Some people in my circle think we are heading for a banking crash. I think they are being over reactive. What do some of the Economics Wonks on here think. It seems that the fed is guaranteeing all banking due to the failed SVB? Which basically subsidizes all risk, but lets the gains still go to the investor class? Why don't we let banks fail like we do people and any other capitalistic enterprise? I don't know anything about this and I am not about to pul my money out of the banks, because if it really were to crash it would probably be worth less than paper.
some articles I've read suggest the Fed raising rates as they have were a driver on top of bad decisions by that bank in particular. it also didnt help fuckstick rolling back certain regs .
so much winning.
If it was a result of Davos Donnie rolling back regulations you can be sure that there is a whole slew of people that will just see that as Biden blaming Trump for his shortcomings. Do you have a link to the regs that would have stopped this that Donnie dearest may have rolled back
Some people in my circle think we are heading for a banking crash. I think they are being over reactive. What do some of the Economics Wonks on here think. It seems that the fed is guaranteeing all banking due to the failed SVB? Which basically subsidizes all risk, but lets the gains still go to the investor class? Why don't we let banks fail like we do people and any other capitalistic enterprise? I don't know anything about this and I am not about to pul my money out of the banks, because if it really were to crash it would probably be worth less than paper.
some articles I've read suggest the Fed raising rates as they have were a driver on top of bad decisions by that bank in particular. it also didnt help fuckstick rolling back certain regs .
so much winning.
If it was a result of Davos Donnie rolling back regulations you can be sure that there is a whole slew of people that will just see that as Biden blaming Trump for his shortcomings. Do you have a link to the regs that would have stopped this that Donnie dearest may have rolled back
oh that was also a gop controled house/senate too...
Not today Sir, Probably not tomorrow.............................................. bayfront arena st. pete '94
you're finally here and I'm a mess................................................... nationwide arena columbus '10
memories like fingerprints are slowly raising.................................... first niagara center buffalo '13
another man ..... moved by sleight of hand...................................... joe louis arena detroit '14
Some people in my circle think we are heading for a banking crash. I think they are being over reactive. What do some of the Economics Wonks on here think. It seems that the fed is guaranteeing all banking due to the failed SVB? Which basically subsidizes all risk, but lets the gains still go to the investor class? Why don't we let banks fail like we do people and any other capitalistic enterprise? I don't know anything about this and I am not about to pul my money out of the banks, because if it really were to crash it would probably be worth less than paper.
some articles I've read suggest the Fed raising rates as they have were a driver on top of bad decisions by that bank in particular. it also didnt help fuckstick rolling back certain regs .
so much winning.
If it was a result of Davos Donnie rolling back regulations you can be sure that there is a whole slew of people that will just see that as Biden blaming Trump for his shortcomings. Do you have a link to the regs that would have stopped this that Donnie dearest may have rolled back
Funny thing is, nobody remembers nor really cared when 15 banks failed under POOTWH. Dems are held to a much higher standard.
Class action suit filed against Silicon Valley Bank parent
By MICHELLE CHAPMAN
10 mins ago
A class action lawsuit is being filed against the parent company of Silicon Valley Bank, its CEO and its chief financial officer, saying that company didn't disclose the risks that future interest rate increases would have on its business.
The lawsuit against SVB Financial Group, CEO Greg Becker and CFO Daniel Beck was filed in the U.S. district court for the Northern district of California. It is looking for unspecified damages to be awarded to those who invested in SVB between June 16, 2021 and March 10, 2023.
The lawsuit from shareholders led by Chandra Vanipenta says some quarterly and annual financial reports from SVB didn't fully account for warnings from the Federal Reserve about interest rate hikes.
In particular, the lawsuit said that annual reports for 2020 through 2022, “understated the risks posed to the company by not disclosing that likely interest rate hikes, as outlined by the Fed, had the potential to cause irrevocable damage to the company,” the lawsuit stated.
It also claims that the company "failed to disclose that, if its investments were negatively affected by rising interest rates, it was particularly susceptible to a bank run.”
