No Federal Bailout for SVB, Says US. Bank Had Weakened Regulations, Paid Bonuses (apnews.com) 189
Today U.S. Treasury Secretary Janet Yellen said Silicon Valley Bank would not be bailed out by the federal government. But the government is working on helping depositors, Yellen said on the CBS News show Face the Nation.
The Associated Press reports that deposits insured by the federal government are supposed to be available by Monday morning... 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] 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...."
Silicon Valley Bank is the nation's 16th-largest bank. It was the second biggest bank failure in U.S. history after the collapse of Washington Mutual in 2008. The bank served mostly technology workers and venture capital-backed companies, including some of the industry's best-known brands.... Yellen said she expected regulators to consider "a wide range of available options," including the acquisition of Silicon Valley Bank by another institution. So far, however, no buyer has stepped forward.
CNBC reports that just hours before regulators seized the failing bank — employees were paid their annual bonuses, "according to people with knowledge of the payments."
And the Intercept reports that earlier the bank had successfully lobbied for the rollback of protective rules established in the wake of the 2008 financial crisis. "The lobbying effort managed to exempt banks the size of Silicon Valley Bank from more stringent regulations, including stress tests aimed at uncovering the type of weaknesses that led to the bank's implosion Friday."
But the Washington Post reported that as dramatic as the seizure is, "one thing it doesn't seem likely to do — at least for now — is trigger a wider financial meltdown, banking experts said." Unlike the giant banks that ignited a global crisis in 2008, SVB was heavily dependent upon a single risky sector of the economy for both its depositors and its customers. That concentrated bet proved to be very bad news for the ambitious start-ups that dominate the high-technology world. But it means that the tech-friendly bank lacked the sophisticated financial entanglements with other institutions that can turn one bank's losses into a threat to the entire industry.
The Associated Press reports that deposits insured by the federal government are supposed to be available by Monday morning... 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] 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...."
Silicon Valley Bank is the nation's 16th-largest bank. It was the second biggest bank failure in U.S. history after the collapse of Washington Mutual in 2008. The bank served mostly technology workers and venture capital-backed companies, including some of the industry's best-known brands.... Yellen said she expected regulators to consider "a wide range of available options," including the acquisition of Silicon Valley Bank by another institution. So far, however, no buyer has stepped forward.
CNBC reports that just hours before regulators seized the failing bank — employees were paid their annual bonuses, "according to people with knowledge of the payments."
And the Intercept reports that earlier the bank had successfully lobbied for the rollback of protective rules established in the wake of the 2008 financial crisis. "The lobbying effort managed to exempt banks the size of Silicon Valley Bank from more stringent regulations, including stress tests aimed at uncovering the type of weaknesses that led to the bank's implosion Friday."
But the Washington Post reported that as dramatic as the seizure is, "one thing it doesn't seem likely to do — at least for now — is trigger a wider financial meltdown, banking experts said." Unlike the giant banks that ignited a global crisis in 2008, SVB was heavily dependent upon a single risky sector of the economy for both its depositors and its customers. That concentrated bet proved to be very bad news for the ambitious start-ups that dominate the high-technology world. But it means that the tech-friendly bank lacked the sophisticated financial entanglements with other institutions that can turn one bank's losses into a threat to the entire industry.
Good (Score:4, Insightful)
Should've done this back in 2008.
They couldn't (Score:3, Informative)
The only way around that would be to nationalize the banking system completely, and nobody has an appetite for that.
Re: (Score:3, Insightful)
Don't worry. We just shake them down for what they have and we'll salvage the economy.
Remember: Money is never gone. It just is with someone else. You have to find that someone and crack open the Pinata.
Re:They couldn't (Score:4, Insightful)
Remember: Money is never gone. It just is with someone else. You have to find that someone and crack open the Pinata.
What happened in 2008 was that the banks mixed low risk investments with high risk ones and presented them as good quality. They did so in such a way that it was almost impossible for an investor to understand what they were buying. So when some of the high risk loans collapsed they dragged down some higher risk ones and the whole lot snowballed. Some of those who did the risk mixing (deliberate muddling) got away with it having sold the securities to investors who believed their inflated valuations.
This is why strong regulations are needed. This is why banks do not like them as it makes it harder for them to hoodwink investors.
