What does Silicon Valley Bank’s collapse mean for the financial system?

https://www.economist.com/finance-and-economics/2023/03/10/what-does-silicon-valley-banks-collapse-mean-for-the-financial-system

by mfiguiere • 3 years ago

259 311 3 years ago

economist.com

dr_dshiv• 3 years ago

A cliff, not a valley?

alex_young• 3 years ago

You see a price recovery for $SIVB?

TacticalCoder• 3 years ago

Parent is quoting the name of the graph in the article from The Economist showing the value going from it's peak to nothing, no need to downvote him.

nmca• 3 years ago

https://archive.is/Qg2FI

greenthrow5• 3 years ago

If i screw up my investments i am stuck with the consequences. SVB screws up and we are all forced to bail them out? No thank you.

fnordpiglet6• 3 years ago

You’re not bailing them out, you’re bailing out their depositors who had no say in the investments. The principals of SVB just lost it all to the FDIC, they weren’t bailed out in the least.

greenthrow5• 3 years ago

Read the article. I am not talking about FDIC insurance. I am talking about the bailout that is discussed at towards the end of the article.

dsugarman• 3 years ago

That's not how this article reads, I think the right course of action would be to make the depositors whole and let the bank fail.

cowthulhu• 3 years ago

It’s bailing out the depositors, not the bank itself. But I get your sentiment.

Worth noting though that based on what I’ve read, the bank has plenty of assets to repay depositors… the issue is just that these assets aren’t super liquid. So if there was some form of bailout, it would be more of a bridge loan type deal than a true bailout assuming I understand the situation.

greenthrow5• 3 years ago

Your understanding does not fit with the article or anything else I read, which indicates there is a hole in their assets.

dheera• 3 years ago

Yes but the depositors of SVB are almost all corporations (mostly tech startups), that can ethically be left to die, whereas individuals have rent to pay and families to feed. I can see where this sentiment comes from if their income taxes are being used to bail out corporations.

At the same time the flip side of this is that many of those startups aren't profitable and in the absence of a FDIC bailout, those startups' employees (who are typically not paid that well to begin with) may not get their next paycheck and thus it still is directly impacting individuals and families.

SkyPuncher4• 3 years ago

the issue is just that these assets aren’t super liquid.

Yep. To me it seems like one of the monster banks will gladly pick this up. They can handle the short term liquidity then cash out massively on the long term investments.

diebeforei485• 3 years ago

Taxpayer money won't be required here. SVB will get sold to a bigger bank.

Providing short-term liquidity will be profitable for the taxpayer.

jonstewart• 3 years ago

It didn’t seem probable at the time, but the taxpayer did pretty well with all the bailouts in 2008.

ttul3• 3 years ago

I believe SVB is done. It won’t be sold. They wound it up. It’s over.

cscurmudgeon2• 3 years ago

1. You are bailing out depositors not SVB.

2. Depositors have no other option in general. https://www.bloomberg.com/opinion/articles/2019-03-08/the-fe...

greenthrow5• 3 years ago

The article is talking about bailing out SVB, which in turn can then make the depositors whole.

This is like arguing that if I screw up my investments and put myself in a bad position that the government should bail me out for the sake of everyone I owe money to.

twblalock• 3 years ago

If we don't help depositors then bank runs at other banks are more likely. That hurts everyone, including yourself if the contagion gets really bad.

If helping depositors also ends up helping the bankers, we still have to do it.

In cases like this, people need to set aside moral outrage and look at what will actually happen.

greenthrow5• 3 years ago

I'm not arguing about FDIC insurance. Anyone who deposited beyond what was insured knew the risk they were taking.

plutonorm• 3 years ago

What is worse is we allow the mistakes to go unpunished - because then we will have more episodes like this down the line. If there are no consequences then the bad practise will continue. Anything that breaks away from the survival of the fittest is abdication of long term success in favour of short term stability. I don think that is a good trade for the system as a whole.

MrFoof• 3 years ago

We didn't bail them out.

Banks pay insurance premiums to the FDIC. These premiums create the reserve the FDIC uses to pay for these exact situations.

IG_Semmelweiss6• 3 years ago

agreed.

Bail out is bad. Takeover is good.

Failure of entity is bad. Failure of equityholders is good.