The collapse of Silicon Valley Bank has shaken the technology industry and worried small businesses and individuals with deposits at the financial institution. The Biden administration’s move guaranteeing all Silicon Valley Bank’s deposits above the insured limit of $250,000 per account has brought relief to some.
Silicon Valley quickly established itself as the “go-to” spot for venture capitalists looking for financial partners more open to unconventional business proposals than its bigger, more established peers who still didn’t have a good grasp of technology.
Venture capitalists set up their accounts at Silicon Valley Bank just as the tech industry started its boom and then advised the entrepreneurs that they funded to do the same.
That cozy relationship came to an end when the bank disclosed a $1.8 billion loss on low-yielding bonds that were purchased before interest rates began to spike last year, raising alarms among its financially savvy customer base who used the fruits of technology to spread warnings that turned into a calamitous run on deposits.
Not today Sir, Probably not tomorrow.............................................. bayfront arena st. pete '94
you're finally here and I'm a mess................................................... nationwide arena columbus '10
memories like fingerprints are slowly raising.................................... first niagara center buffalo '13
another man ..... moved by sleight of hand...................................... joe louis arena detroit '14
It's not difficult to understand why bank failures are back. It is a direct reaction to the idiotic move by television executives removing "It's a Wonderful Life" from being broadcast on repeat over the holidays. No one remembers George Bailey anymore...no one remembers that when a bell rings an angel gets his/her wings...and most importantly, no one remembers that the bank has loaned out your $ to help your neighbors and you should trust the process and not make a run on the bank.
Hopefully holiday season 2023 will correct this grave error.
Some people in my circle think we are heading for a banking crash. I think they are being over reactive. What do some of the Economics Wonks on here think. It seems that the fed is guaranteeing all banking due to the failed SVB? Which basically subsidizes all risk, but lets the gains still go to the investor class? Why don't we let banks fail like we do people and any other capitalistic enterprise? I don't know anything about this and I am not about to pul my money out of the banks, because if it really were to crash it would probably be worth less than paper.
some articles I've read suggest the Fed raising rates as they have were a driver on top of bad decisions by that bank in particular. it also didnt help fuckstick rolling back certain regs .
so much winning.
If it was a result of Davos Donnie rolling back regulations you can be sure that there is a whole slew of people that will just see that as Biden blaming Trump for his shortcomings. Do you have a link to the regs that would have stopped this that Donnie dearest may have rolled back
It's absolutely true that certain provisions of Dodd Frank were rolled back for banks under a certain managed asset threshold. The argument was the cost of compliance (meaning the teams of people necessary to staff your regulatory teams) exceeded the systematic risk to the financial system that the bank represented. Now whether the specific failure of SVB would have been avoided if that law wasn't passed is another question. I have not seen anything saying that.
SVB's problem was pretty straightforward. They invested too much cash in long term treasuries locking up the cash. Depositors recognized that their money could do much more in other investment vehicles after all of the rate hikes, so they started withdrawing. SVB had to sell treasuries at a loss to cover the withdrawals. Moody's caught wind, downgraded them, and that created a massive run by the rest of the depositors. That's a great recipe for collapse.
I think that other mid size banks could be at risk for a deposit run as well. I know that a lot of commercial clients that work with mid size banks are looking to move their money to the big dogs (BAC, Chase, WF, etc.) because there is more confidence in their diversification strategies. I think that's the contagion that the Fed is worried about. Protecting everyone (not just the FDIC deposits) probably is going a long way in calming nerves.
Some people in my circle think we are heading for a banking crash. I think they are being over reactive. What do some of the Economics Wonks on here think. It seems that the fed is guaranteeing all banking due to the failed SVB? Which basically subsidizes all risk, but lets the gains still go to the investor class? Why don't we let banks fail like we do people and any other capitalistic enterprise? I don't know anything about this and I am not about to pul my money out of the banks, because if it really were to crash it would probably be worth less than paper.
some articles I've read suggest the Fed raising rates as they have were a driver on top of bad decisions by that bank in particular. it also didnt help fuckstick rolling back certain regs .
so much winning.
