Off again to a show that will happen tonight. Will be doing the same again tomorrow. ENJOY the weekend all.
Not exactly, this wasn't a tiny high risk bank. The first FDIC insured in nearly 3 years. Credit Suisse is the next obstacle to overcome. Obviously some are healthier than others but it's a sign of the times. News moves the markets and today put a little fear in the air. Just have to see how much collateral damage this creates. DOW puked up 3 months of gains. Next week will be interesting to see how it unfolds.
W, you don’t think that the collapse of SVB is a major event? Especially when you connect it to what the feds have been doing for the past year and a half now in regards to raising rates, and the crunch on the tech sector? I wouldn’t compare SVB to a small player in the banking industry and its certainly a major player with the tech sector. This is not a Sam Bankman Freid scale event here. And that was chaotic as well, although I could rationalize it on the same line of thought you had - a fool and his money. As tragic as this event is, I think that overall this will LIKELY send a clear signal to the feds - STOP with the rate hikes! … That is a GOOD thing. I’m not investing in financial institutions as well, but that doesn’t mean I’m downplaying their significant role in balancing our economy. As always, just my opinion
No....I see them as a niche bank that is tied in with the tech industry and the Venture Capital firms. I dont see it as a major event to the economy or even the banking industry. I see their failure as being caused by their very narrow customer base.....(tech startups and VC companies).......which made them susceptible to a run on the bank by their narrow customer base. I also dont think the FED will take this into consideration when it comes to continued hikes. I believe this event will quickly disappear from the financial news......in perhaps a couple of weeks. BUT......this is just personal opinion......so dont bet the farm on what I say.
This is what I mean: Here’s how the second-biggest bank collapse in U.S. history happened in just 48 hours https://www.cnbc.com/2023/03/10/silicon-valley-bank-collapse-how-it-happened.html (BOLD is my opinion OR what I consider important content) "Key Points The company’s downward spiral began late Wednesday, when it surprised investors with news that it needed to raise $2.25 billion to shore up its balance sheet. “This was a hysteria-induced bank run caused by VCs,” Ryan Falvey, a fintech investor of Restive Ventures, told CNBC. All told, customers withdrew a staggering $42 billion of deposits by the end of Thursday, according to a California regulatory filing. Now, those who remained with SVB face an uncertain timeline for retrieving their money. On Wednesday, Silicon Valley Bank was a well-capitalized institution seeking to raise some funds. Within 48 hours, a panic induced by the very venture capital community that SVB had served and nurtured ended the bank’s 40-year-run. Regulators shuttered SVB Friday and seized its deposits in the largest U.S. banking failure since the 2008 financial crisis and the second-largest ever. The company’s downward spiral began late Wednesday, when it surprised investors with news that it needed to raise $2.25 billion to shore up its balance sheet. What followed was the rapid collapse of a highly-respected bank that had grown alongside its technology clients. Even now, as the dust begins to settle on the second bank wind-down announced this week, members of the VC community are lamenting the role that other investors played in SVB’s demise. “This was a hysteria-induced bank run caused by VCs,” Ryan Falvey, a fintech investor at Restive Ventures, told CNBC. “This is going to go down as one of the ultimate cases of an industry cutting its nose off to spite its face.” The episode is the latest fallout from the Federal Reserve’s actions to stem inflation with its most aggressive rate hiking campaign in four decades. The ramifications could be far-reaching, with concerns that startups may be unable to pay employees in coming days, venture investors may struggle to raise funds, and an already-battered sector could face a deeper malaise." MY COMMENT Personally since I ONLY invest in the BIG CAP MONSTERS of the tech world.......I am not concerned about any impact from this event. I also agree with this: SVB failure doesn't threaten 'safety and soundness' of banking system: Analyst https://finance.yahoo.com/news/svb-...ness-of-banking-system-analyst-210627755.html "Silicon Valley Bank (SIVB) was taken over by regulators Friday in the biggest bank failure since the financial crisis after the bank was unable to raise fresh capital following a run on deposits. And as investors and analysts pick through SVB's failure, one analyst says it won't lead to bigger issues in the banking sector. In a note to clients on Friday, TD Cowen analyst Jaret Seiberg wrote the bank's failure doesn't pose contagion risk, noting the failure is more about Silicon Valley's business model rather than broader problems in the banking system. "We do not see this as the start of a broader threat to the safety and soundness of the banking system,” Seiburg wrote. "Much like Silvergate (SI), Silicon Valley had a unique business model that was less dependent on retail deposits than a traditional bank. This left the bank more exposed to interest rate risk as its funding got more expensive, but its assets were not repricing higher." Seiburg says Silicon Valley Bank's failure appears to be a typical bank failure akin to those seen during the savings and loan crisis of the 1980s. Instead of being focused on real estate, the bank was focused on the tech industry. Seiburg said he expects regulators to revamp liquidity rules in response to this failure. California state regulators seized the Santa Clara-based institution and appointed the Federal Deposit Insurance Corporation as receiver, meaning the FDIC will be able to sell off assets and return money to insured depositors." Etc, etc, etc."
