[Chick Webb]

Originally Posted by dradernh

The gist of it is that SVB suffered a bank run.

This was for two reasons: 1) it was paying too-low rates on deposits, having placed a substantial portion of those deposits in low-rate, long-dated US Treasuries and mortgage bonds BEFORE the Fed started inexorably raising rates; and, 2) the bank's depositors were heavily skewed towards Silicon Valley startup founders who wanted their deposits back, either to get higher returns elsewhere or to deal with business issues in an economy no longer as enamored of tech startups as it recently was (esp. from mid-2020 to early 2022).

Essentially correct, though when that piece referred to "the bank's clients" they were referring primarily to companies (many of them startups, some more established) and not individuals. Companies that, in some cases, had hundreds of millions of dollars in SVB and took _all_ of it out at once. To give you some sense of how big these accounts were, it's estimated that over 80% of the deposits at SVB were uninsured (over the $250k/entity FDIC limit), and totaled over $150 Billion. With a B, yeah. SVB was so desperate to raise cash that they sold $2.3B of Treasuries for $500M earlier this week. It clearly wasn't enough.

Many of those companies that did jump ship did so on the advice of their VC backers, who got spooked by some things that Peter Thiel (one of the most famous and successful VCs) said about SVB earlier in the week. VCs are herd animals and spook easily, and of course their clients listen very closely to them (or else), so when one of them panicked and ran, they all did.

Some companies were left holding the (empty) bag, as it were, and did not get their money out before the FDIC swooped in and shut SVB down. Several were pretty big firms. Roku, for example, announced today that 28% of their cash, about $500M, was in SVB. (Stock fell 5% on the news. Ouch!) The small companies that got locked out are likely to be in trouble, since many had all of their operating capital in that one bank. I personally know somebody who was told that his company is unlikely to be able to make their payroll next week because they don't have access to their funds at SVB. There will likely be a lot of stories along those lines, and I expect we'll see some companies fold as a result of this, too.

Depositors will likely get their money, eventually, but that could be painful for a lot of them. Shareholders and bond holders are likely wiped out. (SVB traded at $300 or so recently. OUCH!) And, while SVB was a very unique institution, it'll be interesting to see if anybody else catches this "corporate covid". The way some of the bank stocks went today (including Schwab) clearly there are some that think they will. Everyone keeps saying that this isn't 2008 and the banks are much stronger thanks to Dodd-Frank. I guess we'll see soon. In the meantime, collecting 4% on those 2-years seems like a good way to ride this one out.

[dradernh]

Originally Posted by Chick Webb

Essentially correct, though when that piece referred to "the bank's clients" they were referring primarily to companies (many of them startups, some more established) and not individuals. Companies that, in some cases, had hundreds of millions of dollars in SVB and took _all_ of it out at once. To give you some sense of how big these accounts were, it's estimated that over 80% of the deposits at SVB were uninsured (over the $250k/entity FDIC limit), and totaled over $150 Billion. With a B, yeah. SVB was so desperate to raise cash that they sold $2.3B of Treasuries for $500M earlier this week. It clearly wasn't enough.

Many of those companies that did jump ship did so on the advice of their VC backers, who got spooked by some things that Peter Thiel (one of the most famous and successful VCs) said about SVB earlier in the week. VCs are herd animals and spook easily, and of course their clients listen very closely to them (or else), so when one of them panicked and ran, they all did.

Some companies were left holding the (empty) bag, as it were, and did not get their money out before the FDIC swooped in and shut SVB down. Several were pretty big firms. Roku, for example, announced today that 28% of their cash, about $500M, was in SVB. (Stock fell 5% on the news. Ouch!) The small companies that got locked out are likely to be in trouble, since many had all of their operating capital in that one bank. I personally know somebody who was told that his company is unlikely to be able to make their payroll next week because they don't have access to their funds at SVB. There will likely be a lot of stories along those lines, and I expect we'll see some companies fold as a result of this, too.

Depositors will likely get their money, eventually, but that could be painful for a lot of them. Shareholders and bond holders are likely wiped out. (SVB traded at $300 or so recently. OUCH!) And, while SVB was a very unique institution, it'll be interesting to see if anybody else catches this "corporate covid". The way some of the bank stocks went today (including Schwab) clearly there are some that think they will. Everyone keeps saying that this isn't 2008 and the banks are much stronger thanks to Dodd-Frank. I guess we'll see soon. In the meantime, collecting 4% on those 2-years seems like a good way to ride this one out.

Thanks for fleshing that out so well. At $185 billion or so in deposits, I'd assumed that most of it belonged to companies. I wouldn't think individuals and families with seven or more figures to place would choose a bank unless it was very short-term and for convenience. That's above my pay grade, though.