If it was a result of Davos Donnie rolling back regulations you can be sure that there is a whole slew of people that will just see that as Biden blaming Trump for his shortcomings. Do you have a link to the regs that would have stopped this that Donnie dearest may have rolled back
It's absolutely true that certain provisions of Dodd Frank were rolled back for banks under a certain managed asset threshold. The argument was the cost of compliance (meaning the teams of people necessary to staff your regulatory teams) exceeded the systematic risk to the financial system that the bank represented. Now whether the specific failure of SVB would have been avoided if that law wasn't passed is another question. I have not seen anything saying that.
SVB's problem was pretty straightforward. They invested too much cash in long term treasuries locking up the cash. Depositors recognized that their money could do much more in other investment vehicles after all of the rate hikes, so they started withdrawing. SVB had to sell treasuries at a loss to cover the withdrawals. Moody's caught wind, downgraded them, and that created a massive run by the rest of the depositors. That's a great recipe for collapse.
I think that other mid size banks could be at risk for a deposit run as well. I know that a lot of commercial clients that work with mid size banks are looking to move their money to the big dogs (BAC, Chase, WF, etc.) because there is more confidence in their diversification strategies. I think that's the contagion that the Fed is worried about. Protecting everyone (not just the FDIC deposits) probably is going a long way in calming nerves.
Makes sense. I understood the part about having invested the funds in longterm bonds and having everything stuck. I mostly wanted to see just how big of a deal this is for "all of us" and if in fact this could be attributed to Trump roll backs as some are saying. It sounds like it was poor management. Hopefully this fully insured thing is a short term measure and not the way of doing business going forward. I can't imagine subsidizing all risk and privatizing all reward would be a great strategy for stable economy that benefits all.
The way some people talk it sounds like they want a full on stock market crash so they can fulfill some of their twisted fantasies.
Banks are fine. Look at the bigger ones, they aren't hurting.
We are currently building Chase's flagship building in Manhattan,. They doubled its size while only gaining like 3 more floors. They wanted it bigger than the Vanderbilt building to show who's is bigger. Who owns the Vanderbilt building or rather the main tenant? TD Bank.
Banks are fine. Look at the bigger ones, they aren't hurting.
We are currently building Chase's flagship building in Manhattan,. They doubled its size while only gaining like 3 more floors. They wanted it bigger than the Vanderbilt building to show who's is bigger. Who owns the Vanderbilt building or rather the main tenant? TD Bank.
I think Chase is the best run bank in the US, if not the world. They don't make me nervous at all.
Some people in my circle think we are heading for a banking crash. I think they are being over reactive. What do some of the Economics Wonks on here think. It seems that the fed is guaranteeing all banking due to the failed SVB? Which basically subsidizes all risk, but lets the gains still go to the investor class? Why don't we let banks fail like we do people and any other capitalistic enterprise? I don't know anything about this and I am not about to pul my money out of the banks, because if it really were to crash it would probably be worth less than paper.
some articles I've read suggest the Fed raising rates as they have were a driver on top of bad decisions by that bank in particular. it also didnt help fuckstick rolling back certain regs .
so much winning.
If it was a result of Davos Donnie rolling back regulations you can be sure that there is a whole slew of people that will just see that as Biden blaming Trump for his shortcomings. Do you have a link to the regs that would have stopped this that Donnie dearest may have rolled back
It's absolutely true that certain provisions of Dodd Frank were rolled back for banks under a certain managed asset threshold. The argument was the cost of compliance (meaning the teams of people necessary to staff your regulatory teams) exceeded the systematic risk to the financial system that the bank represented. Now whether the specific failure of SVB would have been avoided if that law wasn't passed is another question. I have not seen anything saying that.
SVB's problem was pretty straightforward. They invested too much cash in long term treasuries locking up the cash. Depositors recognized that their money could do much more in other investment vehicles after all of the rate hikes, so they started withdrawing. SVB had to sell treasuries at a loss to cover the withdrawals. Moody's caught wind, downgraded them, and that created a massive run by the rest of the depositors. That's a great recipe for collapse.