Re:They couldn't (Score:5, Insightful)
And, this is why the Consumer Financial Protection Bureau (CFPB) needs to be able to act nimbly to stop new cons by Goldman Sachs and other "too big to fail" banks of their ilk.
Re: They couldn't (Score:2)
If you can't understand what you're buying, you shouldn't be buying it.
Re: They couldn't (Score:2)
That's not true. Money is created when issuing loans and disappears on default.
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Nope. What a loan creates is a debt. What a default destroys is that debt. But money, it ain't.
I loan you 1000 bucks and want 1100 back. Did this create money? Nope. I am down 1000 bucks, you're up 1000. I have a claim for 1100, you have a debt of 1100. That's worth zilch until you either pay it back or until you declare that you cannot. In the first case I get 1100 money from you.
So that 100 get created there? Nope. Not even that. Those 100 were created when you somehow managed to sell goods and services.
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Yes it does, but it takes a few steps
Person A puts 1000 in an account the bank lends out 900 to person B who buys something from person C who puts $900 in the account, bank lends 810 to person D and so on. But person A has $1000 and person D has $900 and so on just at that stage you started with $1000 but the total people think they have is $1900, Tada money created.
For a sum to infinity at a 10% reserve you get a 10 times increase in the money supply.
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Remember: Money is never gone. It just is with someone else. You have to find that someone and crack open the Pinata.
This isn't true in many instances. Perhaps the most important way is for asset valuations. Money is money, but assets have whatever values the "market" assigns. Asset values aren't money, but they're often treated like money and often have economic effects similar to real money. Asset value "money" can magically appear for no substantial reason and can disappear on the same whims of the market.
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I have this $object. I bought it for 10 bucks. The going price now is 100 and you buy it from me. Suddenly nobody wants it anymore and it costs 10 bucks again. You desperately need money and you sell it back to me for 10 bucks.
Please tell me how the change in the price has created or destroyed any money. Yes, I'm 90 bucks richer and you're 90 bucks poorer, but all the money did was to change hands.
Re: They couldn't (Score:2)
Right.
Now suppose the value drops to $1. Further suppose nobody wants to buy it, ever. The price never rises again. That money is gone.
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If nobody wants to buy something, its value is zero. And that money isn't gone. It's by the person I originally bought it from for 10 bucks.
Re:They couldn't (Score:5, Interesting)
if they had the entire global economy would have collapsed.
That turned out to be a lie. The Wall Street Journal did quite a bit of investigative reporting on the topic, and found that the banking system would have survived without too much difficulty. That is, the proposed mechanisms for contagion throughout the banking system were not critical.
So we didn't need to give money to banks. (This wasn't obvious immediately though).
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Well, it was obvious to many people. Considering that the bankers have the politicians in their pockets they got the bailout they wanted regardless.
Given how pissed off many of us were at the time, it seems the government may have learned from that mistake.
That is, until the new round of political donations start rolling in.
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>"Given how pissed off many of us were at the time, it seems the government may have learned from that mistake."
I am not so sure.
>"That is, until the new round of political donations start rolling in."
The best way to prevent the abuse of such power is to limit and constrain it and push it closer to the citizens.
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Given how pissed off many of us were at the time, it seems the government may have learned from that mistake.
Unfortunately the lesson has only been learned by today's politicians; it will be forgotten in 30 years time. Politicians in 2060 & beyond will be seduced by the banks into rolling back regulations [[ insert all manner of supposed benefits with no mention of down-side ]], this will set the scene for another meltdown a few years later.
The 2008 crash was caused by the lessons of the 1930 depression [wikipedia.org] having been forgotten leading to the financial big bang of the 1980s [wikipedia.org].
Rinse, repeat.
Re: They couldn't (Score:2, Interesting)
I'm not worried about the banking system (Score:3)
Bottom line, we're in a hostage situation.
Re: I'm not worried about the banking system (Score:2)
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Sell the bankers for spare parts. Only gotta do one or two, rest assured the rest suddenly figures out where they can get a couple billions to save their hide.
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those Ghouls take care of themselves. I'm worried about the *massive* layoffs that would follow in the wake of the 2008 crash if we "let 'er rip". Bottom line, we're in a hostage situation.
When Norway was in a banking crisis around 1990, the banks that didn't stay solvent was taken over by the government and then resold. The owners lost their money, the customers kept theirs.
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That turned out to be a lie.