It will be interesting to see how it plays out. Some heavy hitters were shareholders and its already having a trickle down effect. The depositor side is revealing some heavy names as well, from ROKU to ABNB, the vast majority are above the 250,000 threshold. I say more collateral damage is yet to surface. The yield inversion has caught many off guard. This wasn't a tiny start up bank that catered only to the Bevery Hills Elite. A lot of investors will be drug down the drain, how it affects the balance sheets is yet to be seen. From retirement funds to large depositors not being able to function. This indeed will be interesting to watch.
What I see as happening with SVB.....is a HUGE PR and FEAR MONGERING campaign that we are seeing playing out in the media right now. I am already seeing calls for the FDIC and the government to make all depositors whole......regardless of the FDIC $250,000 limit. This is why all the comparisons to Washington Mutual are being made. In other words a potential BILLION-PLUS bail out to the wealthy VC community and many tech companies in Silicon Valley. I would bet that this bank is probably partially or wholly OWNED by......all the Venture Capital elites......and many other Silicon Valley elites. They use it as a funding and lending source for their VC activities. THIS.....is what I see happening right now. For example this little article: When will Silicon Valley Bank depositors get their money back — and will they be made whole? Questions swirl after lender goes down https://www.msn.com/en-us/money/com...sn&cvid=4b11bcee5048466bac4834d38e19338b&ei=5 BOLD is my opinion OR what I consider important content) "In the wake of the stunning collapse of Silicon Valley Bank, depositors who kept their money with the lender are wondering when they'll get their money back — and if so, whether they'll be able to retrieve all of their funds. The bank's funds are currently in the hands of the Federal Deposit Insurance Corporation. Since SVB was an FDIC-insured lender, anyone who banked with it had their money guaranteed by the federal government — but only up to $250,000. That's left anyone with more than that amount — totaling 90% of SVB’s deposits — in financial limbo. It's a group that includes Roku, which said it has nearly $500 million with SVB; Roblox, which said it has $150 million with SVB; and numerous others — SVB claimed to have approximately half of all U.S. venture-backed tech and life science companies and more than 2,500 venture capital funds as its customers. Other firms, including Etsy, have already told customers they are facing payment processing delays. This weekend, the FDIC will attempt to find an entity that will buy SVB outright, said Morgan Ricks, a professor of banking and finance at Vanderbilt University. But the FDIC has already telegraphed that it does not expect to be able to find such a purchaser, Ricks said, having announced Friday that it intends to issue "receivership certificates" to customers for deposit amounts in excess of $250,000. The FDIC also announced that "as it sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors." "It gives you the sense FDIC doesn’t place a super high probability on finding a buyer," Ricks said. If there is no buyer, what happens next? Ricks said customers with uninsured funds will likely eventually see their money — but there is no guarantee they'll get all of it back. The FDIC will commence a liquidation process of assets that SVB valued at more than $200 billion — but the actual dollar amount those assets fetch is likely to be less. "[Uninsured depositors will get a recovery, and may even get a full recovery, but that will happen at some point in the future," Ricks said. For a company that needs to meet payroll, Ricks said, "it's far from ideal." "But it’s definitely not going to be the case that uninsured depositors are wiped out, meaning that there's no recovery whatsoever," Ricks said. Over the weekend, a mix of Silicon Valley investors and California politicians called on the FDIC to make all depositors, including ones with uninsured amounts, whole. Saturday afternoon, California Gov. Gavin Newsom issued a statement saying he had been in touch with the Biden Administration and other Washington officials about SVB. “Everyone is working with FDIC to stabilize the situation as quickly as possible, to protect jobs, people’s livelihoods, and the entire innovation ecosystem that has served as a tent pole for our economy,” Newsom said. But Ricks said that in order for the FDIC to use public money to help uninsured depositors, it must declare a "systemic risk exception" — something that requires two-thirds of the Federal Reserve Board of Governors, two-thirds of the board of the FDIC, and the Treasury Secretary, in consultation with the president, to approve. "That seems to me extremely unlikely," Ricks said. For the average person or business, the collapse of SVB sets a troubling precedent, Ricks said. While it never hid its financial issues, for a bank of the size, scale, and reputation of SVB to go down suggests customers should have been more acutely aware of the problems, a concept Ricks finds "ridiculous." "Most businesses don’t want to be in the business of evaluating financial institutions' balance sheets — it's not their comparative advantage," Ricks said. Going forward, he said, more firms and individuals are likely to take their business to too-big-to-fail banks that they know would receive governmental support in a worst-case scenario. "That's unfortunate for our financial system," Ricks said. If you're someone who does not plan to bank at a major bank going forward, Ricks said: Start boning up on bank safety and soundness. "That's the whole theory of it," he said. "I think it’s sort of silly — it's a silly way to manage