I think that other mid size banks could be at risk for a deposit run as well. I know that a lot of commercial clients that work with mid size banks are looking to move their money to the big dogs (BAC, Chase, WF, etc.) because there is more confidence in their diversification strategies. I think that's the contagion that the Fed is worried about. Protecting everyone (not just the FDIC deposits) probably is going a long way in calming nerves.
Makes sense. I understood the part about having invested the funds in longterm bonds and having everything stuck. I mostly wanted to see just how big of a deal this is for "all of us" and if in fact this could be attributed to Trump roll backs as some are saying. It sounds like it was poor management. Hopefully this fully insured thing is a short term measure and not the way of doing business going forward. I can't imagine subsidizing all risk and privatizing all reward would be a great strategy for stable economy that benefits all.
The way some people talk it sounds like they want a full on stock market crash so they can fulfill some of their twisted fantasies.
One thing to keep in mind is the positioning of "bail out". SVB wasn't bailed out, it was the companies that used SVB as their bank that were bailed. I'm not picking on you or your words around subsidizing risk. At the end of the day SVB is gone. Their people don't have jobs and their investors lost. Making the deposits whole is good for the system, although it is making a huge dent into the FDIC insurance fund.
Some people in my circle think we are heading for a banking crash. I think they are being over reactive. What do some of the Economics Wonks on here think. It seems that the fed is guaranteeing all banking due to the failed SVB? Which basically subsidizes all risk, but lets the gains still go to the investor class? Why don't we let banks fail like we do people and any other capitalistic enterprise? I don't know anything about this and I am not about to pul my money out of the banks, because if it really were to crash it would probably be worth less than paper.
some articles I've read suggest the Fed raising rates as they have were a driver on top of bad decisions by that bank in particular. it also didnt help fuckstick rolling back certain regs .
so much winning.
If it was a result of Davos Donnie rolling back regulations you can be sure that there is a whole slew of people that will just see that as Biden blaming Trump for his shortcomings. Do you have a link to the regs that would have stopped this that Donnie dearest may have rolled back
It's absolutely true that certain provisions of Dodd Frank were rolled back for banks under a certain managed asset threshold. The argument was the cost of compliance (meaning the teams of people necessary to staff your regulatory teams) exceeded the systematic risk to the financial system that the bank represented. Now whether the specific failure of SVB would have been avoided if that law wasn't passed is another question. I have not seen anything saying that.
SVB's problem was pretty straightforward. They invested too much cash in long term treasuries locking up the cash. Depositors recognized that their money could do much more in other investment vehicles after all of the rate hikes, so they started withdrawing. SVB had to sell treasuries at a loss to cover the withdrawals. Moody's caught wind, downgraded them, and that created a massive run by the rest of the depositors. That's a great recipe for collapse.
I think that other mid size banks could be at risk for a deposit run as well. I know that a lot of commercial clients that work with mid size banks are looking to move their money to the big dogs (BAC, Chase, WF, etc.) because there is more confidence in their diversification strategies. I think that's the contagion that the Fed is worried about. Protecting everyone (not just the FDIC deposits) probably is going a long way in calming nerves.
Makes sense. I understood the part about having invested the funds in longterm bonds and having everything stuck. I mostly wanted to see just how big of a deal this is for "all of us" and if in fact this could be attributed to Trump roll backs as some are saying. It sounds like it was poor management. Hopefully this fully insured thing is a short term measure and not the way of doing business going forward. I can't imagine subsidizing all risk and privatizing all reward would be a great strategy for stable economy that benefits all.
The way some people talk it sounds like they want a full on stock market crash so they can fulfill some of their twisted fantasies.
One thing to keep in mind is the positioning of "bail out". SVB wasn't bailed out, it was the companies that used SVB as their bank that were bailed. I'm not picking on you or your words around subsidizing risk. At the end of the day SVB is gone. Their people don't have jobs and their investors lost. Making the deposits whole is good for the system, although it is making a huge dent into the FDIC insurance fund.