[chassis]

Toughest investing period since 2008...

I am a long term bull, but it would be nice if the market did some of the work for us!

[Choptop]

Made my 1st ever, as a retail investor, into the stock market, 2 years ago after buying GME and AMC. Millions of us have watched the manipulation by market makers, hedge funds, shadiness by the CEO and constant looking away by the SEC and other agencies that are suppose to watch out for us. Now we are looking at a vote on a reverse split, loosing 90% of our shares and thus helping out the hedge funds which have amassed possibly billions of synthetic shares, by the reverse split. I could not sell if I wanted to because of the price of the stocks now and the money I would loose. Hopefully I can at least, at some point, get out and break even but I am not holding my breath.

[Chick Webb]

Originally Posted by Choptop

Made my 1st ever, as a retail investor, into the stock market, 2 years ago after buying GME and AMC.

Having won and lost many times over the years, I feel your pain. But, with all due respect, buying meme stocks on the basis of social media hype created by pump-and-dump hucksters, the modern equivalent of the boiler rooms of the past, is not "investing". You were gambling when you took those positions and playing against a crooked house, no less. Unless you were incredibly lucky there was almost no way to win. Lesson learned, one hopes.

More on the topic at hand, this morning I read that USDC, a so-called stable coin (speaking of scams), broke their $1 USD peg and is trading around $0.87, in large part because they announced that a substantial portion of the funds they rely on to maintain that peg (~ $3.3 Billion) is locked up in SVB's vaults (so to speak). I wouldn't be surprised to see a bum rush for the door in USDC over the weekend. Since crypto trades 24x7 this one may evaporate before the sun rises Monday.

BTC, which everyone had been praising for demonstrating the "stability" of the crypto space and had recently been trading at about $25k, dropped to $20k yesterday. Down 20% over the span of a couple of weeks doesn't look so stable to me. Full disclosure, I do own BTC and ETH - because it's cryto, ya gotta have some, 'cuz who knows? - but it's a very small amount of my portfolio. It'll be interesting to see what happens in the less-than-fully-transparent crypto and private banking worlds over the next weeks.

[ASAP]

bill ackman is advocating for a government bailout of depositors lmao... get ready to socialize some losses if this happens... and here we go again

[antzcrashing]

Originally Posted by Tyga11

I was down 40% last year but I'm up around 20% this year...so what are we proving? I'm still down 20%.

You are learning what works and what doesn’t work in investing. Somethings will not work. Also, you are learning (I hope) that your time spent investing is valuable i.e. there is a cost to active personal management of your portfolio.

Also,
You tell me what you are learning

[antzcrashing]

Originally Posted by ASAP

bill ackman is advocating for a government bailout of depositors lmao... get ready to socialize some losses if this happens... and here we go again

The bailout will be for the banks, including silicon valley bank. These banks support our tech industry which is too big to fail.

[ASAP]

my understanding is that SVB overall was a relatively conservative institution not really doing anything wrong... timing just worked out REALLY poorly for them... now imagine a bank that isn't too responsible

[antzcrashing]

Originally Posted by ASAP

my understanding is that SVB overall was a relatively conservative institution not really doing anything wrong... timing just worked out REALLY poorly for them... now imagine a bank that isn't too responsible

SBF was very wreckless. He will likely be able to avoid life in jail, but that doesn’t make what he did right.

I hope others will second think investing into those type businesses in the future

[ASAP]

Originally Posted by antzcrashing

SBF was very wreckless. He will likely be able to avoid life in jail, but that doesn’t make what he did right.

I hope others will second think investing into those type businesses in the future

I am referring to Silicon Valley Bank...

Sam Bankman Fried is a straight up sheister

[RickFLM4]

Originally Posted by ASAP

bill ackman is advocating for a government bailout of depositors lmao... get ready to socialize some losses if this happens... and here we go again

He’s not the only one. The irony pointed out is pretty remarkable. VCs have a lot to lose if their portfolio companies still have uninsured funds on deposit. Should be an incentive to figure out a solution this weekend. They have extensive connections to sources of capital and banks. Hopefully something more constructive is proposed than just having gov’t bear the entire burden.

Investors implore the government to step in after Silicon Valley Bank failure

https://www.cnbc.com/2023/03/11/sili...ment-aid.html?

[ASAP]

Originally Posted by RickFLM4

He’s not the only one. The irony pointed out is pretty remarkable. VCs have a lot to lose if their portfolio companies still have uninsured funds on deposit. Should be an incentive to figure out a solution this weekend. They have extensive connections to sources of capital and banks. Hopefully something more constructive is proposed than just having gov’t bear the entire burden.

