Silicon Valley Bank Collapse

[Cheerful Charlie]

Katie Porter explains the SVB collapse. SVB is the biggest bank collapse since 2008.

..
During an appearance on MSNBC’s “The Sunday Show with Jonathan Capehart,” Porter said rising interest rates were one of the leading causes of the bank’s collapse, noting how the bank in late 2020 grew rapidly by taking in “lots of deposits.”

It attracted those deposits by promising relatively high interest rates, and then invested money in federal Treasury bonds. When the Fed started hiking interest rates last year, that devalued the bonds, leaving Silicon Valley Bank with a gaping hole in its balance sheet.

The bank’s collapse began last Wednesday when it informed investors that it needed to raise some $2 billion to shore up its balance sheet.
.....

Porter on Silicon Valley Bank collapse: ‘You can’t bet on’ interest rates staying low forever

Rep. Katie Porter (D-Calif.) on Sunday blamed the Silicon Valley Bank collapse in part on the mistaken belief that interest rates would stay low forever. During an appearance on MSNBC’s “The Sunday…

thehill.com

 

[Tigers!]

Was this bank caught up in the recent collaspe of that cryptocurrency?

 

[Swammerdami]

Katie Porter explains the SVB collapse. SVB is the biggest bank collapse since 2008.

..
During an appearance on MSNBC’s “The Sunday Show with Jonathan Capehart,” Porter said rising interest rates were one of the leading causes of the bank’s collapse, noting how the bank in late 2020 grew rapidly by taking in “lots of deposits.”

The risk of borrowing short-term while lending long-term was understood even before the Peruzzis of Florence went bankrupt underwriting the Hundred Years War. And SVB was still buying long-term bonds when the danger was tangible to any 100-IQ individual with access to YouTube.

The criminals at FTX were teeny-boppers still almost in diapers during the 2007 crisis. Who would expect them to be conscious of risk?

I'm not accusing SVB management of crimes; but were they, like the FTX crew, unimaginative teeny-boppers?

 

[TV and credit cards]

They rolled back some of the Dodd-Frank rules for regional banks back in ‘18 so of course greed kicked in and they started making dangerous investments. In SVB’s case putting too many of their investment eggs in one basket. In two others, investing in cryptocurrency. I read the thing to watch now is how many of these banks shore up their liquidity through the Federal Home Loan Banking system.
I’m not familiar with the FHLB but it sounds like they are not using it for its intended purpose.

 

[Cheerful Charlie]

Katie Porter has had several appearances on MSNBC explaining this. Since the banks got regulated post 2008, many financial institutes have been sending CEOs and lobbyists around Washington, weeping big salty tears about the horrors of regulation. Carrying promises of large PAC checks during election season. Regulations were being rolled back for years. With the triumph of Trump and the GOP, those bad old regulations were gone. There have now been several bank failure recently, not just SVB. Many banks have lost stock prices, and are losing nervous depositers. Biden is acting swiftly to make sure depositors will not be hurt, while Fed chair Yellen vows no big bailouts as usual for these banks or those running them into the ground.

Check Google, MSNBC, Katie Porter, banks for more Katie Porter.

 

[T.G.G. Moogly]

Katie Porter explains the SVB collapse. SVB is the biggest bank collapse since 2008.

..
During an appearance on MSNBC’s “The Sunday Show with Jonathan Capehart,” Porter said rising interest rates were one of the leading causes of the bank’s collapse, noting how the bank in late 2020 grew rapidly by taking in “lots of deposits.”

The risk of borrowing short-term while lending long-term was understood even before the Peruzzis of Florence went bankrupt underwriting the Hundred Years War. And SVB was still buying long-term bonds when the danger was tangible to any 100-IQ individual with access to YouTube.

The criminals at FTX were teeny-boppers still almost in diapers during the 2007 crisis. Who would expect them to be conscious of risk?

I'm not accusing SVB management of crimes; but were they, like the FTX crew, unimaginative teeny-boppers?

One article I read likened it to a quasi Ponzi scheme. Ultimately, however it was managerial greed that sunk the ship. SVB got what it deserved and I'm with Warren in that the big wheels who collected their multi-million bonuses and paychecks ought to be forced to return their stolen cash.

