Silicon Valley Bank - Shutdown!

[BabyRay]

 

[BingerFang]

View attachment 1208143

Omg!

 

[Roosky01]

Whatever Jim Cramer says...do the opposite. I heard there's an anti-Jim Cramer ETF that someone setup that is actually performing better than his picks.

I don't know about you, but this doesn't appear good to me?

https://twitter.com/i/web/status/1634222320398086145

 

[Havasu blue label]

Asking for a friend:
If you have more than $250K in an account(s), should you open another account(s) at the same bank or another bank and limit them all to $250K to be FDIC protected?
I think they can all be at the same bank as long as they are separate accounts.
Vote for Democrats and this is what ya get.

Bueller, Bueller,,, anyone,, anyone?:

If you have to ask that question you should have a financial advisor

 

[Roosky01]

Bucks star Giannis Antetokounmpo has money in 50 bank accounts

Giannis Antetokounmpo, the two-time MVP who last year led the Milwaukee Bucks to their first NBA title since 1971, opened bank accounts with 50 different banks — each one of them holding $250…

nypost.com

 

[clarence]

 

[TPC]

If you have to ask that question you should have a financial advisor

And if you read my next post right after that it's from my financial advisor.

 

[nameisbond]

Stablecoin had 3.3B on deposit with SVB i read. I wonder what happens monday. I shorted some coinbase stock two weeks made a few bucks so far though it didn't really drop anymore after hours friday so maybe its stable now. Gold went up 2% friday so that tells you something.

Gold going up is likely because Europeans are selling US stocks and don't want US dollars. So they buy gold.

 

[JFMFG]

If you have to ask that question you should have a financial advisor

I will be opening accounts at numerous fdic banks Monday and Tuesday for my business and spreading it between 5-6 banks.

 

[Havasu blue label]

ok

 

[ChumpChange]

I’m a little surprised anyone would be having exposure above the 250 limit.

Many banks have a program where all amounts over 250 are swept to other FDIC insured institutions so there is no deposit risk. It’s all behind the scenes so the customer only sees his/her balance and can transact as if all is at the one bank.

Not sure why those with high cash deposits were not using such a products unless they were willing to take the risk in return for some yield on cash balances.

Correct. Known as an Insured Cash Sweep (ICS) account. The bank does all the work with participating banks to make sure all funds are insured.

At the same time, choose banks wisely. Large businesses write million dollar checks every single day. It’s tough not to have more than $250,000 in the account.

 

[ChumpChange]

I will be opening accounts at numerous fdic banks Monday and Tuesday for my business and spreading it between 5-6 banks.

Unnecessary. Look at my post above and a single bank can handle this for you. If you’d like to discuss, let me know.

 

[LargeOrangeFont]

And if you read my next post right after that it's from my financial advisor.

That is asking a lot.

 

[ChumpChange]

Asking for a friend:
If you have more than $250K in an account(s), should you open another account(s) at the same bank or another bank and limit them all to $250K to be FDIC protected?
I think they can all be at the same bank as long as they are separate accounts.
Vote for Democrats and this is what ya get.

Bueller, Bueller,,, anyone,, anyone?:

It’s per institution and not necessarily per account. There are many ways to structure accounts above and beyond this with multiple names, corporations, beneficiaries, etc.

Or the ICS noted above.

 

[Singleton]

High level explanation of what went down

1. As of Dec 31, SVB had $209bn in assets, $175bn in deposits

2. Over the last several years, deposits have surpassed the amount SVB was loaning out so they had excess money to put to work. With it, they bought held-to-maturity fixed-income securities at low interest (e.g., 10yr mortgage-backed securities). As of dec, they had $117bn worth

3. In the past year, the Fed has aggressively hiked rates. This tanked the value of SVB's bond portfolio. Too many MBS + long term + huge unrealized losses = bad risk mgmt

4. Simultaneously, companies have been taking out more money than normal to keep afloat in the current environment with VC $ drying up

5. Over a wk ago, Moody's told SVB it was preparing to downgrade their credit rating (bc of item 3). To reassure investors, SVB sold off $21bn of its most easily sellable treasury and MBS and took a $1.8bn loss to reinvest the capital in assets with higher returns

