The Demise of Silicon Valley Bank

Yeah I’m sure bankers are relishing the opportunity to bankrupt their institutions and blow up their livelihoods and careers by emulating SVB. 🙄

Both parts of this sentence are incorrect. Wrong SVB, and nowhere near CFO at Lehman.

Whatever, dude. Trump was an accomplished businessman before he decided to become president. He knows banking. He knows the system. He would never have let this happen. Biden just sold us out to the liberals and the Chinese. It's all about money, power and ego with Biden and the libs.

And Rep. George Santos (R-N.Y.) worked for Goldman Sachs. Or so he says.

Yep.

Quite a party. Keep up the good work. A laugh a minute.

Wow, so much ignorance packed into one post. Congrats.

FDIC covering any amount, not just up to $250,000 is a idiotic move by the incompetent Yellin and just sets the stage for all subsequent losses greater than the agreed upon limit.

Terrible precedent; terrible President.

You do realize Trump lifted regulations on both those industries which is absolutely why these things are happening. did i miss the /s or are you just so far up you own ass youre too dumb to have actually paid any attention to Trumps actual policies and only listened when he said he was owning the libs

For everyone giving the Fed a hard time about the covering of the Deposit base for FDIC you are looking very simply at the equation.

They didn't do it per say to save the deposit base for SIVB (in reality they may have let that go), but the deposit rush thereafter which took out SBNY created a different story

No bank (no matter how regulated) can withstand a full on deposit run. It's chaos and the danger of hedge funds and social media can do a lot of damage

If the Fed didn't step in there was a proper risk that their could have been another 5-6 banks under by Monday afternoon as everyone smaller banks flees towards JPM. It's even happening WITH the protection they have announced in place

They could/should have handled it better and done a better job of trying to stop the panic, but to think the solution was tailor made for SIVB is very level 1 thinking.

Probably worth noting I think the Fed has been useless for a while and as mentioned didn't do a great job here but had very little other good choices.

Huh? The depositor's money is gone. Depositors will be compensated by the FDIC insurance scheme, paid out like any insurance plan.

The government might need to compensate losses for depositors above $250K but I don't see how that encourages riskier behavior in the bank or other banks. There's no bank anymore for you to take your complaint to. It doesn't care it lost your money, it doesn't exist anymore.

Individual depositors have no way of collecting any money back from the bank now it's collapsed, so either they are compensated by insurance or taxpayers or they get nothing. I don't see how punishing depositors makes bank less likely to fail in future.

You might take into consideration that European banks have quite different capital requirements. Can it be that American banks should have requirements similar to European banks?
As far as I can see the Democrats care because they are asking the above question.

Just testing the waters here, but how would everyone feel about forcing anyone employed at SVB to relinquish any assets acquired from the company in excess of $200,000 over the last 5 years. Any highly compensated employees of SVB should share in the losses incurred by the company's mismanagement.

Biden came out and said what he said to stem the contagion you mention. Still doesn't help a few root causes:

1. The worthless paper SVB had on their books were Federal Treasuries which are generally termed as "risk free". Spoiler: they aren't. Because...

2. Fed raised rates too quickly, causing the Bonds to become worthless. Because...

3. Fed/Biden had the blinders on regarding Covid inflation. They reacted too slowly and were in complete denial. Using words like "transitive" or "temporary"

So again, Fed has raised rates through open market operations, decreasing M1 supply. Now banks own the worthless paper and can't cover demand deposit accts due to high rates, decreased money supply and bonds they can't liquidate because they aren't worth anything.

Lot of this is the fault of the current administration.

No, the wokes are to blame! Those pesky drag queens have crashed the banking system!

If Biden is calling the SVB failure a caualty of Capitalism, than it also must be true that the employees keep the pay they made while working there. Cost of doing business.

Let's not forget lots of them were share holders. Those are now worthless.

How come Biden and the Democrats didn't fix this deregulation? It's been 2 years since the election

I will tell you why. Because they're just as bad. Maybe Biden can worry more about giving men women's awards, and lecturing everyone on racism.

I miss the Biden that voted yes and passed the 1994 crime bill. I miss the Biden that beat up thugs like corn Pop.

Nope - Biden came out and said a few things trying to stem the contagion but it was a relatively poor effort in terms of practicality and strength which is why it didn't work as planned. Draghi's 2014 "we will do whatever it takes" was a much better version in terms of posturing in order to get it done

For your comments:

1) Wrong - They are still "risk free". The difference is if you buy them as Hold to Maturity over a period of 10 years at the wrong price and then suddenly have a deposit run and you can't sell them you have a problem
- This problem was intensified by the Fed with the interest rate moves but it's the banks responsibility to Hedge your interest rate risks and take appropriate measures to cover yourself.
- SIVB were terrible at this and their B/S was a mess so that's on them

3) As i mentioned I think the Fed has been a disaster and agree a lot of the mess comes from their managing of policy during Covid .

Again the paper isn't worthless if you hold it as you wanted to at the time.
Hedging your interest rate risk should be Banking 101 for a bank management team and if you done this correctly you shouldn't have a problem

Liquidity outside of SIVB (their own fault) has become a problem even if managed to a better degree (not perfect) due to the panic where depositors run for the doors. As a bank you hold a certain amount of free cash on hand but unfortunately even if correctly de-risked it may not be enough to stop a full bank deposit run

When banks know there's no risk they engage in the most riskiest of behaviors. We have encouraged this since we bailout any institution that is deemed big enough and important enough and politically connected enough.

I just hate that the same people from 2008 are pulling the same stunt again, and I assume in 15 years or so they'll do it all again.

Joe Biden caused this with his massive inflation making interest rates climb...

aljazeera.com

Why did Silicon Valley Bank fail and is a financial crisis next?

John Power

Economists see Lehman Brothers-style crisis as unlikely despite jitters following collapse of California-based lender.

Open link

the deregulation was, of course, signed by DJT