 

[Jarhyn]

They rolled back some of the Dodd-Frank rules for regional banks back in ‘18 so of course greed kicked in and they started making dangerous investments. In SVB’s case putting too many of their investment eggs in one basket. In two others, investing in cryptocurrency. I read the thing to watch now is how many of these banks shore up their liquidity through the Federal Home Loan Banking system.
I’m not familiar with the FHLB but it sounds like they are not using it for its intended purpose.

It's like clockwork at this point. We should as a rule not trust banks to ever do good or right or socially responsible things without regulation to constrain them

 

[Elixir]

Katie Porter has had several appearances on MSNBC explaining this. Since the banks got regulated post 2008, many financial institutes have been sending CEOs and lobbyists around Washington, weeping big salty tears about the horrors of regulation. Carrying promises of large PAC checks during election season. Regulations were being rolled back for years. With the triumph of Trump and the GOP, those bad old regulations were gone. There have now been several bank failure recently, not just SVB. Many banks have lost stock prices, and are losing nervous depositers. Biden is acting swiftly to make sure depositors will not be hurt, while Fed chair Yellen vows no big bailouts as usual for these banks or those running them into the ground.

Check Google, MSNBC, Katie Porter, banks for more Katie Porter.

Liz Warren screamed bloody murder about this back in ‘18 when the Trump junta eviscerated Dodd-Frank. Of course the right derided her warnings as the ravings of a hysterical woman.

 

[ZiprHead]

If the windfall profit tax had been implemented instead of raising interest rates across the board, this would probably not have happened. They hurt everyone across the board and missed the target entirely.

And the gas companies are still raking in record profits.

 

[Cheerful Charlie]

Moody's downgrading banks.

....
In a harsh blow to an already-reeling sector, Moody’s Investors Service cut its view on the entire banking system to negative from stable.

The firm, part of the big three rating services, said Monday it was making the move in light of key bank failures that prompted regulators to step in Sunday with a dramatic rescue plan for depositors and other institutions impacted by the crisis.
....

Moody's cuts outlook on U.S. banking system to negative, citing 'rapidly deteriorating operating environment'

The firm, part of the big three rating services, said it was making the move in light of key bank failures.

www.cnbc.com

 

[repoman]

They rolled back some of the Dodd-Frank rules for regional banks back in ‘18 so of course greed kicked in and they started making dangerous investments. In SVB’s case putting too many of their investment eggs in one basket. In two others, investing in cryptocurrency. I read the thing to watch now is how many of these banks shore up their liquidity through the Federal Home Loan Banking system.
I’m not familiar with the FHLB but it sounds like they are not using it for its intended purpose.

It's like clockwork at this point. We should as a rule not trust banks to ever do good or right or socially responsible things without regulation to constrain them

The bank was so woke that as it was going down the executives donated any remaining liquidity to NAACP, GLAAD and the SPLC.

 

[Cheerful Charlie]

A number of SVB executives sold their stock days before the bank's collapse. Insider trading at its best.

 

[TSwizzle]

Just one member of Silicon Valley Bank's board of directors had experience in investment banking, while the others were major Democratic donors, it has been revealed. Tom King, 63, was appointed to the board in September after previously serving as the CEO of investment banking at Barclay's. He has had 35 years of experience in investment banking. But he is the only one on the board with experience in the financial industry, while others are a former Obama administration employee, a prolific contributor to former House Speaker Nancy Pelosi and even a Hillary Clinton mega-donor who prayed at a Shinto shrine when Donald Trump won the 2016 presidential election.
The board is now being investigated by federal authorities after it failed to prevent the bank from going under while it was investing clients' money in risky low-interest government bonds and securities. It has previously been accused of being too focused on woke issues.

Daily Mail

Hilarious.

 

[TomC]

A number of SVB executives sold their stock days before the bank's collapse. Insider trading at its best.

This is one of the big problems with this sort of corporate crime. The criminals know in advance when shit will hit the fan and plan accordingly.

Back in Enron days,
Folks like Kenneth Lay were addressing Enron employees and shareholders explaining that Enron was a solid company with a few temporary difficulties. While simultaneously Lay's minions were down on the loading dock putting bales of money in the trunk of his limousine.
Tom

 

[Bomb#20]

Biden is acting swiftly to make sure depositors will not be hurt, while Fed chair Yellen vows no big bailouts as usual for these banks or those running them into the ground.