So it was only people and companies that had money deposited and used SVB bank for general business practices that will receive funds in the amount of assets deposited and handled with the bank? No executives will be getting their full salaries and no risky investments will be backed. I ask because the reporting around this isn't very clear and you seem to work in the sector and maybe have a better idea of what is going on.
Personlly I believe that if you have any amount of money deposited in a bank that should the bank fail you will get that money back somehow. Its the cases of making failed investments whole and bailing out executives with golden parachutes that I am more worried about.
I take your statement as saying that those individuals and businesses that had money deposited with SVB will have the funds restored to them and that is the extent of the insurance?
Do you know if this infinity limit of deposit insurance is only for this crisis or if it is going to go on?
one last thing do you think this will have wider implications in the economy or that it will pretty much be a non event except to those employed directly by SVB?
From the NYT email blast. And I thought the FDIC was funded by the banks and not the taxpayers so that this "bailout" is not borne by the taxpayers? And as such, the banks will pay? However, I'm sure hits on the FDIC result in more banking fees as I'm sure premiums go up and they're going to increase their profits along with their costs.
Good morning. Deregulation contributed to Silicon Valley Bank’s collapse.
Stopping the fallout
The collapse of Silicon Valley Bank and others — and the government’s rescue over the weekend — left many of us again rushing to understand the arcane details of the financial system. It can be maddeningly complex, so I want to use today’s newsletter to explain some of the basics.
First, the latest: Bank stocks plummeted yesterday, hitting midsize and smaller institutions in particular. Other financial markets gyrated as well, despite U.S. policymakers’ emergency help for customers of the closed banks. “It didn’t put calm back in the system,” said my colleague Maureen Farrell, who covers business.
Why does this matter to everyday Americans? After all, SVB is relatively small and most of us keep no money in it.
The short answer is the potential for wider fallout. When banks collapse, other people sometimes fear that their own banks and investments will follow. Even healthy banks don’t keep enough cash on hand to pay out all depositors, so if too many people panic at once and pull out their money — a classic bank run — it could lead to broader financial and economic calamity. And that is what the Biden administration and the Federal Reserve are trying to stop: a financial crisis largely prompted by plunging confidence.
The collapse
How did we get to this point? To answer that, I need to dive into more detail about Silicon Valley Bank.
As its name suggests, the bank portrayed itself as focused on the leading edge of technology. And it served thousands of tech firms. Yet SVB invested their money in something much less exciting, as Paul Krugman wrote: U.S. bonds, effectively I.O.U.s from the federal government.
Because the federal government has always paid its bills, U.S. bonds are widely considered the safest investment. SVB’s experience shows there are moments when even these safe investments may not pay off. The details get technical, but they’re worth unpacking to understand what went wrong.
Bonds are effectively money that the government borrows from buyers — the public — before paying them back later, with interest. Market conditions and the Federal Reserve, America’s central bank, help determine that interest rate.
When SVB bought bonds, interest rates were very low. Since then, the Federal Reserve, which sets certain influential rates, increased those to combat rising prices. Now, new bonds can carry interest multiple times higher than those SVB bought.
Imagine, then, that you want to buy bonds today. You would want the newer bonds because they have a higher payout. So when SVB needed to sell bonds, to raise cash that it could use for its customers’ withdrawals, it could do so only for a discount, taking a loss.
The bank failed to follow basic financial advice: Diversify your portfolio. “It’s not fraud,” said Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics. “But it’s an extremely risky, and obviously risky, strategy.”
In the past few weeks, venture capitalists and other wealthy customers on social media and in private chats started discussing concerns that SVB could no longer pay its depositors. Some began to move their money out of the bank, and the situation spiraled quickly. “Once you start asking, ‘Are we having a bank run?,’ it’s too late,” my colleague David Enrich, a business editor, said.
A regulatory failure
Financial regulations are supposed to stop these kinds of crises. But Silicon Valley Bank’s problems were not caught until it was too late — which many experts say was a result of insufficient oversight. (Here’s what to know about how your own money is covered.)