Not at all. While the WSJ may have concluded that the system itself would endure, the reality was even *with* the bailout the effect on the local (and related global western economies) was already huge and would have far far worse without the bailout.
The problems in the USA not only lead to USA based bank bailouts, but stimulus to various economies around the globe as the world suffered through the biggest global economic depression since World War II. The bailouts were not about making sure the banks survi
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Sure, if they had done nothing, the system would have collapsed. But what they could have done instead of what they did is just declare all CDO/CDS invalid financial instruments, no different than if two guys had bet on the economy collapsing. People who bet on the downside are welcome to try and collect in a court of law from whatever bank officer signed the agreement, but the financial institution is entirely off the hook. Sure, lots of pissed off people who thought they could get a payday betting agai
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has a long history of causing more problems than it supposedly solves.
More problems for who? What kinds of problems?
Re: They couldn't (Score:4, Insightful)
By far the worst affected is the consumer, and for all of the same reasons that monopolies tend to be bad for consumers. When you nationalize anything, you're essentially handing it over to the government, and granting the government a monopoly.
Rsilvergun is enamored with this idea because he's a literal socialist. Like all socialists, he thinks government run monopolies are full of rainbows and gumdrop smiles. Point out to him that literally every socialist economy ever has had a continually declining GDP until the entire population is destitute, then he'll handwave that by pointing at Nordic countries, who themselves get annoyed when idiots like him call them socialist, because surprise, they're not at all socialist, and unlike him, they well know what socialism looks like because they shared a border with actual socialism for 80 years, witnessing first hand just how poor and stupid they all were, and they want nothing to do with it.
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Point out to him that literally every socialist economy ever has had a continually declining GDP until the entire population is destitute
Would you consider China as a socialist economy? Their GDP has been on the growth side for a while.
I feel like rsilvergun and you are both talking about extremist views (one says "let's nationalize the banking system completely!", and the other says "nationalizing anything at all is bad!").
Re: They couldn't (Score:4, Insightful)
Would you consider China as a socialist economy? Their GDP has been on the growth side for a while.
I know most people consider this to be evil, but I routinely entertain the ideologies of all stripes, including the ones that I highly detest. This is exactly why I tend to (but not necessarily) know a lot more about socialism, communism, and fascism than the adherents of all of them. Nonetheless, this is all my opinion.
Having said that, the best label I could apply to China is in fact fascism. Both in terms of their government structure and their economy. People often struggle over the question of whether Nazi Germany was capitalist or socialist, and the answer is...neither...and for the exact same reason as China. Just like Nazi Germany, socialists like to call them state capitalist, and capitalists like to call them socialist. But neither shoe really fits. Socialism is nearly universally defined as having two traits: The means of production is owned by the government, and the economy is entirely centrally planned. This does not describe China. It's neither a free market structure, nor is it entirely planned, nor is the means of production in the exclusive domain of the government. In one sense it is free market in that anybody can set up shop however they choose within the law. On the other hand, the government can take it over at a whim and just restructure it to however the politicians demand, and anybody who objects might just suddenly take a permanent vacation one day. Or if the government simply decides that any given business, or even an entire industry, is somehow bad, destructive to humanity, etc, they can just shut the whole thing down. The only well defined economic system that I've ever run across that has all of these traits is in fact fascism.
Now keep in mind that fascism has two components: Government structure and economic structure. We've only talked about the latter here. Though I think anybody would find it hard to disagree that China's government structure very closely resembles fascism in all but name. Interestingly, a lot of socialists hold fascist views without realizing it. A lot of times you'll hear them talk about certain industries that "ought to be banned". Listen to the way Bernie talks about space flight for example. Though I wouldn't go as far as to call him a fascist, as the shoe doesn't fit in a lot of other ways. Bernie likes to hide it because he knows it's unpopular, but the guy clearly has ambitions about having an entirely planned economy. There was a time when he was very open about it in the past, and IMO he only hides it now because even among his own crowd it's a bit unpopular. He's just an all out socialist. And the biggest reason he wouldn't fit in the fascist shoe is because, in what is IMO his ideal world of having a fully planned economy, there basically can't be any industry that the government hasn't explicitly set up, and therefore approves of. The green new deal, which he is a backer of, is itself a veiled attempt at moving towards a planned economy, its proponents have even admitted as much.