All we need here is a change in management and owners. The bank should live but without any assistance (bailout) from taxpayers beyond FDIC limits

icelancer4• 3 years ago

No. "SVB" is its shareholders. They are going to be wiped out. You are not bailing them out.

rvz• 3 years ago

Ask Stripe.

They are strangely quiet today.

kashnote• 3 years ago

They actually sent out an email about 2 hours ago:

Hello,

Silicon Valley Bank was taken over by the FDIC [0] today, Friday March 10th. We’re monitoring the situation closely and it saddens us to see the closure of a bank that partnered with many of you.

If you’re impacted by the SVB closure and need to open a new bank account, we are here to guide you through it.

Choosing a banking partner

- We’ve worked with startup-friendly banking partners like Mercury (mercury.com/partner/atlas) and Novo (novo.co/a/stripe-atlas) to get Stripe Atlas companies priority access to signing up.

- You can also choose to use any bank such as JP Morgan Chase, Bank of America, Wells Fargo, or PNC, and often your personal bank offers business services.

loopdoend• 3 years ago

Never mind

hedora12• 3 years ago

Wealthfront is running a banner at the top of their homepage advertising a savings account with a 4.05% APY + $2M of FDIC insurance.

JKCalhoun3• 3 years ago

Crazy. So now 4% is the new normal savings rate?

cm21874• 3 years ago

I wonder why they were not bailed in.

stuckkeys• 3 years ago

They fucked with the wrong people, that is why. I just hope this is not a chain reaction. 2008 all over again, but this time it is going to be extra juicy. Alot of shady stuff is going to be unveiled in the next few months.

nradov• 3 years ago

Why would they be bailed in? SVB is not systemically important. The FDIC will wind it up just like any other small failed bank.

cm21874• 3 years ago

200bn assets is a big bank. Lehman was 600bn and look what it caused.

ttul3• 3 years ago

It’s the second largest bank failure ever in the United States.

albert_e• 3 years ago

as opposed to being bailed OUT?

cm21874• 3 years ago

Well they are not being bailed out, they are being liquidated. A bail-in is the power given to regulators to write down debt holders to auto-recapitalise the bank so it can re-open healthy the following Monday. A sort of instanteneous, extra-judicial chapter 11.

paulpauper• 3 years ago

When Peter Thiel yesterday said to get out it probably made things worse by having to sell assets at worse prices. People got spooked.

twelve403• 3 years ago

its fate was sealed way before that and if Thiel instead advised everyone to stay with the bank it would have only prolonged the agony, with more people losing their money

g42gregory5• 3 years ago

Here is what I don't understand: How is this even possible? If SVB buys $100B worth of (10yr?) T-Bonds and MBS, this will immediately show up as an enormous interest rate risk position on their internal risk profile. The Bank's Risk Manager, CEO and Management Committee are supposed to look at these things every day and should have very specific guidelines on market risk exposure bounds. Regardless of what those guidelines were, presumably $100B worth of 10-yr unhedged fixed income instruments will be way out of those bounds. How was this missed? This is not some sophisticated high finance, this is basics. What on earth happened?

eclipticplane• 3 years ago

https://www.prnewswire.com/news-releases/svb-hires-kim-olson... - Jan 2023

The previous CRO resigned in April 2022.

g42gregory5• 3 years ago

Wow. I am guessing they discovered this mess in early 2022. The CRO bailed or was pushed out. They couldn't hire anyone qualified, once they've seen the balance sheet (or were refused to be shown the balance sheet, which would be a red flag). Tried to unwind the position throughout the 2022, but couldn't, with the rising interest rates.

IG_Semmelweiss6• 3 years ago

this is incredible.

As chief risk officer, going into a public company that goes bad not even 2 months after being hired -for strictly risk mismanagement, not fraud- tells you all you need to know about the competency of the person being hired.

EDIT: Sincerely curious about downvotes:

You are interviewing for a CTO job. As part of the process, you get unrestricted access to prod codebase. The stack/ libraries are something you are very familiar. You find out the software will be a critical component to make payments to people worldwide. Its a high profile project. You are the public face of the software that must go live very soon, no one can tell for sure, but its imminent.

Your (interview) prep finds a dumpster fire. There's no way this thing will even run. The entire thing is not salvageable.