Under pressure from banks in 2018, Congress passed bipartisan legislation that Donald Trump signed into law shielding smaller banks, like SVB, from more stringent rules. The banks argued that they were so small that they posed little risk to the broader financial system.
SVB’s collapse and the aftermath suggest the banks’ claims were wrong: Even smaller bank failures can threaten the financial system as a whole, prompting some experts — but not all — to call for the federal government to get more involved.
Controlled slowdown
To readers of this newsletter, the Federal Reserve’s involvement in containing the fallout of Silicon Valley Bank’s collapse may be puzzling. The Fed, after all, has been raising interest rates to slow the economy. An economic slowdown inherently involves businesses, including banks, failing.
The Fed’s concern is that the bank collapses could go too far and pose bigger systemic risks beyond SVB. Think of it this way: You can stop a runaway car by blowing out its tires, potentially causing a crash. But it would be better if the car stopped by simply braking. Officials are trying to get the economy to brake to a safer speed — one in which inflation isn’t so high.
The economic slowdown that the Fed hopes for would still affect everyday Americans, in both lower prices and also potentially higher unemployment rates. But that outcome is better than an uncontrolled bank run that topples the financial system and takes the rest of the economy, and your 401(k), down with it.
Banks pay into the FDIC. The statement that customers will bear the price through higher fees is speculative. It's certainly possible if not probable that some banks will increase fees to pay for it. It's also possible that some banks won't. But pressing down increases in expenses to the consumer is true and possible for any business. But remember some fees are heavily regulated and cannot go up. For example, late and overlimit fees are governed by the Card Act and everyone is already at the max.
Banks pay into the FDIC. The statement that customers will bear the price through higher fees is speculative. It's certainly possible if not probable that some banks will increase fees to pay for it. It's also possible that some banks won't. But pressing down increases in expenses to the consumer is true and possible for any business. But remember some fees are heavily regulated and cannot go up. For example, late and overlimit fees are governed by the Card Act and everyone is already at the max.
I was referring to the mischaracterization that this is “a government/tax payer bailout.” It’s not, as the banks fund the FDIC via insurance premiums. However, you know the banks will raise the fees they can get away with if their premium costs increase. They’re not going to lose profits, right? Maybe there needs to be more regulation regarding mitigating risk and how heavily invested banks can be with their reserve portfolio, or have a consumer rating disclosure system that makes it easier to understand the bank’s financial security. Depositor beware, I suppose.
Some people in my circle think we are heading for a banking crash. I think they are being over reactive. What do some of the Economics Wonks on here think. It seems that the fed is guaranteeing all banking due to the failed SVB? Which basically subsidizes all risk, but lets the gains still go to the investor class? Why don't we let banks fail like we do people and any other capitalistic enterprise? I don't know anything about this and I am not about to pul my money out of the banks, because if it really were to crash it would probably be worth less than paper.
some articles I've read suggest the Fed raising rates as they have were a driver on top of bad decisions by that bank in particular. it also didnt help fuckstick rolling back certain regs .
so much winning.
If it was a result of Davos Donnie rolling back regulations you can be sure that there is a whole slew of people that will just see that as Biden blaming Trump for his shortcomings. Do you have a link to the regs that would have stopped this that Donnie dearest may have rolled back
It's absolutely true that certain provisions of Dodd Frank were rolled back for banks under a certain managed asset threshold. The argument was the cost of compliance (meaning the teams of people necessary to staff your regulatory teams) exceeded the systematic risk to the financial system that the bank represented. Now whether the specific failure of SVB would have been avoided if that law wasn't passed is another question. I have not seen anything saying that.
SVB's problem was pretty straightforward. They invested too much cash in long term treasuries locking up the cash. Depositors recognized that their money could do much more in other investment vehicles after all of the rate hikes, so they started withdrawing. SVB had to sell treasuries at a loss to cover the withdrawals. Moody's caught wind, downgraded them, and that created a massive run by the rest of the depositors. That's a great recipe for collapse.
