & the Fed wimped out. Or in 2018 Trump wigged out and Powell backed off.

    The reporter gets 1 Fed rep to go on air, Kashkari, who thinks they are blameless and says Congress needed to do more. He oversaw TARP which many criticized since banks pocketed the money instead of lending it.

    (Wikipedia)

    A review of investor presentations and conference calls by executives of some two dozen US-based banks by The New York Times found that "few [banks] cited lending as a priority. Further, an overwhelming majority saw the program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future." The article cited several bank chairmen as stating that they viewed the money as available for strategic acquisitions in the future rather than to increase lending to the private sector, whose ability to pay back the loans was suspect. PlainsCapital chairman Alan B. White saw the Bush administration's cash infusion as "opportunity capital", noting, "They didn't tell me I had to do anything particular with it."

    https://www.pbs.org/wgbh/frontline/documentary/age-of-easy-money/
     
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  22. Smurfquake

    Smurfquake Moderator
    Staff Member

    Aug 8, 2000
    San Carlos, CA
    Club:
    San Jose Earthquakes
    Nat'l Team:
    United States
    It's kind of weird how every time we loosen regulations on banks, the bankers show themselves to be total assholes who really need tighter regulations. Just the strangest coincidence.
     
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  23. The Jitty Slitter

    The Jitty Slitter Moderator
    Staff Member

    Bayern München
    Germany
    Jul 23, 2004
    Fascist Hellscape
    Club:
    FC Sankt Pauli
    Nat'l Team:
    Belgium
    Often what the Fed is doing in these situations is just being the cool head when the market loses its mind.

    The mark to market losses at SVB were only a few billion pre bank run IIRC. So had this new Fed programme existed last week, the run and the bigger losses never would have happened. And the Fed would know that the securities would be redeemed at face value in a couple of years.

    This is why in the next couple of weeks they will lend against lots of these securities at regional banks across the US. It doesn't really cost the Fed anything to do this, because the security is there.

    The problem has always been about duration, not the assets.
     
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  24. The Jitty Slitter

    The Jitty Slitter Moderator
    Staff Member

    Bayern München
    Germany
    Jul 23, 2004
    Fascist Hellscape
    Club:
    FC Sankt Pauli
    Nat'l Team:
    Belgium
    It's hilarious to see Sacks justifying his bailout, then like the ungrateful twit he is, blaming it all on inflation caused by Joe Biden which he knows is a lie.

    He can't go even one day.

    Unbelievable.
     
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  25. The Jitty Slitter

    The Jitty Slitter Moderator
    Staff Member

    Bayern München
    Germany
    Jul 23, 2004
    Fascist Hellscape
    Club:
    FC Sankt Pauli
    Nat'l Team:
    Belgium
    Yep.

    It seems pretty clear why this happened. SVB is a high touch bank that is expensive to run. Because they are good at their core business they attracted an epic run of deposits. But because they have to pay interest on them, they chased yield on the money and decided to stick with that, even when the danger was obvious, because profits.

    Had they been required to report like a bigger bank - this never happens
     

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