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Silicon Valley Bank tanks, venture capitalists pushing Fed to have another bank take over

Jman

By Jman
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Master-Debater131 Paragon

Master-Debater131

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Last week Silicon Valley Bank took roughly 24 hours to go from a solvent bank, to collapsed, to being placed under control of the FDIC. Fear of contagion led to widespread selloffs of banking stocks and fears of another banking collapse and recession.

https://apnews.com/article/silicon-valley-bank-svb-collapse-customers-ec0148382edb344c27c0bdfdcbd3cf66

 

Fears arent limited to just the US either. The entire UK Tech Sector may wind up collapsing if the UK Government doesnt step in.

https://www.france24.com/en/live-news/20230312-british-tech-sector-at-serious-risk-after-svb-collapse-govt

"London (AFP) – Britain's technology and life sciences sectors are at "serious risk" following the closure of the Silicon Valley Bank, Chancellor Jeremy Hunt warned on Sunday. The California-based SVB bank, which was closed by US authorities on Friday, manages the money of some of the UK's most promising businesses, Hunt said."

To put it in perspective of just how large of a failure this was take a look at this handy graphic.

 

Back in the US there is already talk of yet another bailout for the privileged class. All sorts of tech bros on social media are screaming for  a bailout and saying if they dont get their money the tens of thousands of people will lose their jobs, the economy will collapse, and the sky will rain blood.

Treasury Secretary Yellen has already come out to say that she does not support a bailout.

https://apnews.com/article/silicon-valley-bank-bailout-yellen-deposits-failure-94f2185742981daf337c4691bbb9ec1e

"WILMINGTON, Del. (AP) — Treasury Secretary Janet Yellen said Sunday that the federal government would not bail out Silicon Valley Bank, but is working to help depositors who are concerned about their money. The Federal Deposit Insurance Corporation insures deposits up to $250,000, but many of the companies and wealthy people who used the bank — known for its relationships with technology startups and venture capital — had more than that amount in their account. There are fears that some workers across the country won’t receive their paychecks."

 

So, here we go again?  Whos up for yet another banking collapse in our lifetimes? All I know is they better not bail these bastards out. The leadership of SVB sold tons of stock leading up to this, and the CEO actively worked to convince the Fed that they didnt need any sort of oversight.

https://unusualwhales.com/news/numerous-corporate-executives-sold-silicon-valley-bank-sivb-stock-before-the-collapse

https://www.dailymail.co.uk/news/article-11847295/CEO-collapsed-Silicon-Valley-Bank-successfully-lobbied-Congress-avoid-imposing-extra-scrutiny.html

"The president of Silicon Valley Bank appeared before Congress in 2015 to argue that his bank should not be subject to scrutiny - insisting that 'enhanced prudential standards' should be lifted 'given the low risk profile of our activities'."

 

 

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wacky1980 Freakin Mutant

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On 3/12/2023 at 12:34 PM, katt_goddess said:

Maybe the ones that were responsible for rolling back the regulations that would have kept this from happening should be held to some account. 😐

i think it was barney frank himself who said those threshold changes didn't have a hand in this crisis. then again, he's on the signature bank board and he's crying that he was shut down because of his bank's strong crypto holdings, so he's grinding an axe today. as far as i understand the situation, stress testing wouldn't necessarily have smoked this problem out, so i have to agree with frank (eww, i can't believe i just typed that). and i was largely responsible for administering our DR/continuity testing at my old bank job, so i'm not a *complete* idiot when it comes to this stuff.

tomorrow should be more fun (read: scary) than today though, if a few things happen in the right (read: wrong) order. i've got my popcorn ready just in case.