I think that other mid size banks could be at risk for a deposit run as well. I know that a lot of commercial clients that work with mid size banks are looking to move their money to the big dogs (BAC, Chase, WF, etc.) because there is more confidence in their diversification strategies. I think that's the contagion that the Fed is worried about. Protecting everyone (not just the FDIC deposits) probably is going a long way in calming nerves.
Makes sense. I understood the part about having invested the funds in longterm bonds and having everything stuck. I mostly wanted to see just how big of a deal this is for "all of us" and if in fact this could be attributed to Trump roll backs as some are saying. It sounds like it was poor management. Hopefully this fully insured thing is a short term measure and not the way of doing business going forward. I can't imagine subsidizing all risk and privatizing all reward would be a great strategy for stable economy that benefits all.
The way some people talk it sounds like they want a full on stock market crash so they can fulfill some of their twisted fantasies.
One thing to keep in mind is the positioning of "bail out". SVB wasn't bailed out, it was the companies that used SVB as their bank that were bailed. I'm not picking on you or your words around subsidizing risk. At the end of the day SVB is gone. Their people don't have jobs and their investors lost. Making the deposits whole is good for the system, although it is making a huge dent into the FDIC insurance fund.
So it was only people and companies that had money deposited and used SVB bank for general business practices that will receive funds in the amount of assets deposited and handled with the bank? No executives will be getting their full salaries and no risky investments will be backed. I ask because the reporting around this isn't very clear and you seem to work in the sector and maybe have a better idea of what is going on.
Personlly I believe that if you have any amount of money deposited in a bank that should the bank fail you will get that money back somehow. Its the cases of making failed investments whole and bailing out executives with golden parachutes that I am more worried about.
I take your statement as saying that those individuals and businesses that had money deposited with SVB will have the funds restored to them and that is the extent of the insurance?
Do you know if this infinity limit of deposit insurance is only for this crisis or if it is going to go on?
one last thing do you think this will have wider implications in the economy or that it will pretty much be a non event except to those employed directly by SVB?
1. My understanding is that the only thing guaranteed other than the normal FDIC under 250k was deposits above that mark. That would include the many commercial accounts SVB had. That was the extent of the announcement that was made Sunday night by the Fed. And they were forced to move quickly because they had to beat the opening of Asian markets. I have read nothing about any employees or executives being compensated. In fact, teh DOJ opened an investigation today into the sale of shares by execs in the past few weeks.
2. The FDIC fund is going to be significantly depleted by them covering all of these deposits. Banks will have to replenish it.
3. Your last question is the good one. If the Fed didn't guarantee the deposits, you would have seen a run on several more mid size and regional banks. Companies would rush to move money to safer banks like WF, Chase, etc. That could have been a huge disaster. I don't know if we are out of the woods, but I think the fed will have to be cautious about raising rates again, particularly with inflation cooling.
And now we know that KPMG was the auditor for SVB. Not only do we have a regulatory failure but again the auditor's issued clean opinions when they should have pointed out concerns.
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Not today Sir, Probably not tomorrow.............................................. bayfront arena st. pete '94
you're finally here and I'm a mess................................................... nationwide arena columbus '10
memories like fingerprints are slowly raising.................................... first niagara center buffalo '13
another man ..... moved by sleight of hand...................................... joe louis arena detroit '14
https://www.bankrate.com/banking/list-of-failed-banks/
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A class action lawsuit is being filed against the parent company of Silicon Valley Bank, its CEO and its chief financial officer, saying that company didn't disclose the risks that future interest rate increases would have on its business.
The lawsuit against SVB Financial Group, CEO Greg Becker and CFO Daniel Beck was filed in the U.S. district court for the Northern district of California. It is looking for unspecified damages to be awarded to those who invested in SVB between June 16, 2021 and March 10, 2023.
The lawsuit from shareholders led by Chandra Vanipenta says some quarterly and annual financial reports from SVB didn't fully account for warnings from the Federal Reserve about interest rate hikes.
