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Arsenic Lupin posted:https://twitter.com/torrenegra/status/1634573234187407369 quote:1:30 PM: SVB is a solid bank. I know their CEO, Greg Becker. Great guy. I figure this is a temporary issue caused mainly by people panicking. They'll recover. I buy shares of SVB at what I consider significantly low prices. quote:~8:00 AM: Learn that SVB is now controlled by the government. The shares I bought the day before are now likely worthless. I made a mistake. 🚀📈🌕👶
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Mar 12, 2023 19:33
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StumblyWumbly posted:Why did the depositors do it. Why did some VCs require the startups keep money with SVB. Based on a bunch of tweets, depositors did it partly because they couldn't get anyone else to lend them money to start their disruptive business, or they got better terms from SVB on loans, or their investors made them do it, or SVB itself strongly encouraged them to: https://twitter.com/girdley/status/1634634172290457600 https://twitter.com/girdley/status/1634635729157382146 I've never had >$250k so I don't know what exactly was stopping startups from opening accounts elsewhere (other than SVB refusing to transfer funds out to other banks, if that's even legal). As for VCs, I guess managers aren't using their own money and didn't care enough, and investors either didn't know or were just regular stupid.
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Mar 12, 2023 19:36
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You forgot  Anyway... https://twitter.com/JStein_WaPo/status/1634985507427057665 But, and this is exactly what the FDIC was intended to prevent, there are now being runs on other "regional" (don't know the legal definition of this, if there is one) banks. FRB is one. e: eXXon posted:I've never had >$250k so I don't know what exactly was stopping startups from opening accounts elsewhere (other than SVB refusing to transfer funds out to other banks, if that's even legal). As for VCs, I guess managers aren't using their own money and didn't care enough, and investors either didn't know or were just regular stupid. Arsenic Lupin fucked around with this message at 19:44 on Mar 12, 2023 |
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Mar 12, 2023 19:40
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Arsenic Lupin posted:When you (you a corporation, not you a person) have tens of millions, parcelling them out into individual 250K deposits is nearly impossible. Perhaps, although apparently that hadn't stopped Giannis Antetokounmpo opening 50+ 250k accounts. I just don't understand what incentives a bank could offer a company with multiple millions in deposits to keep everything there as opposed to at least a handful of other accounts.
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Mar 12, 2023 19:56
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Arsenic Lupin posted:e: In some other thread I learned about insured cash sweeps which apparently would have solved this problem specifically and both SVB and their customers seemed to not know about
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Mar 12, 2023 19:57
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roffles posted:In some other thread I learned about insured cash sweeps which apparently would have solved this problem specifically and both SVB and their customers seemed to not know about Cooooool.
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Mar 12, 2023 20:07
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If SVB was in relative good health, and Peter Thiel started a bank run just for shits and giggles, that's gotta be illegal? I mean, lol at Thiel ever ever serving time, but there has to be a law on the books somewhere about this
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Mar 12, 2023 20:15
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Boba Pearl posted:First time I've talked about this more then bitching in a couple of discords, but I don't actually understand what's going on. I was locked out of my account Friday and found out I was laid off at the end of the day for <company> I can't withdraw my personal funds from SVB where I had an account, my manager isn't taking my calls, and I'm starting to get the feeling that I'm not going to get my severance. I'll get the money out of my account because of insurance, so I'm not super worried about that, but can someone explain what actually happened that would cause a company to fold or panic like that? I'm not a finance person, so I can't really even formulate the questions to learn what I need to know. Is it possible this isn't related to that? I work in San Francisco, but I don't want to give too many details. roffles posted:In some other thread I learned about insured cash sweeps which apparently would have solved this problem specifically and both SVB and their customers seemed to not know about E: ^^^ There should be a line somewhere. On the one hand, you can't make it illegal to say "I think this bank may have problems", but on the other hand it seems shady to control or influence so much money that you can just yank the rug out from under a bank. The punishment may end up being that folks just don't want to bank with VC money because it can all catch fire like this. StumblyWumbly fucked around with this message at 20:26 on Mar 12, 2023 |
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Mar 12, 2023 20:17
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eXXon posted:Perhaps, although apparently that hadn't stopped Giannis Antetokounmpo opening 50+ 250k accounts. I just don't understand what incentives a bank could offer a company with multiple millions in deposits to keep everything there as opposed to at least a handful of other accounts.