Do you take the job ?

thewarpaint• 3 years ago

Source: https://fortune.com/2023/03/10/silicon-valley-bank-chief-ris...

unclesaamm• 3 years ago

Well, to answer one part of the question, the chief risk manager quit early last year and wasn't replaced until just over a month ago

AnimalMuppet• 3 years ago

Is it normal for a bank of that size to run without a chief risk manager for an entire year?

hoofhearted2• 3 years ago

https://twitter.com/jonwu_/status/1634250754486857729?s=46&t...

g42gregory5• 3 years ago

Well, the bet against raising interest rate is not the problem. It's the size of that bet that is the problem.

nostromo4• 3 years ago

What a total clusterfuck from so many VCs.

There was a moment where they could have mustered up a bridge loan to SVB, probably at very favorable terms, saved their companies and acquired some decent assets while they're at it.

Instead they DDOSed their own bank, tanked a large portion of their portfolio, and now are asking for a bailout.

It seems like the VCs should shore up their companies until SVB is wound down or take the losses. It's not like they don't have the capital.

JumpCrisscross2• 3 years ago

was a moment where they could have mustered up a bridge loan to SVB, probably at very favorable terms, saved their companies and acquired some decent assets while they're at it

One, they couldn’t. It’soutside their mandates; they’d have to raise new funds from LPs. Two, why? Just have your start-ups pull their capital and bank with the countless other banks providing the same services as SVB.

twelve403• 3 years ago

if a bank becomes so toxic that FDIC had to parachute in in the middle of the day (couldn't even wait til closing) and shut it down, how can this bank be saved with a bridge loan?

SVB “didn’t have nearly as much capital as an institution that risky should have had”

https://www.bloomberg.com/news/articles/2023-03-10/svb-spect...

blaming the customers for wanting to save their money and claiming as if they were the cause of the bank's recklessness seems really strange.

MrLeap• 3 years ago

If they had more capital, wouldn't that have made them _less risky_? Sounds like a tautology!

more_corn• 3 years ago

A bank run like this would collapse any bank in the world. I get what you’re saying. But it is literally the fault of the people panicked and withdrew their deposits. And doubly the fault of the people who advised them to do so.

nostromo4• 3 years ago

Thanks to many VCs asking all of their portfolio companies to withdraw at once, SVB had $42b in withdrawal requests on Thursday. On Friday there would have had many more billions if they hadn't ceased taking them.

I wonder if any US bank could muster up $100b in 24 hours.

(On most days with lots of withdrawals, like on common pay days, banks will see lots deposits too. They aren't one-directional and out of the blue.)

stickfigure• 3 years ago

It's not like they don't have the capital.

I'm not sure you have the right scale in mind. The shortfall associated with this bank may be into the tens of billions. That's a monstrous sum even for SoftBank.

TheOtherHobbes3• 3 years ago

SoftBank just keeps picking them.

IG_Semmelweiss6• 3 years ago

No. If you are familiar with LPAs (limited partnership agreements) some have severe restrictions on what types of investments they can make. Moreover, a lot work on committed capital, and have to therefore make capital calls to LPs that are not exactly the easiest at this time of overvalued holdings.

I can imagine how that conversation would pan out:

"Hello, Mr PIMCO Manager. Hi, we need 80% of your committed capital in less than 2 hours in order to bail out a failing bank in which we are not a shareholder or board member. Oh yes, I don't know how much we need, but its, like, a lot. Unfortunately, we don't have any collateral on this if FDIC takes over, but I'm working on it!

Oh yea, about those mark-to-market positions, can we talk about that later please? Can we count on your capital? "

testfoobar• 3 years ago

Which specific VCs told their clients to pull funds from SVB?

nostromo4• 3 years ago

Peter Thiel’s Founders Fund, Coatue Management, Union Square Ventures, Founder Collective, YC, and I’m sure many more.

eddsh19942• 3 years ago

One of the YC partners tweeted it

JKCalhoun3• 3 years ago

You seemed to have made it clear:

  bridge loan or bailout?

Hmmm, that's a tough one.

jacknews3• 3 years ago

This seems to me like a crisis caused by the fed, and their ill-advised focus on inflation.