our monetary system."" MY COMMENT It is very FOOLISH that these companies and Venture Capital firms were not holding their money in the BIG CAP banks that are too big to fail. But than.....this bank was their......"TOY".....to use for all their financial needs. I am sure the VC community steered companies to this bank and I suggest that is is ......"LIKELY".....many of the Silicon Valley insiders owned this bank as shareholders or founders. This is NOT some retail bank leaving a lot of little customers in the lurch. This is a sophisticated.......VENTURE CAPITAL and TECH niche bank.......with extremely financially sophisticated customers. Want to know why there is all the discussion in the media about systemic risk to other banks.........It is necessary to quality for a government BAILOUT. "in order for the FDIC to use public money to help uninsured depositors, it must declare a "systemic risk exception" — something that requires two-thirds of the Federal Reserve Board of Governors, two-thirds of the board of the FDIC, and the Treasury Secretary, in consultation with the president, to approve." With the POWER and influence of these ELITES......I believe there is a significant chance that they WILL be BAILED OUT by the government. After all......this is when all those political contributions and connections pay off. That is my CYNICAL take on this whole thing.
Some good discussion on the bank deal. Here is an interesting chart. Looking back on it brings back some memories. Bank failures since 2009 Year Total number of bank failures: 512 2023 1 2022 0 2021 0 2020 4 2019 4 2018 0 2017 8 2016 5 2015 8 2014 18 2013 24 2012 51 2011 92 2010 157 2009 140 Source: Federal Deposit Insurance Corp.
Janet just gave the middle finger to the bailout idea. Let the chips fall as they may. Poor Joe will have to take a vacation until the dust settles. Collateral damage inbound.
Kind of on a related note to the above. I got to thinking about some of this and our pandemic downturn. I realized as time goes on we have gotten further and further away from some very notable and severe events in market history. I considered how we as investors are shaped a lot by our experiences, just like life in general I suppose. It made me ponder how many investors haven't really "experienced" some of this. I suspect a portion of investors first real test may have been the covid crash and then the following bear market after the run up. Investors who never experienced the dot.com era, 9/11 timeframe, or the financial crises. Obviously those are just the more "recent" events. We could go further back, but the point is the same. I mean it's no fault on their own, it's just a time and age thing. It did make me think about how "experiences" may shape us to a certain degree and maybe how we view our own risk tolerance. The difference between a 50% decline in your portfolio vs 25% is a different type of experience to say the least. Same with the more current story of SIVB. Many investors have been through a three year stretch where 389 financial institutions went down. In that same light, many have not or simply were young enough the full effect was not apparent. So, I can see how the most recent event coupled with other current issues could raise the fear factor. Where investors with more time could be more "hardened" simply based off of past experience. It is one thing to look back at a chart and see a severe event and think about how you would manage it. If you actually went through it, well you know the difference. I know some investors that are very, very risk averse due to past experiences and some who went through the same time period who are not phased by most things. Some it scared completely out, while others it gave confidence to weather the next severe event. I think we see some of that surface in todays investing world. Sometimes risk is misunderstood until it shows up. When it does, it is usually too late to adjust to it. If you have no concept of how things can turn and how long they can sometimes last....do you really understand how much one could handle. It's interesting because you need the experience, but you can't control when you are going to get it. Such is life I suppose. Anyway, just thinking out loud about our different time frames and how that factors into how we view, react, and how all of that shapes our investing minds at times.
For what it's worth.....if you believe her or not. She is going on record....and that may or may not mean anything to her or anyone for that matter. A portion of the story below. Yellen says no federal bailout for Silicon Valley Bank (Yahoo Finance.) 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. Yellen, in an interview with CBS' “Face the Nation,” provided few details on the government's next steps. But she emphasized that the situation was much different from the financial crisis almost 15 years ago, which led to bank bailouts to protect the industry. “We’re not going to do that again," she said. "But we are concerned about depositors, and we’re focused on trying to meet their needs.” With Wall Street rattled, Yellen tried to reassure Americans that there will be no domino effect after the collapse of Silicon Valley Bank. “The American banking system is really safe and well capitalized," she said. "It’s resilient.”
Government bailouts are what got us in the mess we're currently in from 2008 forward. Let the market crash, it will sort itself out in time.
Yeah, I have a hard time with any of the FOMC. They ignored the building inflationary environment too long. Remember....it is all transitory...until it wasn't. We are now paying the price for all of that free money, triple size unemployment checks, don't pay your rent, and on and on. What an experiment they tried out. This is the result of it.