Though both fascism and socialism being highly collectivist ideologies (collectivist being the diametric opposite of individualist) they're bound to have some overlap.
The problem that I have with both is that they're both highly undemocratic, and they're both inflexible to change. We've already seen that trait within China. Nazi Germany also had a growing GDP. Theoretically you can have democratic socialism, but I've yet to see that actually happen. They've only ever claimed it on paper. Venezuela, North Korea, and Cuba all claim to be democracies for example. But are they really?
Re: (Score:3)
If you measure everything by the bottom line, that's all you will get. You will notice, though, that countries and municipalities generally have other things than simple profit as their main goal. Or, rather, they factor in other effects that, in the end, mean better service or even more profit when you look at the big picture. Allow me to give you an example.
Our capital here runs their public transport system as their own service, nationalized. On a purely profit-based view, it's horrible. Lots of lines ar
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I was sent to Switzerland many years ago on a business trip and was put up in a tiny hotel 20 minutes away from the conference centre, which was no problem as the buses ran almost 24 hours a day every 10 minutes.
Good public transport makes life better for everyone.
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^^ +1
So many people think that centralized control will "fix" things, when what it does is almost always make things worse. It also very convenient for lobbyists and other cronies to target and take over this single target. Far removed from their State constituents and entrenched in multiple-decade seats , these politicians have no clue what is actually going on. This is exactly why the Founders designed and meant for the Federal government to be SMALL and WEAK.
Had we not "bailed out" banks the last time
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Just look at the real estate bubble that's been created as a result of the government effectively owning about 70% of the mortgage market in the US as a result of nationalizing (they call it conservatorship) Freddie Mac and Fannie Mae. And the government has used that power to effectively prime the pump for another real estate explosive decompression.
But in the interim, Uncle Sam is benefiting from the profits generated by their monopoly position in guaranteeing home loans.
Re: Good (Score:2)
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You do know that their wealth is pretty much tied to the country's continued existence, yes?
SVB executives also dumped their stocks ahead of t (Score:5, Insightful)
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a company that had $1,750,000.00 in an account at SVB that they do payroll from, might have some difficulty next week. automated transfers are certain going to be rejected if communication to SVB's system can even be established. printed and signed paychecks will bounce, now. FDIC coverage is done via a government check or transfer, not via SVB itself, though it will have to be done based on data and verification of records from SVB.
bankruptcy court can "claw back" money that the bank paid out up to a ye
Re:SVB executives also dumped their stocks ahead o (Score:5, Informative)
I practice bankruptcy law, but this is not legal advice. If you want advice, pay my retainer.
generally speaking, clawbacks aren't going to apply to contemporaneous payments.
On top of that, even if payroll *were* clawed back, it would hand each employee a "priority" claim of up to $15,150 for wages in the last 180 days before filing, so the "recovered" money would go straight back to them (except maybe for *really* high wages).
"preferential payments" (more than the creditor would have received in bankruptcy) in the 90 days before filing on outstanding unsecured debt can be recovered by the trustee, and other transactions can be unwound--but that means in *both* directions.
And for two years (longer in some states), "fraudulent conveyances" can be unwound--transactions where the debtor received less than market value for giving up assets (including cash) while insolvent.
The last is likely useless here, as the bank apparently didn't go insolvent until the run. (it's not a clear cut answer, given that mark to market isn't daily, but the effects of that interest rate change on the value of the bonds it was holding to sell if needed was well known).
hawk, esq.
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I have a married couple of friends who work in software at two different companies, each of which had money at SVB, and it's questionable if the companies will be operating on Monday.
Re:SVB executives also dumped their stocks ahead o (Score:5, Interesting)
Tucker Carlson and his social-media clones have been going hard for bailouts the past few days. There's an article under his name on the Fox News website now, warning us about "1929-style bank runs" and doing a sad, weird tapdance to the effect of "I know I've sat here for years shitting on California, bankers, and tech companies, but today I will tell you we just have to bail them out, so that the money can trickle down to the common man."
Not a word about the bank's executives, of course.
Re: (Score:3)
not false narrative.
My startup is still scrambling. If we can't get that $250k, we won't make payroll.
I have a friend who's startup just closed shop, told everybody they don't know if they'll have a job next week.
This is a real problem.
The heart of the problem, however, should be placed at the hands of the VCs who yelled "fire" in a crowded theater.