JKCalhoun3• 3 years ago

I might believe that if all banks were failing.

jacknews3• 3 years ago

I have a bucket of popcorn for the coming week...

dmn3222• 3 years ago

It’s on purpose. They knew what they were doing

jacknews3• 3 years ago

https://www.nakedcapitalism.com/2023/03/silicon-valley-bank-...

"Christopher Whaler, Chairman of Whalen Global Advisors in New York, said: ‘I think the Fed badly miscalculated the impact of rising interest rates and so these are self-inflicted wounds and if we see more banks fail then the Fed is faced with a very tough situation which may force them to drop interest rates.’"

treebeard901• 3 years ago

An unexpected side effect of continued employment gains is that the employees expect to be paid... A series of bank failures puts payroll in doubt, and could quickly lock up the system with extreme inflation and a liquidity crisis.

More money will be created to bail out the banks which will cause more inflation and more inflation will mean higher rates to fight it, which could freeze credit more and draw down savings and so on, all of which leads to more job losses and liquidity problems. It's numerous things in a feedback loop and if the bank runs and failures continue to spread then it's going to put serious strain on a system that never fully recovered from 2008.

The reverse repo rates are kind of fascinating when you look at what happened around 2007 and where it is today.

Maybe SVB is an outlier and can be contained but another hidden issue is how much Fintech has worked its way into normal finance. There are many online only banks and companies like Chime and Cash app which could broaden a crash.

I really believe we are about to experience a financial crisis worse than anyone alive has experienced. It will be unique as well in that so many of these factors have never happened before or all simultaneously.

This also doesn't consider global reserve currency changes and ways for the world to conduct trade without the U.S. financial system being involved. All of this provided liquidity in the past, the safe haven effect and so on.

Or maybe a few banks will get bailed out and it will be no worse than the savings and loan crisis. The next few months should get interesting.

Oh and if that's not enough, there is the potential for Ukraine to do poorly in the summer and a potential conflict with China on the horizon. The U.S. could be in a two front war with near peer competitors at a debt to GDP ratio higher than at its highest point during WW2.

Quantitative easing kicked the bucket down the road but it seems to have been a band aid only making the disease worse in the long run.

ok_computer6• 3 years ago

(I hope this comment doesn’t age poorly.)

Lessons were learned following the 2008 financial crisis to sure up major banking risk exposure. Dodd Frank act was reversed a little but there are regulations and stress test simulations to improve banking system resilience if there is a cash or credit shortage. Who knows how valid some of the assumptions changes in these marginally higher interest rate times but we cannot be in pre-2008 credit swap nonsense.

SVB represents $200B assets and the customers are in large part revenue negative or growing startups. That doesn’t make it Ok but it cannot be representative of the greater economy. I’m sure fintech in personal banking, credit, and mortgages is far more popular than it was in the 2000’s but it by and large does not represent a majority or even large minority of retail banking.

My hope is there isn’t some sneaky financial engineering marvel in large corporate debt that this fringe instability snowballs and we find out we’re back in a state where the market is propped up by sketchy extrapolations of value estimates.

But I don’t think a bank run by a bunch of VCs or startups is a picture of the greater economic engine.

hedora12• 3 years ago

This bank was 40 years old. It’s leadership weren’t really just a bunch of startups.

I suspect your comment will age poorly. The solution to 2008 was to bail out failing institutions instead of letting them fail and be replaced with competent ones. If anything, since then, the institutions that created the 2008 crisis have consolidated market share, and gotten more and more regulations rolled back.

ranman• 3 years ago

SVB represents $200B assets and the customers are in large part revenue negative or growing startups. That doesn’t make it Ok but it cannot be representative of the greater economy.

There are ~1900 publicly traded companies with a market cap over $1B. (NAMER) There are over 1000 privately owned companies with valuations over $1B. (NAMER?)

Writing off startups as not contributing to the economy (jobs, spending with vendors, etc.) is a harder to argue in 2023 than it would have been in the past.

This very well could be the beginning of a stall in the greater economic engine. Except this time it isn't necessarily fueled by failure of the underlying assets. Instead the underlying assets may fail because of the banks. Which could cascade into additional failures across the system.

mdorazio• 3 years ago

So, how many put options have you purchased against the financial sector? If the answer is zero, I don't think you really believe it that much.

salawat• 3 years ago

The market can remain irrational longer than one can remain solvent and furthermore, this logic is either predatory; goading someone into doing something unwise; or altogether irrelevant (namely in that if one belieces the financial system is going to fall apart, why on Earth would you try to use the very system on whose destruction you're wagering to... Win?)