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katt_goddess Monster Mutant

katt_goddess

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18 hours ago, wacky1980 said:

i think it was barney frank himself who said those threshold changes didn't have a hand in this crisis. then again, he's on the signature bank board and he's crying that he was shut down because of his bank's strong crypto holdings, so he's grinding an axe today. as far as i understand the situation, stress testing wouldn't necessarily have smoked this problem out, so i have to agree with frank (eww, i can't believe i just typed that). and i was largely responsible for administering our DR/continuity testing at my old bank job, so i'm not a *complete* idiot when it comes to this stuff.

tomorrow should be more fun (read: scary) than today though, if a few things happen in the right (read: wrong) order. i've got my popcorn ready just in case.

The trouble with blanket deregulations is that all the things that would have at least hinted at shit before it turned to shit were gone and done so in favor of those people that ended up running things into the ground while taking off with as much cash for themselves as they could. Knowing that they were going to be tested would have forced them to either not be garbage in the first place or scramble to fix things to pass. And you can only scramble so much before someone notices that things are slipping. 

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PhilosipherStoned Monster Mutant

PhilosipherStoned

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Are we fucked? Or are we fucked idk?  As always this indian on the internet made a thing about it...Worth the click and indian guy ranting if you're not looking for the biggest pile of clickbait on the internet about the subject..  

 

Edited by PhilosipherStoned
I agree that thumbnail is bullshit but whatever.
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Master-Debater131 Paragon

Master-Debater131

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Whats amazing about the Credit Suisse thing is that people on Reddit have been saying they will fail for a while now. The same subreddits that kicked off the GME and memestock boom have been saying that there is no way that CS can survive.

Are we really at the point where random people on Reddit have a better handle on things than the "experts"?

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Jman Hero

Jman

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5 hours ago, Master-Debater131 said:

Whats amazing about the Credit Suisse thing is that people on Reddit have been saying they will fail for a while now. The same subreddits that kicked off the GME and memestock boom have been saying that there is no way that CS can survive.

Are we really at the point where random people on Reddit have a better handle on things than the "experts"?

Meme stock is the literal definition of the power of people in large groups.  I would consult your broker before r/personalfinance on stock advice.

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Master-Debater131 Paragon

Master-Debater131

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4 minutes ago, Jman said:

Meme stock is the literal definition of the power of people in large groups.  I would consult your broker before r/personalfinance on stock advice.

I jumped on the gamestop meme and made some pretty good money off of that. Since then I havent really followed what they say, it tends to be a bunch of bullshit. Except for the reverse Cramer, that is a legitimate investing strategy.

I just find it funny that CS has been all over those subreddits for a few weeks and then today it looks like it really may be collapsing.

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Jman Hero

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This is why I'm utterly baffled at the people blaming "wokeness" for this.  This is a grift, and they were taking advantage of looser regulations by serving companies and start-ups that couldn't get loans at more regulated banks.  It's literally subprime mortgages for the people trying to make the next Hazbin Hotel or gaming news websites full of outrage articles about Hogwarts Legacy.

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katt_goddess Monster Mutant

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11 hours ago, Jman said:

This is why I'm utterly baffled at the people blaming "wokeness" for this.  This is a grift, and they were taking advantage of looser regulations by serving companies and start-ups that couldn't get loans at more regulated banks.  It's literally subprime mortgages for the people trying to make the next Hazbin Hotel or gaming news websites full of outrage articles about Hogwarts Legacy.

'Woke' is this year's 'CRT' for scary buzzword that needs to be said over and over again to show how scary and bad it is while...the people screaming it can't even tell you what it exactly means. 

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Seight Monster Mutant

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12 hours ago, Jman said:

This is why I'm utterly baffled at the people blaming "wokeness" for this.  This is a grift, and they were taking advantage of looser regulations by serving companies and start-ups that couldn't get loans at more regulated banks.  It's literally subprime mortgages for the people trying to make the next Hazbin Hotel or gaming news websites full of outrage articles about Hogwarts Legacy.

They're trying to claim the problem is "wokeness" because this thing that totally couldn't be their fault is entirely their fault.