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Mar 12, 2023 20:24
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Arsenic Lupin posted:Threats. Your VC may require you to use SVB, SVB may require you to keep all your money there as a condition of dealing with you at all. This is why our company used SVB. Payroll ended up clearing yesterday, but we're all holding our breath to figure out what happens next. Hopefully my next paycheck goes through. Hopefully I still have a job by then. I have a decent job (technician at a hardware startup), and I have savings to tide me over for at least a few months, so I'm in a better spot than a lot of people. But I just signed a 1-year lease on a place with bay area rent, and I have alimony payments to make, so that money will be gone pretty quick if poo poo really hits the fan.
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Mar 12, 2023 20:37
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Shrecknet posted:fractional reserves This is not how fractional reserve banking works.
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Mar 12, 2023 21:04
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Boba Pearl posted:e: I don't normally post in DND because politics posting is exhausting, so if this isn't the right thread to learn from that lmk and I'll piss off. No worries, you're good. No one here can give you financial advice in the strict sense of it, but this would the most helpful thread that we should have for chatting about SVB.
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Mar 12, 2023 21:16
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Arsenic Lupin posted:Cooooool. Even simpler: quote:For the industry overall, the episode is likely to cast a long shadow. It’s been 868 days since a bank last failed in the US, close to the longest stretch on record. In the meantime, consumers have become inured to the risk, evidenced by the growth of uninsured deposits, including in digital wallets. https://www.netinterest.co/p/the-demise-of-silicon-valley-bank
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Mar 12, 2023 21:26
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For others working for companies who apparently had a lot of their finances tied up in SVB, I can recommend the latest episode of Pivot.. Put my mind a bit more at ease in terms of, does the bank get liquidated Vs deposits handled by someone else. Roughly 5 million people in the US alone work in tech, and SVB was the bank of choice for a large number of smaller tech firms. I know everyone's got big tech in their crosshairs at the moment, but they're also v nervous about Chinese tech firms like TikTok coming in & overrunning the US sector. SVB, gently caress it, they're toast. But I would be shocked if the government would let the US tech sector suffer a blow like this as it would open the floodgates to Chinese firms. It's not like it will just be, gently caress it, tech firms are on their own. Someone will come along who wants to be the next SVB, likely one of the big boys, and will work with the government to put something in place. There are too many knock-on effects to tech getting clobbered, it's not just wifi-connected juicers, it's boring poo poo like payroll software, accounting software, cloud infrastructure etc that almost all businesses rely on.
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Mar 12, 2023 21:56
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Nissin Cup Nudist posted:If SVB was in relative good health, and Peter Thiel started a bank run just for shits and giggles, that's gotta be illegal? I mean, lol at Thiel ever ever serving time, but there has to be a law on the books somewhere about this Why should a person or business not have the right to pull their money from a bank at any time, regardless of reason?
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Mar 12, 2023 22:08
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Mister Facetious posted:Why should a person or business not have the right to pull their money from a bank at any time, regardless of reason?
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Mar 12, 2023 22:12
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Mister Facetious posted:Why should a person or business not have the right to pull their money from a bank at any time, regardless of reason? That wasn't the question. It was more along the lines of "yelling fire in a crowded theater".
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Mar 12, 2023 22:12
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Mister Facetious posted:Why should a person or business not have the right to pull their money from a bank at any time, regardless of reason? Being Peter Theil is a pretty good reason.
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Mar 12, 2023 22:14
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It's not illegal to cause a bank run, even if he can be linked to it. It's just a strong reason not to do business with him but there will always be frogs lining up to take him across the river.
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Mar 12, 2023 22:15
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It's his money, not the bank's.
