SVB Failed! Silicon Valley Bank.

[CB750F]

Hold on to your hats boys & girls, this is the start of a wild ride.
2nd biggest US bank to fail.
18 biggest in world.

This will have devastating effect on the startup community. Lots of companies lost everything
& will have to close. Or maybe the Fed will rescue 'them' like they did other banks in 2009.
Best to all.

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[TJC]

The Fed is between a rock and a hard place. Save the banks and watch inflation shoot to the stars... or tamp down inflation with high interest rates, and watch a run on the "to big to fail" banks.

There gonna kick the can down the road again, only the road has a cliff... Thelma and Louise time!

Break out the popcorn! Here we go again!

 

[Trigganometry]

FDIC only insure to 250K after that you eat it. Many with millions deposited are in for some awfully bad news.

Honestly, if we ran our own homes finances like this we would go belly up and no one would give a damn.

Bailouts only allow it to happen again because they know they will get that. At some point you throw your hands up and say, oh well, better luck next time.

 

[JesseS]

SVB is a relatively small commercial bank with only 212B in assets. It invested mostly in crypto currency and suffered a lot from the FTX crash. Add in the hike in interest rates that has made its 0% bonds purchase go negative and its no big surprise. JPM Chase is also losing money on the bond drop but has much larger reserves to carry it. Many large companies have withdrawn funds to invest in growth rather than borrow due to interest rates, this has reduced SVB's reserves to the point of failure. (meaning they only have enough reserve left to cover deposits)

 

[AzScorpion]

SVB is a relatively small commercial bank with only 212B in assets. It invested mostly in crypto currency and suffered a lot from the FTX crash. Add in the hike in interest rates that has made its 0% bonds purchase go negative and its no big surprise. JPM Chase is also losing money on the bond drop but has much larger reserves to carry it. Many large companies have withdrawn funds to invest in growth rather than borrow due to interest rates, this has reduced SVB's reserves to the point of failure. (meaning they only have enough reserve left to cover deposits)

You're right it was all because they were heavily invested in Crypto and nothing to do with the economy.

Anyone who's still invested in bonds deserve to lose because you should've learned your lesson by now. All these bond traders care about is making a profit from YOUR money and most have nothing to lose of their own.

This is nothing like what had happened back in '08 as those were all banks who were doing sub prime loans. Geez take a deep breath and go for a ride the sky isn't falling!

 

[TJC]

On paper you are correct (actually if it is a joint account it doubles to $500K). But the FDIC only funds to cover 1.3% of the insured deposits on file. This is below the 1.35% required by law. They can save a bank or two, but not a full scale run like that which occurred in the 1930's. At least not without printing a whole lot of dollars! A LOT of dollars!

People who lost everything in the bank runs of the 1930's got 10 cents on the dollar years later, and the government finally managed to pay off that 10% to the last of those depositors in late 1955.

Your government at work for you!

 

[AzScorpion]

FDIC only insure to 250K after that you eat it. Many with millions deposited are in for some awfully bad news.

Honestly, if we ran our own homes finances like this we would go belly up and no one would give a damn.

Bailouts only allow it to happen again because they know they will get that. At some point you throw your hands up and say, oh well, better luck next time.

FDIC is up to $500K with a joint account holder.

https://www.fdic.gov/resources/deposit-insurance/brochures/insured-deposits/

The balance of a joint account can exceed $250,000 and still be fully insured. For example, if the same two co-owners jointly own both a $350,000 CD and a $150,000 savings account at the same insured bank, the two accounts would be added together and insured up to $500,000, providing up to $250,000 in insurance coverage for each co-owner. This example assumes that the two co-owners have no other joint accounts at the bank.

 

[dtech]

FDIC only insure to 250K after that you eat it. Many with millions deposited are in for some awfully bad news.

Honestly, if we ran our own homes finances like this we would go belly up and no one would give a damn.

Bailouts only allow it to happen again because they know they will get that. At some point you throw your hands up and say, oh well, better luck next time.

All I can say is reach into the distant past for a quote "read my lips no new taxes" deficit then was a mere $1.5 T

Link to chart showing deficit growth by POTUS , I find it informative.

https://www.usatoday.com/money/blueprint/banking/national-debt-by-president/

 

[TJC]

I don't think Cryptos played a role in the SVP failure. They were trapped in Fixed Rate Bonds as the Fed kept raising interest rates. Read on...

Why did SVB's stock price crash?
There are two reasons – both tied to the Federal Reserve's aggressive interest-rate hikes as it bids to crush soaring inflation in the US.

The Fed's tightening campaign weighed on SVB's bond holdings, and it disclosed a $1.8 billion loss Thursday after completing a $21 billion fire sale of its fixed-income portfolio. The company tried and failed to raise $2.3 billion through stock sales to cover those losses.

In addition, startups find it more difficult to access funding with borrowings turning costlier – and that's fueled a high level of deposit outflows from SVB, analysts say. This sparked fears of a bank run, prompting several of the SVB's clients to limit their exposure to the institution.