Like SVB's tactics or not, they had a plan, and it was viable.
You could also argue that they were undercut by the Fed itself, who shouldn't be competing with ban
And feds accept no responsibility, again? (Score:2)
This quote:
"The lobbying effort managed to exempt banks the size of Silicon Valley Bank from more stringent regulations, including stress tests aimed at uncovering the type of weaknesses that led to the bank's implosion Friday."
tells me that the feds had to agree to this lobbying, despite the risks, and should carry some responsibility as well. Am I missing something?
Re: (Score:3, Insightful)
Why? Anyone rich enough to be hurt by this knew the risks of having more than FDIC-insured limits at any one bank.
Re: And feds accept no responsibility, again? (Score:3)
The people who will be hurt by this are not rich, they are the tens of thousands of rank and file employees who work for the thousands of startups who can not pay their salaries next week if the Fed does not restore access to *their money* - not SVBs money, the money they had in the bank to pay their staff. 250K will not cover payroll for 100 people in a startup.
Re: And feds accept no responsibility, again? (Score:5, Insightful)
The people who will be hurt by this are not rich, they are the tens of thousands of rank and file employees who work for the thousands of startups who can not pay their salaries next week if the Fed does not restore access to *their money* - not SVBs money, the money they had in the bank to pay their staff. 250K will not cover payroll for 100 people in a startup.
The corollary to that is those thousands of startups exist in an environment that is extremely unhealthy, facilitated by institutions like SVB, so that venture capitalists can get richer by convincing tech workers to live in a casino atmosphere. Virtually all of these companies would be able to make payroll if they had staffed one accountant charged with splitting their money up among a few different institutions and having alternate lines of credit set up in case of emergency. They didn't, because the Silicon Valley culture is "fast and lean". And lets not pretend that if you work for a startup you don't know the score there. Those are gambling jobs, with hopes of hitting it rich. A rapid collapse was always a possibility, every person in a job like that should be prepared for it if they're responsible.
Allowing this to run its course would introduce some much needed rigor into Silicon Valley. Yes, people will be impacted. Startups will go under (most of them would have anyway, regardless). But... frankly the Fed's desire is to for people to be impacted like this, that's literally what they're trying to do by raising rates. The horror at the tech sector bloodbath has been mildly amusing, because it seems to be mostly surprise that the "wrong people" are being impacted. There seemed to be an expectation that factory workers and farmers in "flyover" country would get wiped out again, like they have over and over again in the last century. But when it's wealthy VCs and white collar workers on the coast all of a sudden it's a crisis.
Re: And feds accept no responsibility, again? (Score:2)
Your point? There are plenty of banks that insure more than the FDIC. There is even one that will insure 3mil by splitting the funds across standard accounts. There are plenty of ways to do this, any simple accountant can come up with a solution. 4 FDIC accounts is plenty for a small business.
Sorry, if you are running your business this poorly, you should let someone else step in its place.
Re: And feds accept no responsibility, again? (Score:2)
You have lost the plot.
Re: And feds accept no responsibility, again? (Score:2)
Payroll is the highest obligation in any kind of bankruptcy; everyone else stands behind them in the queue which ends with general shareholders. This is why Fry's Electronics literally closed doors overnight; the reviewer got the itch that total assets may not cover payroll... he stopped the bleeding overnight.
Those start ups can't just stop compensating their employees for the work already done because there is no funds in the bank account. They can petition the bankruptcy court for priority on the salary
Roku had 26% of their cash reserves in the bank (Score:5, Insightful)
The problem is the Trump administration repealed the Dodd Frank regulations. We were warned, but we didn't listen. Too busy laughing at funny Orange Man and worrying about "woke" and "CRT" and drag queens and unsexy M&Ms and whatever other culture war nonsense is being peddled this week. Not to mention Her Emails...
As the saying goes, Elections have consequences. In this case you're probably going to bail out those depositors because if you don't it'll trigger a massive run on banks and you'll lose your job in the crash (just like Jerome Powell wants...).
The time to stop this is *before* it happens. Afterwards you're just fucked. Like those folks in East Palestine.
Wrong (Score:2, Interesting)
The problem is the Trump administration repealed the Dodd Frank regulations.
Dodd-Frank was not repealed [brookings.edu].
It's OK, around here we typically expect liberals to get anything related to financial matters backwards, so your confusion is expected.