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Mar 12, 2023 22:16
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Isn't the "yell fire in crowded theater" exception a well-known misunderstanding of 1st Amendment protections? There's this recent video, but every once in a while an American lawyer will get het up about it. https://www.youtube.com/watch?v=jTsPgiUoBKA
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Mar 12, 2023 22:17
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Morrow posted:It's not illegal to cause a bank run, even if he can be linked to it. It's just a strong reason not to do business with him but there will always be frogs lining up to take him across the river. I hope SEC checks if he did some shorting of the stock simultaneous to that, though...
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Mar 12, 2023 22:28
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Motronic posted:That wasn't the question. It was more along the lines of "yelling fire in a crowded theater". The chain of events goes: - SVB announces it sold a bunch of stuff at a loss and was going to try to issue new stock to get more liquid cash - VC firms see that as a bad sign, think the bank is risky, and advise companies they own to bank elsewhere - Enough companies actually do withdraw their money to push SVB from maybe-fixable-problems to completely on fire
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Mar 12, 2023 22:29
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Foxfire_ posted:The theater was actually on fire though, or at least smoldering. This analogy isn't going to carry out. But no, it's not like that at all. A panic was fomented. Don't worry, nobody will be held to account so the entire argument is moot.
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Mar 12, 2023 22:35
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If theres actually a fire in the crowded theater then you can yell fire cant you? SVB doesnt seem to have been in good health at all
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Mar 12, 2023 22:36
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Can't wait to see the people who are fighting tooth and nail against student loan forgiveness to be the loudest ones demanding SVB get saved from the very problem its leadership actively lobbied to enable (student loans should be forgiven and SVB should be nationalized).eXXon posted:Perhaps, although apparently that hadn't stopped Giannis Antetokounmpo opening 50+ 250k accounts. I just don't understand what incentives a bank could offer a company with multiple millions in deposits to keep everything there as opposed to at least a handful of other accounts. There's no real reason to have millions of dollars in cash on hand as a regular person. Like, even billionaires only usually have immediate access to a few million dollars in short order and even those are usually stocks or other things they can immediately liquidate, not a Scrooge McDuck vault of cash. Giannis is just weird unless that bank is giving them some crazy interest rates (unlikely) that beats out extremely safe investments. Plus, managing 50+ bank accounts sounds like a special kind of hell. Sure, they probably (hopefully) have an accountant doing the work for them but goddamn.
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Mar 12, 2023 22:41
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I don't think we have much reason to think there were shenanigans except for the fact that Thiel was involved, but there is the potential for this being essentially a pump and dump. Folks coordinating the withdrawal of, what, 60% of the money in a bank? That would kill any bank's share prices, even if it doesn't cause a default. I think it would be almost impossible to prove, but smart banks should be wary about getting too many VC funds in the future, especially if this wasn't coordinated.
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Mar 12, 2023 22:53
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Evil Fluffy posted:(student loans should be forgiven and SVB should be nationalized). What????? No! I mean yes on student loans, but nationalizing a failing bank is literally a bailout. It's making the taxpayers make the depositors whole at a minimum and I'm not inclined to think that's reasonable. Because I have lived through this before. And it obviously didn't loving work because here we are again.
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Mar 12, 2023 23:08
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Motronic posted:What????? No! You lived through nationalizing a bank? Which one?