It's like talking to someone as a person with a gambling problem and dismissing them telling you the roulette ain't gonna help, and you replying Well, then bet on the roulette and make money.

I.e. you totally miss the God blessed point.

UncleOxidant• 3 years ago

I really believe we are about to experience a financial crisis worse than anyone alive has experienced... Or maybe a few banks will get bailed out and it will be no worse than the savings and loan crisis.

I think right now it looks more like the latter (S&L crisis of the late 80s/ early 90s) than it does the Great Recession '08. Wasn't a huge impact in the economy at large from the S&L debacle. It will have an impact on tech so that this might look kind of like the tech wreck of the early aughts - again, while that impacted those of us who were in tech at the time it had little effect outside of tech. If it were to start spreading outside of tech to other sectors then I'll reconsider.

HyperSane• 3 years ago

"I really believe we are about to experience a financial crisis worse than anyone alive has experienced."

Ugh, this is like evangelicals constantly predicting the return of Jesus.

ok_computer6• 3 years ago

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kordlessagain2• 3 years ago

A good asset to purchase during a banking meltdown would be something that would hold its value or increase in value. This could include things like gold, silver, or other precious metals.

dmfdmf2• 3 years ago

From the Article> Thankfully, loan books make up a much larger share of assets at most other institutions.

I got a laugh on this one. Sure... other banks are safe from loss of client deposits and a bad bet that interest rates won't rise. I'm not so sure that with rising interest rates and a shaky economy these institutions with large loan books won't see too many loan defaults. We are seeing a lot of commercial property defaults already in the big markets. Can't pay your mortgage if you can rent out your skyscapper.

hedora12• 3 years ago

People holding large fixed rate loans are extremely unlikely to refinance, and are likely to weather inflation and rising interest rates pretty well.

It’s almost as good as buying bonds! No one’s gone broke doing that, right?

dmfdmf2• 3 years ago

Perhaps I wasn't clear. With the rising inflation and interest rates and deteriorating economy people lose their jobs and can't pay their mortgage. My point, and why I thought the line was funny in that article, is that the way SVB failed isn't the only way that banks can fail. Moreover, Tech is currently in a massive round of layoffs and if this spreads to the general economy (which I think it will) then holding large loan balances could become a problem for the banks.

locusm• 3 years ago

What regulation was watered down that ultimately led to this?

Redoubts• 3 years ago

Basel III

https://www.ft.com/content/c95e7708-b903-405d-a017-963844eb3...

not_the_fda• 3 years ago

Loopholes in Basel III. Community banks have been arguing the rules don't apply to them.

https://www.ft.com/content/c95e7708-b903-405d-a017-963844eb3...

woeirua• 3 years ago

There’s definitely going to be some major fallout from this. I don’t think SVB will be bought, and depositors certainly are not going to be made whole anytime soon. Why?

Well check out SVBs most recent 10-Q. Everyone knows they had $90B in MBS but most people haven’t commented on the fact that they also had $70B in loans as part of their assets. Normally loans are considered pretty safe assets, but as others have commented a good part of these loans are to the same depositors (startups) that SVB owes money to. Additionally SVB lent money to founders to buy homes, cars, etc. Hopefully you can see where this is going now… The real question is going to be how much if any of those loans SVB can recover to cover their deposits. This could mean calling in all kinds of credit instruments from startups that are ill prepared to suddenly pay them back.

Unless the loans are forgiven, in addition to making the depositors whole, SVB will still take a whole bunch of startups down with it. Those companies vendors will feel the hit too. It may take some time for the full repercussions to be felt but this is going to be a big deal.

Also, for those of you who didn’t live through 2008, there were plenty of people who assured everyone that everything was OK right until the music stopped.

ericmay4• 3 years ago

Unless the loans are forgiven, in addition to making the depositors whole, SVB will still take a whole bunch of startups down with it.

This is fine. Healthy even. There are risks inherent with investing whether that’s a startup or otherwise and so letting them fail leads to better, safer, and more innovative business models that don’t rely on low interest rates and excess cash.