I'm all for the the little guy. If he can live free then so be it. Just the cost of doing business. Change the tax code if you want results. Let the market crash and reset itself. I'm looking forward to the outcome of the ARM loans that adjust, that's when the bubble finally pops.
I'm all for the guy who works for a living and makes his own way. As a taxpayer, I wouldn't mind paying extra for senior citizens and military veterans. Freeloaders....no.
YEA.......but.....there is always a "but"......Yellen ruled out a bailout of the bank itself....but that is not a "rule out" of making the depositors whole above the FDIC $250,000 limit. You know.......with all the money that is thrown around in VENTURE CAPITAL by the 300 to 500 VC firms in Silicon Valley......you would think the VENTURE CAPITAL GUYS.....could easily put together a group and buy this bank and restore it to financial health. After all they cumulatively invest many, many $BILLIONS......at least $25BILLION to $30BILLION in new start up companies and other companies.....every year........most to which will never make it. OBVIOUSLY....they could easily do this.....but a government repayment of all the lost deposits is so much nicer.......FREE MONEY......for the ELITES and their companies that they invest in. We are now at the point where......FREE MONEY........and the expectation of......FREE MONEY.....is the American way.
As I said.....I suggest that these people simply buy and fund the bank......same as they invest in all their Venture Capital start-up companies. They certainly have the capital and the business experience......of course.......that is not the same thing as FREE MONEY. Hundreds of venture capital firms vow to work with Silicon Valley Bank again if new owner is found https://www.cnbc.com/2023/03/12/hundreds-of-vcs-vow-to-work-with-svb-again-if-new-owner-found.html (BOLD is my opinion OR what I consider important content) "Key Points More than 300 venture capital firms have signed a letter saying they would be willing to work with Silicon Valley Bank under new ownership provided it is appropriately capitalized. Regulators shut down SVB on Friday, following a run on the bank on Thursday. The SVB failure marks the largest in U.S. banking since the 2008 financial crisis, and the second-largest ever. More than three hundred venture capital firms have signed a joint statement vowing to do business again with Silicon Valley Bank if it is “purchased and appropriately capitalized,” after the financial institution failed on Friday. Regulators shuttered SVB and seized its deposits on Friday following a run on the bank on Thursday. Preceding the bank’s failure, SVB CEO Greg Becker had announced a sudden need to raise $2.25 billion to shore up the financial institution’s balance sheet overnight on Wednesday. A dramatic wave of deposit withdrawals followed on Thursday. Shares in the bank plummeted and triggered a trading halt on Friday before the California state regulators took over. The SVB failure marks the largest in U.S. banking since the 2008 financial crisis and the second-largest ever. Some venture firms withdrew their own money and instructed their portfolio companies to withdraw their deposits from SVB before the run. Reportedly Founders Fund, USV and Coatue were among those to do so. Other venture investors lamented that directives from influential firms, even if prudent in a way, contributed to the run on a bank that had been a long-trusted financial partner to tech startups and firms that invest in them for decades. The Federal Deposit Insurance Corporation (FDIC) will cover up to $250,000 per depositor and may be able to begin paying depositors under that cap as early as Monday. It remains to be seen, however, what portion of the deposits on SVB’s balance sheet will see a full or partial recovery, and whether there is an immediate buyer poised to acquire the bank’s operations. In 2008, JPMorgan Chase acquired Washington Mutual Bank in a transaction facilitated by the FDIC. As CNBC has reported, big names in tech and finance have been calling for the federal government to take dramatic actions to protect depositors who were not under the $250,000 insured cap. Their main concern is that a failure to protect deposits over $250,000 could cause a loss of faith in other mid-sized banks. Venture firms including Accel, Cowboy Ventures, Greylock, Lux Capital, and Sequoia were among the 325 firms who had signed the letter as of Saturday evening in California, expressing a willingness to work again with SVB under new ownership. The joint statement was shared by many individual venture capitalists on social networks following the bank failure. It said: Silicon Valley Bank has been a trusted and long-time partner to the venture capital industry and our founders. For forty years, it has been an important platform that played a pivotal role in serving the startup community and supporting the innovation economy in the US. The events that unfolded over the past 48 hours have been deeply disappointing and concerning. In the event that SVB were to be purchased and appropriately capitalized, we would be strongly supportive and encourage our portfolio companies to resume their banking relationship with them.” Read the statement and the full list of investors expressing support for SVB." MY COMMENT GEE....thanks for nothing. This is not binding in any way......it is simply PR stunt. I have an alternative suggestion......PUT YOUR OWN MONEY WHERE YOUR MOUTH IS.......buy the bank as a group and treat it as a new start-up investment.