As the saying goes, Elections have consequences.
Indeed they do! We elected Biden, now we have bank runs and failures.
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Indeed they do! We elected Biden, now we have bank runs and failures.
POTUS doesn't have that much power, and their effects are delayed. IE this is something that was set into motion during Trump's term or earlier.
Given that Democrats don't tend to weaken bank robustness regulations...
If a Dem had been in the Whitehouse (Score:2)
Re:If a Dem had been in the Whitehouse (Score:5, Insightful)
Indeed. So it was regulations repealed during Trump's term, with Trump's approval, that arguably enabled this bank's failure.
You're lying by omission (Score:4, Informative)
Well, I mean, you're either lying or you fell for it. But I think you're lying. You're clearly too tuned into politics not to have noticed.
The fact that this right-wing troll got modded +5 (Score:3)
And yes technically Dodd Frank wasn't repealed they just passed laws that eliminated all the regulations. Saying Dodd-Frank wasn't repealed would be like pointing at a skeleton and calling it a weight lifter. Maybe before all the muscle was taken away that might have been true.
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SVB's business model was to provide loans to startups, and one of the conditions of the loan was that you had to do your business banking with them.
Need to pay your employees? The payroll money is in an SVB account. Get a big order from a customer? Their payment is going into your SVB account. The money to cover all your operational expenses? Again, it's in that SVB account.
The FDIC insured limit is nothing for the people who use SVB.
Re: And feds accept no responsibility, again? (Score:2)
Well that does suck but most of that money should be recoverable without a bailout. SVB's bond holdings can't be down more than maybe 20% in a forced sale.
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SVB's bond holdings can't be down more than maybe 20% in a forced sale.
SVB sold its bond holdings [axios.com] trying to raise cash and took a $1.8 billion loss.
SVB bonds, ones for the company itself, were getting 31 cents to the dollar [marketwatch.com] on Friday.
Re: And feds accept no responsibility, again? (Score:2)
Banks aren't really allowed to force customers to put additional funds beyond FDIC limits; unless they insure them (why we have CDs). People could have filled up that account and put the rest somewhere else. Ones that were part of Depositors Insurance Fund.
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This quote:
"The lobbying effort managed to exempt banks the size of Silicon Valley Bank from more stringent regulations, including stress tests aimed at uncovering the type of weaknesses that led to the bank's implosion Friday."
tells me that the feds had to agree to this lobbying, despite the risks, and should carry some responsibility as well. Am I missing something?
Well... Congress (bipartisan) and the Trump administration: Trump signs the biggest rollback of bank rules since the financial crisis [cnbc.com]
Rumor is (Score:5, Interesting)
Peter Thiel got scared and his withdrawal caused the bank run and ultimate collapse. Or he had prior knowledge. https://news.yahoo.com/peter-t... [yahoo.com]
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Peter Thiel got scared and his withdrawal caused the bank run and ultimate collapse. Or he had prior knowledge. https://news.yahoo.com/peter-t... [yahoo.com]
I'd be scared too if the bank was doing what they were doing. The hint is: any large customer withdrawing shouldn't have a material impact on the bank if their balance sheet is in order. It wasn't. SVB was sunk primary by some very flaky bonds, not by Thiel pulling out.
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Peter Thiel got scared and his withdrawal caused the bank run and ultimate collapse. Or he had prior knowledge.
Apparently Thiel was using SVB to deliver chunks of cash to startups in various funding rounds - things which require weeks of setup and where timing of delivery of access to the money is important. In the days leading up to this, SVB had some glitches performing its tasks in one (or more) such operation. This was not good for Theil's business, so he moved this part of his operation elsewhere -
That's Old News (Score:4, Interesting)
Janet Yellen said Silicon Valley Bank would not be bailed out by the federal government.
WAPO is claiming they are considering bailing out SVB accounts [twitter.com].
So which do you think is true? That the government will not cover for one of the biggest group of political donors ever? Or that they will do what they have always done, use taxpayer money to bail out banks?
Re:That's Old News (Score:4, Informative)
Janet Yellen said Silicon Valley Bank would not be bailed out by the federal government.
WAPO is claiming they are considering bailing out SVB accounts.
So which do you think is true?