Ultimately SVB isn’t contagion because SVB unlike many other banks was heavily reliant on investments and securities that were highly exposed to interest rate increases. Shit happens. Businesses including banks and startups fail. World keeps spinning. Any argument for bailing out investors here is an equal argument for bailing out homeowners or any other person who was affected by high interest rates for any reason.

hedora12• 3 years ago

This isn’t a case of startups failing for being poorly run.

In some cases, the issue is literally (using small numbers to make it work for individuals), you have a steady job, $200K in the bank and owe $200K in loans, partially secured by the cash and partially by your income.

Tomorrow, the bank calls, and says “we spent your future paychecks and life savings, so we really need you to continue making payments on that loan”.

SkyPuncher4• 3 years ago

I don't think SVB is the keystone, but things simply don't feel correct right now.

* Inflation is unusually high right now

* The working/middle class is increasingly discontent.

* Rising interest rates are causing major follow on effects.

* Housing prices have been blowing up. Given increasing unemployment and interest rates, it's unclear what's going to happen there.

* The pandemic created insanity. Markets have made little sense over the past 3 years. They're just now returning to normal.

* Many, large companies are doing layoff. The market as a whole is signaling they don't expect profitability through revenue increase - so they're reducing burn.

-----

I have a hypothesis that markets are becoming increasingly optimize - which results in quicker returns, but also more frequent and harder drops/recessions.

vineyardmike4• 3 years ago

I think the issue is way worse than all this, and way harder to solve - we're basically on the edge of the roaring 20s. inflation is high because companies are increase profit margin, and companies are increasing margin because there isn't enough competition. Companies would never voluntarily lower profitability, and are rewarded for short term actions, incl. layoffs, which are gutting long term stability of these companies. People, businesses, governments are increasingly indebted compared to prior generations. Housing in productive cities is way below demands, while there's empty houses in Detroit and Cleveland. Even with remote work (which is being clawed back), this isn't stabilizing and there isn't enough housing (esp. affordably). It takes years before that much housing can be built, assuming we legalize it (YIMBY v NIMBY). We don't have a strong growing population without immigration so there is no future generation big enough in this economic Ponzi scheme.

The working class (with housing and all that) are screwed, while the rich get richer. Eventually there's no where left to turn for profitability though - and no more debt Wall Street can issue to keep the spending up. Then what?

7speter• 3 years ago

Unemployment is supposed to go up as interest rates go up. Not all downturns are as extreme as the great recession or the Great Depression

jonny_eh• 3 years ago

Given increasing unemployment

Hasn't the latest jobs reports shown that unemployment is decreasing?

https://www.cnn.com/2023/03/10/economy/february-jobs-report-...

icelancer4• 3 years ago

Savings and Loan Crisis had similar issues. Volcker raised interest rates extremely fast to combat inflation, which put a bunch of banks' assets during ZIRP underwater.

Regulations have controlled a lot of the serious problems back then, but there is no getting away from the fundamentals. Also, during QE, the Fed bought tons of overpriced MBS assets, and they're losing money right now for the first time in a long time. This doesn't really matter since they can't become insolvent; they just print money. But that has inflationary effects itself.

This is a much more complicated (probably worse) situation than most want to admit.

coffeebeqn• 3 years ago

This all really reflects on the fed strategy. They are raising interest until… something breaks. And things are now starting to break

unity1001• 3 years ago

Also, for those of you who didn’t live through 2008, there were plenty of people who assured everyone that everything was OK right until the music stopped

In the 2nd or 3rd week of the 2008 crash starting, they put on CNN this guy who predicted the entire crash years ago and wrote a book about it. And also 3-5 finance experts. All of them were laughing in the guy's face as the guy explained what was happening, why it was happening and what exactly was going to happen very soon. They were discrediting, belittling him and assuring the public how everything was totally okay. All of them were actual prominent personas in finance, with education, experience, credentials and whatnot.

Things happened exactly as the guy wrote in his book and explained on CNN. Everything came crashing down.

What's unforgettable is how all the actual experts with credentials were reassuring the public that everthing was ok SO hard to the point of laughing in the guy's face...

brandonmenc• 3 years ago

https://www.youtube.com/watch?v=1G0tfb8ZefA

jonnycoder• 3 years ago

If the talking heads on the news were told how to react, then it is logical that they maintain the perception that everything is ok. A lot of economic factors are controlled by perception since we are debt based economy. If everyone in the US wanted their money in cash or gold/silver, banks and the entire system would collapse because it is not there. And in 2020 the Fed removed the 10% reserve requirement so I don't see that fairing well.

spookybones• 3 years ago

Who is the guy?