6. Wednesday, SVB announced this to the public along with a $2.25bn capital raise to deal with item 5 (the right thing to do to shore up their balance sheet). At that moment, the bank was nowhere near insolvent but communication was poor. The thought of a bank needing to raise cash in this market spooked investors and created fear that SVB couldn’t cover their cash position if companies pulled $. The stock tanked

7. Several major VC firms (Founders Fund, Coatue etc.) told their portfolio co’s to withdraw funds which set off a viral news / social cycle that created instant panic. SVB banks ~50% of venture backed tech & life sciences startups in the US so when multiple investors sent emails that read "take all your money out," it meant thousands of portfolio co's withdrew. This exposure is unique to SVB

8. That fear became a self fulfilling prophecy. There was a run on the bank in <48 hours (everyone tried to take out their money) and $42bn was withdrawn by EOD Thursday. While there were interested buyers of the stock, SVB had no time to close the deal bc it collapsed so fast

9. Friday, the FDIC shut down SVB after they failed to raise capital. It was the USA's 16th largest bank

10. Final outcome TBD but they will likely get acquired. I can only hope soon because thousands of startups may not be able to make payroll

 

[regor]

https://twitter.com/i/web/status/1634626124260028419

Money changers gambling, F their bailout.

 

[paradise]

With some of the smaller banks offering 4+% I can’t see an ICS offering that. For right now it seems worth the extra effort if you want money in a MM acct to use multiple high yield savings.

E*Trade has a $500k insured high yield MM too

 

[regor]

SVB doled out bonuses ahead of FDIC seizure

The FDIC emailed SVB employees late last night, offering 45 days of employment.

www.axios.com

 

[Roosky01]

SVB doled out bonuses ahead of FDIC seizure

The FDIC emailed SVB employees late last night, offering 45 days of employment.

www.axios.com

That is a big FU to all of us taxpayers if we step in and bailout this disaster above the standard FDIC limits.

It’s going to be an interesting Monday in the markets! Wish I didn’t have a regular job so I could nimbly cut and slice all day long…maybe a Covid diagnosis tomorrow is in the works?

 

[caribbean20]

We get these banking crises every 10 years or so, when people start to pay attention to the FDIC $250K insurance and risk.

Savings and loan in the 80s
Collapse of Long Term Capital Mgt in 98
Financial crisis of 08/09
and now this deal in 23

Use a big money center bank, they have tighter capital controls.

For individuals, look at the underlying investments of your MM mutual fund, if you are in near cash fixed income, or, of course, T Bills. I looked at Schwab MM this morning, almost all short dated paper with minimal counter party risk.

For now, the regional banks seem to be most at risk. This certainly would seem to dictate the FED will only do 25 BPs, if any, at the next meeting.

The FED hates inflation, but they really, really hate bank failures.

 

[Roosky01]

The spotlight is going to focused like a laser beam on banks with unrealized losses now. Those stocks are going nosedive…

 

[Gonefishin5555]

I am on the fence on this one. The 250K thing is there to protect the little guy. Everyone else if you got over 250K you should have your shit together or be able to pay someone to do it for you. I saw Mark Cuban has(had) excess funds no way we bail out that fuk. So tough shit I guess. The other thing who holds that much cash? You need to buy shit anyway like investments real estate gold a ferrari or a boat count as something. Cash is just paper after all. Its a good wakeup call I hope things go smooth monday.

Another edit how about indexing the 250K for inflation? It used to be 100K. It probably should be higher now.

 

[Gonefishin5555]

The spotlight is going to focused like a laser beam on banks with unrealized losses now. Those stocks are going nosedive…

I saw that article saying Schwab took a big hit also. I don't know why.

 

[ChumpChange]

With some of the smaller banks offering 4+% I can’t see an ICS offering that. For right now it seems worth the extra effort if you want money in a MM acct to use multiple high yield savings.

E*Trade has a $500k insured high yield MM too

With some of the smaller banks offering 4+% I can’t see an ICS offering that. For right now it seems worth the extra effort if you want money in a MM acct to use multiple high yield savings.

E*Trade has a $500k insured high yield MM too

My company’s ICS was at 4.22% last Tuesday when I quoted a customer.