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Master-Debater131 Paragon

Master-Debater131

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I read a WSJ article that said that SVB did not have a Chief Risk Officer for roughly the last year. Thats the role that looks at things like rising interest rates and can recommend changes to how a bank operates to mitigate risk.

So SVB really did this themselves. It wasn't a regulatory thing like some are claiming, it was a bank not having an extremely important role filled that led to them continuing on as if there were no changes to the broader economic conditions. It was likely entirely preventable if SVB had filled a role that virtually all major banks and companies have in some capacity.

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katt_goddess Monster Mutant

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20 hours ago, Seight said:

I've seen these ATMs in a couple of gas stations and my thought was "There's no way anyone using these would actually have the investing knowledge NOT to lose their money."

I swear there's one at the grocery store closest to me. Or at least there was because I remember seeing it and thinking that was a stupid thing for a grocery store. 

'Gotta get some cat food, butt napkins, bitcoin roulette, cheese...'

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PeoplesPoet Fringe

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On 3/20/2023 at 8:43 PM, Seight said:

I've seen these ATMs in a couple of gas stations and my thought was "There's no way anyone using these would actually have the investing knowledge NOT to lose their money."

a local alcohol store has one,

...

it really write itself folks. I only know one person that made any money on bitcoin and he invested a lot of money 10 or so years ago in it (and made out like a bandit the beginning of this year). everyone else I know may have got 200 bucks out of it when Elon was being Elon, lots probably lost a few hundred.

that and all the almost burnt out bitcoin video cards on ebay, know a few who got suckered like that.

what was the topic again, oh ya banks. 

Edited by PeoplesPoet
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Icarus27k Icon

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Good news: the failures of Silicon Valley Bank and Signature Bank probably have the same effect as an interest rate hike in terms of lending, so it might lower inflation.

 

What's a few bank failures between us if it lowers the price of groceries? 

Edited by Icarus27k
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Icarus27k

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Raising property values over decades so that poor people can't afford to live and local residents get pushed out sounds like the bad thing, and THAT in the article sounds like the solution. 

 

Plus, workers finally getting treated with some due deference and power. 

 

I don't see the negative here. 

 

 

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Poofy Aristocrat

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On 3/26/2023 at 7:16 PM, Icarus27k said:

Good news: the failures of Silicon Valley Bank and Signature Bank probably have the same effect as an interest rate hike in terms of lending, so it might lower inflation.

What's a few bank failures between us if it lowers the price of groceries? 

not if the fed covers everyone and everything. Fixing this banking crisis undid almost all the progress they made reducing their balance sheet. They're now covering deposits beyond the $250,000 FDIC insurance at any failing bank they deem worthy. Where will that money come from? They say they're collaterized loans but they're really not. The point of raising rates is to make money matter again. We were supposed to see who was swimming naked. Then it happened and everyone was somehow surprised? They're working against their own progress. We don't have strong people in charge who can say no more free money, so the free money era isn't really going to end. Hopefully I'm wrong tho

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scoobdog Monster Mutant

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1 hour ago, Poofy said:

not if the fed covers everyone and everything. Fixing this banking crisis undid almost all the progress they made reducing their balance sheet. They're now covering deposits beyond the $250,000 FDIC insurance at any failing bank they deem worthy. Where will that money come from? They say they're collaterized loans but they're really not. The point of raising rates is to make money matter again. We were supposed to see who was swimming naked. Then it happened and everyone was somehow surprised? They're working against their own progress. We don't have strong people in charge who can say no more free money, so the free money era isn't really going to end. Hopefully I'm wrong tho

I didn’t see anyone swimming naked…

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Jman Hero

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59 minutes ago, Master-Debater131 said:

 

Well thats not ominous at all.

This is pretty standard, and they WERE able to stem the worst of the damage by facilitating the JP Morgan purchase.  
 

Now if Jim Cramer said it, grab your shotgun and hide your money underneath your bed

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