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Bank Run

Signature Bank closed now too. They hired a bunch of people from my former company.
 
MHBDemon said:
Had dinner with my college roommate last night who just started working at SVB in November and has a newborn.
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Ironically they just approached me about a job. I know a ton of people who work there and a lot of them have been there 10, 15, 20 years. They were the clear leader in the segment by a significant margin. I’m still shocked.
 
Oops

 
Can’t wait for the states who sued over student loan forgiveness to sue over bank bailouts.
 
The government was always going to protect those that have deposits.

Which is why the VCs probably shouldn't have panicked and caused a run on the bank.
 
Up to $250K, sure. But who is paying us back for covering their losses?
 
PhDeac said:
Up to $250K, sure. But who is paying us back for covering their losses?
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I don’t even care about covering losses for people. Make bank insurance cover it.

Start putting consequences for bank executives who drive risky behavior.

After 2008, there should’ve been people led out in handcuffs. That there weren’t and meaningful laws weren’t put into place just means the cycle continues.
 
PhDeac said:
Up to $250K, sure. But who is paying us back for covering their losses?
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I doubt we will be covering much. SVB's assets will cover most of it, the issue was liquidity - to give people the money they were demanding now, SVB had to sell assets at a loss. The government won't have to do that.

If the government looks to bail out SVB's owners, then we riot.
 
avalon said:
I doubt we will be covering much. SVB's assets will cover most of it, the issue was liquidity - to give people the money they were demanding now, SVB had to sell assets at a loss. The government won't have to do that.

If the government looks to bail out SVB's owners, then we riot.
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from someone else's post SVB had a buncha 7-10 year bonds earning 1.6%. That's gonna be a long time for everyone to get their money back.
 
bym051d said:
I don’t even care about covering losses for people. Make bank insurance cover it.

Start putting consequences for bank executives who drive risky behavior.

After 2008, there should’ve been people led out in handcuffs. That there weren’t and meaningful laws weren’t put into place just means the cycle continues.
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Right on
 
bym051d said:
I don’t even care about covering losses for people. Make bank insurance cover it.

Start putting consequences for bank executives who drive risky behavior.

After 2008, there should’ve been people led out in handcuffs. That there weren’t and meaningful laws weren’t put into place just means the cycle continues.
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In the 80s, literally hundreds of executives went to jail for the savings and loan scandals.

Edited the rest, not worth it
 
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avalon said:
I doubt we will be covering much. SVB's assets will cover most of it, the issue was liquidity - to give people the money they were demanding now, SVB had to sell assets at a loss. The government won't have to do that.

If the government looks to bail out SVB's owners, then we riot.
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I'm not in banking but doesn't basically every bank not keep all of its money liquid? As in no bank is capable of withdrawing all of its customers' money in a single day?
 
MichDeac25 said:
I'm not in banking but doesn't basically every bank not keep all of its money liquid? As in no bank is capable of withdrawing all of its customers' money in a single day?
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Sure. I'm not in banking either. But the issue is how liquid they should be and what they do with that lack of liquidity.
 
TownieDeac said:
How much of this is down to eroding Dodd Frank yet again in 2018? I gotta say, a bank getting caught holding the bag on a bunch of mortgage backed securities sounds awfully familiar to me.
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I think very little to none of this has to do with Dodd Frank. To my knowledge Dodd Frank didn't make people mark bond investments to market. I'm sure that will be changing. Also, the fact we have regulators saying a few days ago that the rise in interest rates was creating no systemic risk is pretty astounding in light of what has happened.
 
bym051d said:
Maybe.

Maybe the people who want less regulation.

How much of this is due to playing footsie with crypto companies?

I think there should be consequences to the government always stepping in to help companies in trouble. I’m all for nationalizing troubled banks instead of selling them off to other banks or spinning them down.
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The above makes no sense.

You're a small company. You've taken your capital used to meet payroll and operate at a Federally regulated bank. The bank invests in 10 year bonds for some unknown reason - not exactly risky but also not wise if they're may need to raise capital and the value of those bonds drops bc, say, interest rates spike. Their deposits dry up due to lack of market investment. Their outflows stay relatively high because their customers have to pay operating expenses. Interest rates spike. The bonds they invested in drop in value. That is how this crisis unfolded. Their mistake was investing in longer term bonds. And it was a doozy.

The government isn't protecting SVB with this bailout. It is protecting the customers of the bank - i.e. it's depositors.

Crypto? BTC Is up over 250% since Covid hit in March, 2020. ETH is up over 650%. And defi platforms like AAVE have worked exactly like they're supposed to work. Meanwhile FTX wasn't regulated at all and horribly managed and SVB which was highly regulated collapsed bc of bad investment choices by their management.
 
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MichDeac25 said:
I'm not in banking but doesn't basically every bank not keep all of its money liquid? As in no bank is capable of withdrawing all of its customers' money in a single day?
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No bank is 100% liquid because investing that money and lending it out is the entire point of how banks make money. But large banks are heavily regulated nowadays and are required to have a specific percentage of cash on hand, have to undergo frequent stress tests, and plenty of other regularity reporting requirements.
 
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