The two are not mutually exclusive. Clarifications have already come out: She claims to be letting the execs, employees, stockholders, investors, and the corporation itself take the medicine with no government help beyond what's statutorily required, but may consider extra bailouts for the depositors.
Re:That's Old News (Score:4, Informative)
All Debts Will Be Forgiven. LOL! (Score:2)
Forget SVB (Score:2)
In a few months, the story won't be SVB.
SVB was a top 20 bank in the US, and the regulators said it was doing just fine. The problems at SVB are probably in your bank too - you just don't know it yet. Well, back up a bit. SVB did special things that your bank probably does not do - startup loans. That fuse is probably not the fuse that will blow up your bank.
But you can be reasonably sure that your bank is full of the same gunpowder that SVB was full of. So if your bank has some fuse - any fuse - it mi
Save the account holders and let the managers fail (Score:2)
It's all changed now. (Score:2)
The government announced today that all the depositors would get every cent of their money back. They also said that this would not cost taxpayers anything, but the details of this are a little vague as they usually are with this administration. The remaining question is: What will the consequences be for the bank's managers? They were cashing out in the weeks before the failure, so they all knew what was happening. Perhaps some jail time for these guys (and banning them from the finance business in the
Re: (Score:2, Insightful)
"But we are concerned about depositors, and we're focused on trying to meet their needs...."
"We're going to ignore FDIC limits and tap into the inexhaustible wealth of the American taxpayer."
Of course they will. These people who lost money are powerful elites and corporations. Those people deserve help. Those poor people with student loans don't. /sigh
Re:Translation (Score:5, Insightful)
>"Those poor people with student loans"
Well, no. Those are people who voluntarily took out debt to pay for schooling. They didn't have to. There are many options. And they should pay it back, just like most of US did. Just like the companies who lost money in SVB should deal with it themselves. Next time, maybe they will think more carefully about the risks.
Stop taking tons of money from the responsible people, continuously, to pay for the poor life choices of others. Freedom requires responsibility. What money is taken should be used to better inform people of the choices they have, and the possible consequences of those choices, and prevent corruption.
Re: (Score:2, Troll)
Stop taking tons of money from the responsible people, continuously, to pay for the poor life choices of others.
So then you agree all those people [twitter.com] who had their PPP loans wiped out took money from responsible people (i.e. the U.S. taxpayer). As the House Judiciary GOP said, "If you take out a loan you pay it back. Period." [twitter.com]
Re: (Score:2)
Stop taking tons of money from the responsible people, continuously, to pay for the poor life choices of others.
So then you agree all those people [twitter.com] who had their PPP loans wiped out took money from responsible people (i.e. the U.S. taxpayer). As the House Judiciary GOP said, "If you take out a loan you pay it back. Period." [twitter.com]
PPP "loans" were just a clawback scheme to hide unemployment at a time when there would have been massive layoffs due to a pandemic completely altering the landscape of human buying behavior. To be fair our unemployment system couldn't even deal with the unemployed wave that did try to claim benefits, much less the larger number of people hidden by the PPP payments. In return for keeping those people on the books the government gave companies extra money to cover some operations expenses, upgrades, or any
Re: (Score:3)
Well, no. Those are people who voluntarily took out debt to pay for schooling. They didn't have to. There are many options. And they should pay it back, just like most of US did. Just like the companies who lost money in SVB should deal with it themselves. Next time, maybe they will think more carefully about the risks.
Stop taking tons of money from the responsible people, continuously, to pay for the poor life choices of others. Freedom requires responsibility. What money is taken should be used to better
Re: (Score:2)
>"Who is it that you are talking to?"
Ug, that is the second time today my reply was to the wrong post, on the same article. I actually think something went haywire on Slashdot's code.
Was in reply to: https://news.slashdot.org/comm... [slashdot.org]
Re: Translation (Score:3)
Re: (Score:3)
But really that’s nothing, there are a slew of tech companies who are all going to collapse if they can’t get
Re: (Score:2)
Re:They may have to (Score:5, Interesting)
The one thing this should trigger is a repeal of the repealed regulations that let this bank get into such a situation.
Do you know why this bank's going down? (Score:5, Insightful)
That's all it took. 1/21th of it's capital freaked VCs out so much they crashed the entire bank.
The people in charge of our economy aren't smart, they're wealthy and well connected. They panic easily, and with Powell constantly talking about layoffs and planning another interest rate hike they're easily frightened. And we're all likely to get caught in the stamped of those obese elephants what runs our economy...