Scoundreller3• 3 years ago

I don’t think SVB will be bought

FDIC will create a bank then. Just like it did for the (now) 3rd largest bank failure in history, IndyMac:

https://news.ycombinator.com/item?id=35105606

throwanem• 3 years ago

They did that yesterday. https://www.fdic.gov/resources/resolutions/bank-failures/fai...

WeylandYutani2• 3 years ago

At least only SV tech douchebags are hurt. I doubt America will shed a tear for them.

ravenstine• 3 years ago

We are beyond the point where the music will stop. In the last 15 years we have entered the full simulation. Short of a nuclear bomb going off on American soil, there is seemingly nothing that the upper class won't wish away with make-believe. When the class divide becomes great enough, the powerful can dictate reality. Something needs to tangibly get severely messed up for the emperor to admit he's not wearing clothes. Currency is not tangible enough, and there's plenty of room for people to escape with golden parachutes.

1vuio0pswjnm7• 3 years ago

The answer of course is nothing. But it's worth it to read the article to get to this gem of a final sentence.

"Larry Summers, a former treasury secretary, has said that so long as the state steps in, there is no reason to worry that svb will harm other parts of the financial system. Lots of people will be hoping that it does, and that he is right. fS"

Nevermind that no one outside of the "tech" company crowd cares what Larry Summers thinks, the sentence is cringingly ambiguous. What does "it" refer to: (a) the state stepping in or (b) SVB harming other parts of the financial system. Did ChatGPT produce this article.

Not only is there no need to worry about SVB harming other parts of the financial system, there is no need to read "articles" like this one. The amount of useful information is negligible.

synu• 3 years ago

What was the question for which the answer is no?

jcadam• 3 years ago

I've got some really bad news: Earlier today, Jim Cramer tweeted "JP Morgan is a fortress"

https://twitter.com/jimcramer/status/1634222320398086145?s=2...

smallnix• 3 years ago

What does that mean?

pharmakom2• 3 years ago

Inverse Cramer

hypothesis• 3 years ago

Apparently, he was recently hyping up SVB, the one that just went under.

remarkEon• 3 years ago

https://twitter.com/WatcherGuru/status/1634039856924860416

xg152• 3 years ago

I think that guy's financial advice is so legendarily bad that people are using him as a predictor of what will not happen. In this case, certain banks staying solvent...

https://mobile.twitter.com/CramerTracker

odiroot• 3 years ago

A crisis that will eclipse 2008.

DeathArrow• 3 years ago

Who cares about the financial system? What does it mean for the startup sector and companies that trusted SVB with their money?

And what if SVB is just the tip of the iceberg?

Maybe the governments should start better regulating and supervising the banksters and offer no bailouts using public money. Let the wrong doers be the only ones suffering from their mistakes.

philjohn• 3 years ago

I mean - if we have another widespread banking crisis, people will die - literally. When GDP falls, excess deaths go up.

rco8786• 3 years ago

And what if SVB is just the tip of the iceberg?
Who cares about the financial system?

Genuinely confused. We care about the financial system because “what if svb is just the tip of the iceberg”

jzellis• 3 years ago

Wait until spooked investors start looking at other banks and realizing how much they've sunk into agricultural mortgage backed assets, when half of American ag is facing the largest megadrought since the Byzantine Empire was a thing and the other half doesn't know what it's facing because tornadoes and floods knocked it ass over teakettle. Not to mention all the billions invested into property development in the Colorado River Basin. Ooops! Tee hee.

replwoacause• 3 years ago

My wife's employer banks with SVB. I'm still trying to understand the implications for her and her colleagues. It's hard to imagine they won't be affected.

rixrax• 3 years ago

Sort of related question, if you have a brokerage account in a bank that goes the way of the SVB, what happens to the securities account?

Will it get liquidated and you will then eventually be paid some cents on a dollar of your brokerage accounts value?

Simplicitas• 3 years ago

Maybe another reminder that we Americans really need the Glass-Steagall Act back.

What does Silicon Valley Bank’s collapse mean for the financial system?

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