SVB's "unique niche in the tech world is a real boon when that business is booming, but a problem when it's not," Interactive Brokers chief strategist Steve Sosnick said.

 

[Trigganometry]

All I can say is reach into the distant past for a quote "read my lips no new taxes" deficit then was a mere $1.5 T

Link to chart showing deficit growth by POTUS , I find it informative.

https://www.usatoday.com/money/blueprint/banking/national-debt-by-president/

I got to laugh looking at that and then thinking back to each instance and the other factors that played into the amounts shown. What’s really missing there is the GDP as a result of the administration’s policies. I’ll use the Reagan years, Russia imploded because of the space race and the military’s big investments making up for years of neglect. Real GDP grew over one-third during Reagan's presidency, an over $2 trillion increase. The compound annual growth rate of GDP was 3.6% during Reagan's eight years, compared to 2.7% during the preceding eight years.

 

[dtech]

I got to laugh looking at that and then thinking back to each instance and the other factors that played into the amounts shown. What’s really missing there is the GDP as a result of the administration’s policies. I’ll use the Reagan years, Russia imploded because of the space race and the military’s big investments making up for years of neglect. Real GDP grew over one-third during Reagan's presidency, an over $2 trillion increase. The compound annual growth rate of GDP was 3.6% during Reagan's eight years, compared to 2.7% during the preceding eight years.

Hmm, my memory is fading can't seem to recall today the source of another quote "deficits don't matter" . Not trying to broker an arguement , but will say I agree with your comment about household finances and leave it at that.

Somewhat disappointed though that EVs haven't been blamed for any of this fiscal stuff.

 

[AzScorpion]

I don't think Cryptos played a role in the SVP failure.

They were trapped in Fixed Rate Bonds as the Fed kept raising interest rates. Read on...

Why did SVB's stock price crash?
There are two reasons – both tied to the Federal Reserve's aggressive interest-rate hikes as it bids to crush soaring inflation in the US.

The Fed's tightening campaign weighed on SVB's bond holdings, and it disclosed a $1.8 billion loss Thursday after completing a $21 billion fire sale of its fixed-income portfolio. The company tried and failed to raise $2.3 billion through stock sales to cover those losses.

In addition, startups find it more difficult to access funding with borrowings turning costlier – and that's fueled a high level of deposit outflows from SVB, analysts say. This sparked fears of a bank run, prompting several of the SVB's clients to limit their exposure to the institution.

SVB's "unique niche in the tech world is a real boon when that business is booming, but a problem when it's not," Interactive Brokers chief strategist Steve Sosnick said.

It was a combination of several things but crypto and them being heavily invested in start ups were major roles. They were trying to corner the crypto market along with Silvergate Bank and failed.

https://www.coindesk.com/markets/20...ty-markets-ahead-of-nonfarm-payrolls-release/

"Silicon Valley Bank (SIVB), another crypto-friendly bank, comes under pressure. The bank is generally regarded as one of the default fallback options for industry participants impacted by the collapse of Silvergate. Operation Chokepoint 2.0 continues tightening its grip," Ilan Solot, co-head of digital assets at Marex, said in an email, referring to Silvergate Bank, a crypto bank that is closing down, and to a government crackdown in 2013 on banks that did business with the gun sellers.

https://seekingalpha.com/news/36740...vest-in-cryptocurrency-infrastructure-startup

• Bank of New York Mellon (BK +1.8%) and an SVB Financial (SIVB +1.2%) unit invest in Fireblocks, a firm that provides cryptocurrency infrastructure to banks and fintechs, as part of the startup's $133M series C funding round.

https://www.fool.com/investing/2021/02/26/silicon-valley-banks-stake-in-coinbase-could-be-wo/

Silicon Valley Bank (SIVB -60.41%), which caters heavily to the start-up community, has already cashed in on several high-profile tech IPOs over the last year such as BigCommerce Holdings and Root.

Now, it looks like it's about to hit again on the upcoming direct listing of Coinbase, the largest cryptocurrency exchange in the U.S.

First reported by the news website CoinDesk, Silicon Valley Bank in 2014 inked a deal with Coinbase to provide banking services to the exchange.

 

[AzureRanger]

You're right it was all because they were heavily invested in Crypto and nothing to do with the economy.

Anyone who's still invested in bonds deserve to lose because you should've learned your lesson by now. All these bond traders care about is making a profit from YOUR money and most have nothing to lose of their own.

This is nothing like what had happened back in '08 as those were all banks who were doing sub prime loans. Geez take a deep breath and go for a ride the sky isn't falling!

You only lose money in bonds if you don't hold them to maturity (like I do). A Treasury ladder has been a great way to put excess cash to work and take advantage of rising interest rates.

 

[CB750F]

It's a canary in a coal mine . Time will tell.

 

[AzScorpion]

You only lose money in bonds if you don't hold them to maturity (like I do). A Treasury ladder has been a great way to put excess cash to work and take advantage of rising interest rates.

Yes but right now is the worst time to be holding bonds. These higher rates are going to kill the bond market as we're now seeing. Right now the T bills are paying 5.25% for short terms so it's a good place to park money short term.

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