 

[ChumpChange]

High level explanation of what went down

1. As of Dec 31, SVB had $209bn in assets, $175bn in deposits

2. Over the last several years, deposits have surpassed the amount SVB was loaning out so they had excess money to put to work. With it, they bought held-to-maturity fixed-income securities at low interest (e.g., 10yr mortgage-backed securities). As of dec, they had $117bn worth

3. In the past year, the Fed has aggressively hiked rates. This tanked the value of SVB's bond portfolio. Too many MBS + long term + huge unrealized losses = bad risk mgmt

4. Simultaneously, companies have been taking out more money than normal to keep afloat in the current environment with VC $ drying up

5. Over a wk ago, Moody's told SVB it was preparing to downgrade their credit rating (bc of item 3). To reassure investors, SVB sold off $21bn of its most easily sellable treasury and MBS and took a $1.8bn loss to reinvest the capital in assets with higher returns

6. Wednesday, SVB announced this to the public along with a $2.25bn capital raise to deal with item 5 (the right thing to do to shore up their balance sheet). At that moment, the bank was nowhere near insolvent but communication was poor. The thought of a bank needing to raise cash in this market spooked investors and created fear that SVB couldn’t cover their cash position if companies pulled $. The stock tanked

7. Several major VC firms (Founders Fund, Coatue etc.) told their portfolio co’s to withdraw funds which set off a viral news / social cycle that created instant panic. SVB banks ~50% of venture backed tech & life sciences startups in the US so when multiple investors sent emails that read "take all your money out," it meant thousands of portfolio co's withdrew. This exposure is unique to SVB

8. That fear became a self fulfilling prophecy. There was a run on the bank in <48 hours (everyone tried to take out their money) and $42bn was withdrawn by EOD Thursday. While there were interested buyers of the stock, SVB had no time to close the deal bc it collapsed so fast

9. Friday, the FDIC shut down SVB after they failed to raise capital. It was the USA's 16th largest bank

10. Final outcome TBD but they will likely get acquired. I can only hope soon because thousands of startups may not be able to make payroll

That’s a good read.

I think the toughest thing the industry is going to face is the “viral” run/ mob mentality that is sure to follow this based on what I’ve been reading.

The FDIC and industry “experts” need to educate the public and talk about this, rather than have people come to their own conclusions and what they read on Twitter! In my opinion…

 

[paradise]

My company’s ICS was at 4.22% last Tuesday when I quoted a customer.

Hmm, I’ll send you a PM.

 

[Roosky01]

Roku is reported to have 26% of their cash in SVB. That stock is going to be murdered come Monday morning. There will be a pile of others that come to light in the next 24-36 hours as well…

I saw the Schwab article. It’s either a gigantic f’n outlier or this is the beginning of 2008 all over again? Who in the F knows…

 

[caribbean20]

I saw that article saying Schwab took a big hit also. I don't know why.

Schwab has a traditional bank, Charles Schwab Bank, and a separate brokerage, Charles Schwab, with whom most of us are familiar. Both are wholly owned subsidiaries of the holding company, whose stock is publicly traded.

I think the concern is about Charles Schwab Bank, not the brokerage, being the bank is a west coast bank. I think the concern is over done, but I haven’t looked at the bank’s balance sheet.

If your money is with the brokerage, as I would guess is case with the vast majority of customers, should not be an issue. Strict laws on keeping the assets separated between banks and brokers.

That’s my understanding based on research this morning. I think SVB was an extreme case.

 

[Roosky01]

That’s a good read.

I think the toughest thing the industry is going to face is the “viral” run/ mob mentality that is sure to follow this based on what I’ve been reading.

The FDIC and industry “experts” need to educate the public and talk about this, rather than have people come to their own conclusions and what they read on Twitter! In my opinion…

That’s all well and good if the .gov was trustworthy in anything else?

Which they are definitely not.

 

[Roosky01]

On another note, I believe it was the same weekend in 2008 when Lehman or Bear Stearns went under? Might be wrong…

 

[DrunkenSailor]

I am on the fence on this one. The 250K thing is there to protect the little guy. Everyone else if you got over 250K you should have your shit together or be able to pay someone to do it for you. I saw Mark Cuban has(had) excess funds no way we bail out that fuk. So tough shit I guess. The other thing who holds that much cash? You need to buy shit anyway like investments real estate gold a ferrari or a boat count as something. Cash is just paper after all. Its a good wakeup call I hope things go smooth monday.

Another edit how about indexing the 250K for inflation? It used to be 100K. It probably should be higher now.