As for putting those regulations back in place, not a chance. Not with the GOP in charge of the House & Manchin/Sinema in the Senate. Change how you vote or we'll have a depression next.
Re: They may have to (Score:2)
Google First National Bank of California.
Re: (Score:2)
Sorry, it looks like I accidentally replied to your post. It was meant to be to rsilvergun's (which is who I quoted): https://news.slashdot.org/comm... [slashdot.org]
I will re-post it correctly.
Re: (Score:2, Interesting)
It's all part of Trump's 4D chess game. He relaxes rules for banks then lets greedy Democrat states bankrupt themselves.
Let me guess this will now be labelled a Republican bank or Republicans made us do it, hahahahhahahahahhah.
California is about as Blue as it gets and it ate shit under blue leadership. OWN IT.
--
www.fuck.com/off
You're actually not that far off (Score:2, Troll)
We've been doing it since Reagan when we allowed Stock Buybacks.
Re: (Score:2)
since this could start a broader run on banks.
No, it won't and no they don't. As the poster above said:
Stop taking tons of money from the responsible people, continuously, to pay for the poor life choices of others.
SVB made poor choices in its investments. The people who have accounts with SVB made poor choices by having all their money in one place. The ONLY obligation to the depositors is the $250,000 guaranteed by the FDIC. Aside from that these people are owed nothing.
You are correct about the con ar
Re: (Score:2)
>"Now, another solution would be to take that money away, spreading it out it more evenly so that it's no longer a measure of raw power, but folks get antsy when you suggest that."
That always seems to be your proposed solution- Socialism. More government power and control and influence, especially centralized. As if that entity can manage everything better and with less corruption and waste. I don't buy it.
Re: (Score:2)
since this could start a broader run on banks
Nah, only stupid people would run on their banks due to a very isolated failure in one, and stupid don't have much money so can't do much damage.
Re: Maybe risk mgmt exec should focus on the bank (Score:2)
Cause it's IMPOSSIBLE to do both? I mean the other members of the board must have spent time with their families and should have been doing their job instead.
Re: (Score:2)
As long as the job responsibilities don't suffer.
Given the results, something suffered.
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From the CEO's bio.
You might want to start there when condemning someone for having t
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It's not impossible to do both, but it can be very hard to do both significantly without negatively impacting one or the other.
That's why the accusation is improperly "prioritizing", not "solely working for".
If she was, for example, giving LGBT groups a couple points off their risk assessment, so that SVB would be lending more to LGBT owned businesses... Even if done "informally" by maybe not rating this or that risk factor as heavily as she should.
Note: It doesn't matter WHO she benefited this way, wheth
Re: Maybe risk mgmt exec should focus on the bank (Score:4, Insightful)
This was a bank run.
There's no indication there was anything wrong with their loan portfolio. It was just too illiquid to handle the cash draw. like all loan portfolios. See: It's a Wonderful Life.
Re: (Score:3, Interesting)
The CEO of SVB, Greb Becker, exercised his stock options then sold the stock for $2.7 million [marketwatch.com] leading up to SVB's collapse. Funny how you didn't mention that tidbit.
Re: (Score:3)
The CEO of SVB, Greb Becker, exercised his stock options then sold the stock for $2.7 million leading up to SVB's collapse. Funny how you didn't mention that tidbit.
Apparently that transfer was set up long ago, while SVB was solvent right up to this week - and perhaps even at the time of the run (though not liquid enough to survive that big a run).
Stock options are part of high executive's pay - often most, or even all, of it. Idea is that they automatically get paid more when the company is doing well for
Re: (Score:3)
For all you and I know, they did the risk assessment job well, and the CEO and others (in particular whoever was in charge of capital management) failed to act.
The assumption in your post: based on this list of external factors, they did not.
I'm guessing you know what we call assumptions based on factors unrelated to actual job performance [wikipedia.org].
Oh, and that daily mail article that quotes "a Twitter user" like they're some kind of expert is complete garbage.
Re: (Score:2)
There's a critical difference though:
FTX collapses, everybody loses basically everything.
SVB collapses, depositors are like 90% likely to get 90% of their money (eventually).
And the good regulators are the ones you never see. Or were you like, working in SVB's compliance departments such that you'd actually see them?