Investors implore the government to step in after Silicon Valley Bank failure

https://www.cnbc.com/2023/03/11/sili...ment-aid.html?

this is slowly us seeing who has been swimming naked... the managent of the last 10 yrs w low rates was an absolute tragedy

[antzcrashing]

Originally Posted by RickFLM4

He’s not the only one. The irony pointed out is pretty remarkable. VCs have a lot to lose if their portfolio companies still have uninsured funds on deposit. Should be an incentive to figure out a solution this weekend. They have extensive connections to sources of capital and banks. Hopefully something more constructive is proposed than just having gov’t bear the entire burden.

Investors implore the government to step in after Silicon Valley Bank failure

https://www.cnbc.com/2023/03/11/sili...ment-aid.html?

Bill ackman is not going to get his way under Dem run govt, nor under split govt, nor under conservative govt. He is making an ironic comment, but it is a half joke

[dangerus_car]

it's bad management, but then it's all JPow doing and SVB executives bad risk management. it's not like SBF reckless action. SVB bought long term bond that had low interests. Fed keeps rising interests rate and they didn't sell early to cut loss, then it came back as liquidity issue.

always sell early to cut loss than bag holding later

[2000cs]

Originally Posted by dangerus_car

it's bad management, but then it's all JPow doing and SVB executives bad risk management. it's not like SBF reckless action. SVB bought long term bond that had low interests. Fed keeps rising interests rate and they didn't sell early to cut loss, then it came back as liquidity issue.

always sell early to cut loss than bag holding later

Buying long bonds against deposits was a mistake. The durations were vastly mismatched. Had they bought short-term treasuries, the yield would have been lower but they would have liquidated them at near face value and the crisis might have been averted. But there were other issues.

[NickyC]

All going according to plan. The temporary raising of interest rates was always a complete joke, this is a failing economy backed by a dying dollar, with a soon to be 50 trillion in debt within the next 10 years. The banks were failing in early 2020 after 12 years of QE and theft from the American taxpayer, so they developed the Convid scam to syphon what was left of the middle/lower classes to keep the party going for the rich just a few more years. Convid was the most massive transfer of wealth to the rich in the history of mankind, and to this day so few people still see it for what it really was. While they tried to get us to hate one another for not following ridiculous lock down measures, or wearing a face diaper, or taking a worthless MNRA clot shot, they worked silently in the back to steal from us all. There is no Republican vs. Democrat, there is only the rich vs. the poor. The same as it's always been.

This is a forced crisis, just as in 2008 when the Fed didn't bail out Lehman/Bear in order to rape the middle class/poor through QE. The Fed is the banks, the banks are the Fed, it's a revolving door where they enrich themselves and systematically destroy everyone else. The ultimate product now is an entire generation of young Americans with $100k in student loan debt, no chance of ever owning a home, forced to pay $2000 a month in rent for a one bedroom apartment, and little to no opportunity to advance as the generation before them is forced to work well past average retirement age due to massive Fed caused inflation.

The bail out is coming, that wicked bitch Yellen can talk about saving depositors and no bailouts this morning all she wants, but anyone with half a brain knows where this is going. More printed fake money, more shafting of the middle and lower classes, more inflation, and an increasing pace towards a system where there is no middle class and power/money are in the hands of a very few (in other words, how it has been for nearly all of human history).

We will own nothing and we will love it.

[RickFLM4]

Originally Posted by antzcrashing

Bill ackman is not going to get his way under Dem run govt, nor under split govt, nor under conservative govt. He is making an ironic comment, but it is a half joke

I don’t think he is joking at all.

[Choptop]

Originally Posted by antzcrashing

The bailout will be for the banks, including silicon valley bank. These banks support our tech industry which is too big to fail.

The old white haired lady, Yellen, said yesterday that they would not bail out the Silicon Valley bank, but that was yesterday...

[ASAP]

depositors shouldn't in theory be bailed out... everyone knows the fdic 250k limits... cmon lets be real here... it sucks but this is reality

[ASAP]

Originally Posted by Choptop

The old white haired lady, Yellen, said yesterday that they would not bail out the Silicon Valley bank, but that was yesterday...

i wouldn't trust the old white haired lady w washing my car... she was the first one to say inflation was transitiory... then it somehow was sticky, then its ongoing lol

[Choptop]

Well I am learning, learning not to listen to my son. Lol Bought a 32' older Carver boat two years ago, because I had a couple of dollars, he was going to share cost w/me, never came up w/money, everyone was afraid to pilot the big girl, luckily sold it last fall, just before winter storage cost, lost some money but it could have been a lot worse. I will continue to hold my GME/AMC, don't have any choice, and probably bail when I get close to even or it runs up, I think I know which will happen first. LOL