It's major companies that have corporate accounts that are in danger if the bank folds. When you have corporate debt you have capital requirements. A company may not have a choice but to put a couple of million in funds in an account to cover their debt. When the bank goes under their operating account and their reserves disappear.

 

[whiteworks]

I think it’s interesting how all this wealth can just vaporize in moments, it went someplace

Couldn’t happen to a more deserving segment of the economy IMO, the tech sector just got a good dose of vapor ware

Hopefully there is no bailout by the government beyond the previously agreed upon insured amount of $250k, let the free market sort this out.

 

[Roosky01]

https://twitter.com/i/web/status/1634721109324046338

 

[liv4riv]

It's always known that when there's a run on the bank, the big depositors are contacted first The people with a million less are nothing. It's the big boys the getting notified

 

[retaocleg]

top execs were dumping stock leading up to the crash......

Zerohedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

 

[c_land]

Bank failures by size since 2000

 

[WhatExit?]

Billionaire Bill Ackman on SVB collapse: Government has 48 hours to fix 'irreversible mistake'

Billionaire investor Bill Ackman said that the U.S. government needs to take serious action to prevent the financial ruin of other banks amid the failure of Silicon Valley Bank.

www.foxbusiness.com

While Silicon Valley Bank collapsed, top executive pushed ‘woke’ programs

“These banks are badly run because everybody is focused on diversity and all of the woke issues and not concentrating on the one thing they should, which is, shareholder returns,” Marcu…

nypost.com

 

[just_floatin]

How I explained what a bank run is over a couple of beers with the neighbors. Some of us in other trees now worried.

 

[Danger Dave]

Should be fine. Plenty of the smartest diversity hires are on it.

https://twitter.com/i/web/status/1634908271457779713

 

[just_floatin]

Now a word from the head monkey that cashed out before the collapse. How inclusive of him.

https://twitter.com/i/web/status/1634691371834519552

 

[Hydroman55]

Gotta love the CEO selling millions in stock over the last week.

 

[TimeBandit]

Gotta love the CEO selling millions in stock over the last week.

A February 27 filing with the U.S. Securities and Exchange Commission (SEC) shows that SVB President and CEO Greg Becker sold $3,578,652.31 in common stock two weeks before SVB was shut down by federal regulators on Friday morning. The $3.5 million accounted for 10 percent of the stocks he had, since he sold 12,451 of his roughly 98,000 shares.

 

[Hydroman55]

I read it was 11% of his total stock holdings, so he is 89% exposed to the pain?

So just routine transactions had no idea company was in trouble defense or I would have sold much more.

 

[Gonefishin5555]

There is probably an internet forum where crooked ceo's hang out and the advice given was sell 11% max no one will notice.

I'd sell some and immediately put it in a lawyer trust account cause you would definitely need it for legal fees.

 

[Hydroman55]

Sad part of this… companies using SVB accounts for payroll are currently in the cold. Poor executive officers only cashed out a small part of their holdings worth millions.
Need to claw back the money, bankrupt these folks with legal fees and go to jail.
I’m all for making money and capitalism but this behavior is stealing period.
People forget for every winner in the market someone is a loser.

 

[Singleton]

So just routine transactions had no idea company was in trouble defense or I would have sold much more.

Anything over 10% requires an SEC filing. Almost all C level officers sold what they could without having to file the SEC docs.

 

[Singleton]

Sad part of this… companies using SVB accounts for payroll are currently in the cold. Poor executive officers only cashed out a small part of their holdings worth millions.
Need to claw back the money, bankrupt these folks with legal fees and go to jail.
I’m all for making money and capitalism but this behavior is stealing period.
People forget for every winner in the market someone is a loser.

A couple online payroll companies used SVB. They could not process payroll for their customers on Friday and are hoping to process Monday or Tuesday.

 

[Hydroman55]

Anything over 10% requires an SEC filing. Almost all C level officers sold what they could without having to file the SEC docs.

To my point

 

[Havasu blue label]

If your company receives any payments from bill.com keep a eye out for payment

 

[Kachina26]

Bank failures by size since 2000

View attachment 1208319

I guess that shows how it affects the really little guys. I had no idea WaMu failed and I was a customer all the way through the transition to Chase. I didn't have a clue why my bank got a different name.