Making sure the depositors will not be hurt, including accounts over the FDIC guaranteed $250,000, is a big bailout as usual for these banks and those running them into the ground. It's like those making government decisions never took Econ 101. "People respond to incentives. That is the whole of economics. The rest is commentary."

 

[TV and credit cards]

So deposits are being covered by FDIC and auctioning bank assets. Anything further will require a special assessment on all other FDIC insured banks to pay into the fund to make up the difference. And I would guess the banks would want to recoup this special assessment somehow.

Sincerely,
Mr. Somehow

 

[Gospel]

They rolled back some of the Dodd-Frank rules for regional banks back in ‘18 so of course greed kicked in and they started making dangerous investments.

This is likely the response from David Baszucki @ Roblox & Anthony Wood @ Roku if they were here to post it.

 

[Harry Bosch]

Biden is acting swiftly to make sure depositors will not be hurt, while Fed chair Yellen vows no big bailouts as usual for these banks or those running them into the ground.

Making sure the depositors will not be hurt, including accounts over the FDIC guaranteed $250,000, is a big bailout as usual for these banks and those running them into the ground. It's like those making government decisions never took Econ 101. "People respond to incentives. That is the whole of economics. The rest is commentary."

No, it's not a bailout. A bailout is giving financial institutions to a failing business to save it from collapse. SVB has collapsed. It's shareholders and owners lost everything. The insurance fund is making the bank's customers whole. You can't blame the customers for not knowing the risks that SVB was taking. One of the top auditing firms in the country gave SVB a clean bill of health 2 weeks before the collapse! If Biden hadn't authorized this, SVB's customers, large tech companies, would not have been able to pay their vendors or pay their workers. It would have been chaos.

Chaos just isn't Biden's cheesmo man.

 

[Harry Bosch]

So deposits are being covered by FDIC and auctioning bank assets. Anything further will require a special assessment on all other FDIC insured banks to pay into the fund to make up the difference. And I would guess the banks would want to recoup this special assessment somehow.

Sincerely,
Mr. Somehow

I doubt that! All banks have customers who aren't 100% FDIC covered. They would all want their customers covered. They'll gladly agree to chip in more to the fund. I think that FDIC insurance should dramatically increased.

 

[Jimmy Higgins]

Biden is acting swiftly to make sure depositors will not be hurt, while Fed chair Yellen vows no big bailouts as usual for these banks or those running them into the ground.

Making sure the depositors will not be hurt, including accounts over the FDIC guaranteed $250,000, is a big bailout as usual for these banks and those running them into the ground. It's like those making government decisions never took Econ 101. "People respond to incentives. That is the whole of economics. The rest is commentary."

No, it's not a bailout. A bailout is giving financial institutions to a failing business to save it from collapse. SVB has collapsed. It's shareholders and owners lost everything. The insurance fund is making the bank's customers whole. You can't blame the customers for not knowing the risks that SVB was taking. One of the top auditing firms in the country gave SVB a clean bill of health 2 weeks before the collapse! If Biden hadn't authorized this, SVB's customers, large tech companies, would not have been able to pay their vendors or pay their workers. It would have been chaos.

Chaos just isn't Biden's cheesmo man.

SVB is interesting because it is a Great Depression failure. SVB might have been on bad footing, but it was the bank run that closed the doors. A few people on YouTube start on about it and then over $40 billion was withdrawn. How many banks can handle that? Effectively, someone (Peter Thiel) yelled "FIRE!" and now SVB is dead.

I find it funny how some people are angry the bank customers aren't fucked over this. As you note, SVB is dead, FDIC is in charge now until it can find a foster bank to absorb its assets. So SVB wasn't bailed out, just the customers were protected. And some people just aren't happy unless others get burned.

The Biden Admin acted because fear is creeping back into banking and "fear" is one of the worst things in finance. Much much worse than inflation. Institutions and people make poorer decisions when fear is added to the calculus. The US also needs to look into whether banks with $300 billion in assets can be considered "small". I think it is real simple, if it is too complicated for a bank to prove solvency, then maybe, just maybe they are too big to fail.