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Mar 12, 2023 23:10
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Isnt svb basically nationalized? The fdic took it over and is now gonna sell it. The shareholders are kinda screwed but thats capitalism, which theyre all supposedly big fans of capitalism
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Mar 12, 2023 23:14
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Evil Fluffy posted:Can't wait to see the people who are fighting tooth and nail against student loan forgiveness to be the loudest ones demanding SVB get saved from the very problem its leadership actively lobbied to enable (student loans should be forgiven and SVB should be nationalized). No one wants to save SVB. As of this moment, it's already completely controlled by the FDIC. The question is if the businesses who had uninsured deposits in the bank should receive any sort of guarantee, or take a 10-30% loss after a few months. I heard on Twitter that no uninsured depositor has ever lost a dime due to bank failure in the history of the FDIC, but I have no idea if that's true
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Mar 12, 2023 23:24
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OctaMurk posted:Isnt svb basically nationalized? The fdic took it over and is now gonna sell it. The shareholders are kinda screwed but thats capitalism, which theyre all supposedly big fans of capitalism It's being nationalized for a long weekend while it's actual operations are all closed, until someone else can take it over. Nationalizing usually means a country, like, taking over oil fields or utilities for the foreseeable future. SVB is benefitting from a pre-existing government program. Arguably one of the most effective programs, if not one of the most inspirational.
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Mar 12, 2023 23:26
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Absurd Alhazred posted:You lived through nationalizing a bank? Which one?
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Mar 13, 2023 00:04
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https://home.treasury.gov/news/press-releases/jy1337quote:Joint Statement by the Department of the Treasury, Federal Reserve, and FDIC No comment cause I don’t really know what any of this means, other than the line about how taxpayers won’t shoulder the burden.
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Mar 13, 2023 00:07
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Boris Galerkin posted:https://home.treasury.gov/news/press-releases/jy1337 This means that no SVB customer has lost any money in any of this, even those that had uninsured deposits with the bank. Since the failsafe established after this is and announced tonight is not “expected to be drawn upon”, and since Democrats otherwise are not looking to fight the GOP over a federal bailout of SVB, I can only assume that sale of assets and obligations went well enough to guarantee, or almost guarantee, recouping the uninsured loss.
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Mar 13, 2023 00:29
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- One or more of: * Another bank has made a handshake agreement to take the deposit liabilities+assets, but it's not final yet * FDIC's finished auditing and the market value of assets are comfortably bigger than the deposit liabilities * The assets are less than the deposits, but close enough that FDIC can cover the difference from insurance fund (and pass those costs to the banking industry as a whole in higher insurance fees) - This is only deposits. Stockholders and most* anyone else who those banks owed money to (bonds they issued) are probably wiped out Basically, FDIC is signaling that they will continue to have an unofficial a policy of covering all deposits, even above $250k, by seizing failing banks quickly and dipping into the insurance fund. Businesses can still reasonably safely have accounts at smaller regional banks and shouldn't flee to top-3 banks (FDIC does not want that kind of consolidation to happen, because it would also the wreck regional banks). *SVC at least also owed money to some Federal Home Loan Banks. Those loans will probably get payed back in full.
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Mar 13, 2023 00:29
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Funding the shortfall through insurance is a very nifty idea, for a certain interpretaton of “cost shall not be borne by the taxpayer”. In any case, I think an at least equally interesting part of that presser is “oh, and btw another bank just failed lol”.
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Mar 13, 2023 00:34
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https://twitter.com/sindap/status/1635011855491162113 Wow, SVB was in a better shape than I thought, even after a $42 billion dollar one-day bank run (>20% of all their deposits), they still had enough to cover 100% of the insured deposits and ~95% of their uninsured assets. This is going to be an easy sale for the FDIC, because the remains of SVB has a lot of high quality assets. SVB made a lot of dumb decisions in 2021-2022. But there isn't a bank in the US that could withstand a >20% one-day bank run. No one keeps that high of a reserve around. In other words https://twitter.com/SMTuffy/status/1634914151905492999
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Mar 13, 2023 00:34
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This bit may matter a lot (though I am very much beyond the edges of where I truly understand these things: https://twitter.com/StevenKelly49/status/1635046064284930048 ... which sounds like Fed can take the overly illiquid assets like SVB had and help get something more liquid back (at some interest?) which presumably also makes SVB assets less sucky.
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Mar 13, 2023 00:36
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golden bubble posted:Wow, SVB was in a better shape than I thought, even after a $42 billion dollar one-day bank run (>20% of all their deposits), they still had enough to cover 100% of the insured deposits and ~95% of their uninsured assets.
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Mar 13, 2023 00:55
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