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Silvergate SVB - Regional Bank collapse

94Nautique

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What going on with Regional banks?
Glad I don’t need a loan.

VCs use these guys a lot, that could be interesting for PE companies and such.

That’s all I know. But anytime banks go out of business, it’s a very bad thing.
 

LargeOrangeFont

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VCs use these guys a lot, that could be interesting for PE companies and such.

That’s all I know. But anytime banks go out of business, it’s a very bad thing.

This. Silicon valley had a lot of money out there.. many of the tech stocks out there have "corrected". They got caught out.
 

Danger Dave

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The bank partners with nearly half of all venture-backed tech and health care companies in the United States, many of which pulled deposits out of the bank as rising interest rates raised concern that the bank may not be able to get all its customers’ money back if they pulled their deposits en masse.

No different than the local banks that lend to the O&G industry.

When shit hits the fan, your shares drop. I am surprised the FDIC hasn't found someone to take over the bank already. Probably because all the loans are shit.
 

Danger Dave

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For context, the reason this is a big deal is not because lots of individuals have deposits there over the FDIC $250,000 limit.

It's because typically when a venture capitalist writes a startup a check for say $30M to fund their operations, they put it all in SVB.

There are dozens of VC's who ordered all of their portfolio companies to withdraw all of their money from SVB this morning by 830AM (per industry word of mouth). They are afraid of a lock on accounts that would render those startups and larger tech companies unable to make payroll or pay vendors for an unknown amount of time.

If things are working smoothly, the sale will be forced over the weekend and the new owners will honor all deposits after a short interruption in service.

This is a canary in the coal mine though, the question is how many other banks are threatened because their bond portfolios are worth radically less now after the Fed raised rates.
 

Danger Dave

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And there we go.

Friday, March 10, 2023
For Immediate Release
WASHINGTON – Silicon Valley Bank, Santa Clara, California, was closed today by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank.

All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.

Silicon Valley Bank had 17 branches in California and Massachusetts. The main office and all branches of Silicon Valley Bank will reopen on Monday, March 13, 2023. The DINB will maintain Silicon Valley Bank’s normal business hours. Banking activities will resume no later than Monday, March 13, including on-line banking and other services. Silicon Valley Bank’s official checks will continue to clear. Under the Federal Deposit Insurance Act, the FDIC may create a DINB to ensure that customers have continued access to their insured funds.

As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined. The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.

Customers with accounts in excess of $250,000 should contact the FDIC toll-free at 1-866-799-0959.

The FDIC as receiver will retain all the assets from Silicon Valley Bank for later disposition. Loan customers should continue to make their payments as usual.

Silicon Valley Bank is the first FDIC-insured institution to fail this year. The last FDIC-insured institution to close was Almena State Bank, Almena, Kansas, on October 23, 2020.

FDIC: PR-16-2023
 

bonesfab

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So this bank happened to have office in California and Massachusetts. Didn't FTX have dealings in Mass also?? Some fuckery going on and this isn't even the first inning.
 

monkeyswrench

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So this bank happened to have office in California and Massachusetts. Didn't FTX have dealings in Mass also?? Some fuckery going on and this isn't even the first inning.
Conspiracy theorist!

Welcome to the darkside! Happy Hour specials are posted at the door. The bartender is smoking hot, but may be a lizard person;)
 

Orange Juice

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So this bank happened to have office in California and Massachusetts. Didn't FTX have dealings in Mass also?? Some fuckery going on and this isn't even the first inning.
It’s not like you have been lied too. 😜

B3361649-29A2-41D0-9869-BBF59095CEC5.jpeg
 

pronstar

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It’s all due to the Fed raising interest rates.

These startups parked cash at SVB, usually because that’s where the financing originates.

Cash deposits are a bank liability, which must be offset with an asset. So they bought treasuries, like many financial institutions.

Problem is, their treasuries payout next to nothing because they were bought before the fed started hiking rates.

And those treasuries have diminished value, who wants yesterdays low-yield treasuries when you can get high yield treasuries today.

Depositors can move their money elsewhere, earning a good return, while SVB was stuck holding the bag while depositors pulled their money.

They had to sell assets at a loss to cover withdrawals, and the problem just kept feeding itself.

Depositors heard that the bank was strapped for cash, then the bank run started.
 

dnewps

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The FED’s operations DO NOT CONTROL RATES. The ONLY way the FED can control interest rates is through NARRATIVE...and it only works in the short term.

I love the politics of all this cuz captain dementia will take blame...but, while everyone is focused on inflation...it’s the opposite now. Deflation.
 
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dnewps

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So if SVB blew up because they purchased 30year safe secure US treasuries when the rates were really low then wouldn’t you make a bunch of $ Buying them when the rates are high??

Yep.

Do you think rates are high?
 

SNiC Jet

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Uh OH!....another domino just fell o_O

Regulators close New York’s Signature Bank, citing systemic risk​

U.S. regulators on Sunday shut down New York-based Signature Bank
in a bid to prevent the spreading banking crisis.

“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority,” Treasury, Federal Reserve, and FDIC said in a joint statement Sunday evening.

The banking regulators said depositors at Signature Bank will have full access to their deposits.

 
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94Nautique

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Idiots still blaming Trump on the collapse of SVB. 🤣 SVB didn’t insure over 89% of their deposits and instead hedged on failing funds that offered “sustainable finance and carbon neutral…:rolleyes:
LOL, the 1/258th percent person, Liz Warren is blaming capitalism or Trump or dirt or something as the cause. She's an utter moron when it comes to financial markets.
 

pronstar

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The people are naturally conservative.
They are more conservative than the financiers.

Those who believe that the people are so easily led that they would permit the printing presses to run off money like milk tickets do not understand them.

It is the innate conservation of the people that has kept our money good in spite of the fantastic tricks which financiers play-and which they cover up with high technical terms.

The people are on the side of sound money. They are so unalterably on the side of sound money that it is a serious question how they would regard the system under which they live, if they once knew what the initiate can do with it.


- Henry Ford
 

DrunkenSailor

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Nycb received 1bn bailout today and are performing a stock buyback. Tsilvergate definitely contributed to their downfall but they also hold the largest % of cmbs of the large banks. I highly doubt 1bn is enough.
 
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