In particular, the lawsuit said that annual reports for 2020 through 2022, “understated the risks posed to the company by not disclosing that likely interest rate hikes, as outlined by the Fed, had the potential to cause irrevocable damage to the company,” the lawsuit stated.
It also claims that the company "failed to disclose that, if its investments were negatively affected by rising interest rates, it was particularly susceptible to a bank run.”
The collapse of Silicon Valley Bank has shaken the technology industry and worried small businesses and individuals with deposits at the financial institution. The Biden administration’s move guaranteeing all Silicon Valley Bank’s deposits above the insured limit of $250,000 per account has brought relief to some.
BUSINESS
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US inflation eases but stays high, putting Fed in tough spot
Silicon Valley Bank's demise disrupts the disruptors in tech
Silicon Valley quickly established itself as the “go-to” spot for venture capitalists looking for financial partners more open to unconventional business proposals than its bigger, more established peers who still didn’t have a good grasp of technology.
Venture capitalists set up their accounts at Silicon Valley Bank just as the tech industry started its boom and then advised the entrepreneurs that they funded to do the same.
That cozy relationship came to an end when the bank disclosed a $1.8 billion loss on low-yielding bonds that were purchased before interest rates began to spike last year, raising alarms among its financially savvy customer base who used the fruits of technology to spread warnings that turned into a calamitous run on deposits.
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Hopefully holiday season 2023 will correct this grave error.
SVB's problem was pretty straightforward. They invested too much cash in long term treasuries locking up the cash. Depositors recognized that their money could do much more in other investment vehicles after all of the rate hikes, so they started withdrawing. SVB had to sell treasuries at a loss to cover the withdrawals. Moody's caught wind, downgraded them, and that created a massive run by the rest of the depositors. That's a great recipe for collapse.
I think that other mid size banks could be at risk for a deposit run as well. I know that a lot of commercial clients that work with mid size banks are looking to move their money to the big dogs (BAC, Chase, WF, etc.) because there is more confidence in their diversification strategies. I think that's the contagion that the Fed is worried about. Protecting everyone (not just the FDIC deposits) probably is going a long way in calming nerves.
The way some people talk it sounds like they want a full on stock market crash so they can fulfill some of their twisted fantasies.
There are no kings inside the gates of eden
We are currently building Chase's flagship building in Manhattan,. They doubled its size while only gaining like 3 more floors. They wanted it bigger than the Vanderbilt building to show who's is bigger. Who owns the Vanderbilt building or rather the main tenant? TD Bank.
Having your deposits in long term treasuries is bad. Having your deposits centralized with fewer, high net worth clients exasperates the risk.
Personlly I believe that if you have any amount of money deposited in a bank that should the bank fail you will get that money back somehow. Its the cases of making failed investments whole and bailing out executives with golden parachutes that I am more worried about.
I take your statement as saying that those individuals and businesses that had money deposited with SVB will have the funds restored to them and that is the extent of the insurance?
Do you know if this infinity limit of deposit insurance is only for this crisis or if it is going to go on?
one last thing do you think this will have wider implications in the economy or that it will pretty much be a non event except to those employed directly by SVB?
There are no kings inside the gates of eden
There are no kings inside the gates of eden
Good morning. Deregulation contributed to Silicon Valley Bank’s collapse.
Controlled slowdown
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"If you're looking down on someone, it better be to extend them a hand to lift them up."
Libtardaplorable©. And proud of it.
Brilliantati©
2. The FDIC fund is going to be significantly depleted by them covering all of these deposits. Banks will have to replenish it.
3. Your last question is the good one. If the Fed didn't guarantee the deposits, you would have seen a run on several more mid size and regional banks. Companies would rush to move money to safer banks like WF, Chase, etc. That could have been a huge disaster. I don't know if we are out of the woods, but I think the fed will have to be cautious about raising rates again, particularly with inflation cooling.
https://news.bloombergtax.com/financial-accounting/kpmg-gave-no-auditor-warning-before-back-to-back-bank-failures
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