| SVB 18:18 - Mar 12 with 2767 views | Kropotkin123 |
Anyone been following this?
- SVB sold bonds at a loss and said it needed an extra $2b to cover losses.
- Investors took out $42b in one day, causing a run on the bank and its collapse
- Now right wing libertarians and free market capitalists have asked for a bailout
- Centre and left wing commentations have been saying stuff like "Capitlists: We want socialism" and "right wing libertarians: we want government intervention".
- Today the federal government has said no to a bailout
- Don't worry though, everyone got their bonuses in the 24h before the collapse!
I may be missing some stuff, but this is what I've read so far. [Post edited 12 Mar 2023 19:44]
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| SVB on 18:42 - Mar 12 with 2157 views | chicoazul |
I don’t understand it but the right people are annoyed about it. |  |
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| SVB on 18:50 - Mar 12 with 2124 views | nrb1985 |
I suspect the FDIC will end up guaranteeing the deposits over 250k to avoid a contagion risk.
This is what happens when you raise interest rates 5% in 11 months without pausing to first properly gauge whether the first interest rate rises have had any effect. Things break...
Albeit the SVB business model of having zero diversity in their customer base and those customers being at the very risky end of the risk spectrum is also dumb.
There are some really good podcasts on this and what's gone on this weekend, just search "SVB" on Spotify. |  | | |
| SVB on 18:51 - Mar 12 with 2129 views | clive_baker |
It’s going to be a long and protracted issue for many with their funds tied up in SVB. Most businesses have terms that dictate they can’t withdraw the funds for 30, 60, 90 days etc so if you’re towards the back of the queue you might be in a spot of bother.
There’s potentially a bigger issue at play too, if the market deems their liquidity to be representative of other banks it could mean that we see the same elsewhere. Lots of businesses apparently requesting funds from other similar sized banks and a run on those could create a huge problem. Lots of banking stocks have been battered over the last few days of trading, I’m fascinated to see how the markets react. Potentially a buying opportunity if this passes, potentially a lot more damaging if not. |  |
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| SVB on 18:55 - Mar 12 with 2105 views | nrb1985 |
| SVB on 18:51 - Mar 12 by clive_baker |
It’s going to be a long and protracted issue for many with their funds tied up in SVB. Most businesses have terms that dictate they can’t withdraw the funds for 30, 60, 90 days etc so if you’re towards the back of the queue you might be in a spot of bother.
There’s potentially a bigger issue at play too, if the market deems their liquidity to be representative of other banks it could mean that we see the same elsewhere. Lots of businesses apparently requesting funds from other similar sized banks and a run on those could create a huge problem. Lots of banking stocks have been battered over the last few days of trading, I’m fascinated to see how the markets react. Potentially a buying opportunity if this passes, potentially a lot more damaging if not. |
Agree with that last point, I would buy the stocks of the larger banks next week if we go any lower. I don't think we are at a Lehman moment and I don't think this becomes a systemic issue. SVB business model was super unique and I don't think outside of some of the regional banks in California anybody else has that much concentrated exposure to startups/VCs.
Coming out of this, the accounting rules that allowed them to not mark the assets on their balance sheet with the current market value also warrants scrutiny here. | | | |
| SVB on 19:03 - Mar 12 with 2069 views | StokieBlue |
| SVB on 18:55 - Mar 12 by nrb1985 |
Agree with that last point, I would buy the stocks of the larger banks next week if we go any lower. I don't think we are at a Lehman moment and I don't think this becomes a systemic issue. SVB business model was super unique and I don't think outside of some of the regional banks in California anybody else has that much concentrated exposure to startups/VCs.
Coming out of this, the accounting rules that allowed them to not mark the assets on their balance sheet with the current market value also warrants scrutiny here. |
As does running a bank with 200bn+ liabilities without a Chief Risk Officer.
SB |  |
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| SVB on 19:03 - Mar 12 with 2071 views | clive_baker |
| SVB on 18:55 - Mar 12 by nrb1985 |
Agree with that last point, I would buy the stocks of the larger banks next week if we go any lower. I don't think we are at a Lehman moment and I don't think this becomes a systemic issue. SVB business model was super unique and I don't think outside of some of the regional banks in California anybody else has that much concentrated exposure to startups/VCs.
Coming out of this, the accounting rules that allowed them to not mark the assets on their balance sheet with the current market value also warrants scrutiny here. |
The large banks are fine, I can’t see any risk to them. If anything there’s upside as corporations move funds from smaller, regional banks to those that are deemed more stable.
Equally, the sell off hasn’t hit those banks to the same extent. Some of those deemed to be more similar to SVB like PacWest Bancorp have been battered. I took a long position on them on Friday at about $13 per share and also on BOA. There’s a risk of contagion but it’s one I’m happy enough to take. | |
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| SVB on 19:09 - Mar 12 with 2050 views | nrb1985 |
| SVB on 19:03 - Mar 12 by StokieBlue |
As does running a bank with 200bn+ liabilities without a Chief Risk Officer.
SB |
Lolz.
I saw some memes doing the rounds that their risk guy had also worked at Lehman I thought? Quite the brace if true! | | | |
| SVB on 19:13 - Mar 12 with 2026 views | nrb1985 |
| SVB on 19:03 - Mar 12 by clive_baker |
The large banks are fine, I can’t see any risk to them. If anything there’s upside as corporations move funds from smaller, regional banks to those that are deemed more stable.
Equally, the sell off hasn’t hit those banks to the same extent. Some of those deemed to be more similar to SVB like PacWest Bancorp have been battered. I took a long position on them on Friday at about $13 per share and also on BOA. There’s a risk of contagion but it’s one I’m happy enough to take. |
First Republic are likely in a bit of bother too but yes, the bigger banks will receive most of the pulled deposits from elsewhere. I can't buy individual stocks because of my job so I'll probably buy the ETF tomorrow. Agree though re BofA, them and Wells would be my pick.
Sounds like they Govt are going to guarantee the deposits so I expect some of those banking stocks could fly tomorrow. | | | |
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| SVB on 19:16 - Mar 12 with 2009 views | StokieBlue |
| SVB on 19:09 - Mar 12 by nrb1985 |
Lolz.
I saw some memes doing the rounds that their risk guy had also worked at Lehman I thought? Quite the brace if true! |
Their Chief Administrative Officer used to be Chief Financial Officer at Lehman's.
Good hiring there.
SB | |
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| SVB on 19:18 - Mar 12 with 1999 views | BanksterDebtSlave |
| SVB on 18:55 - Mar 12 by nrb1985 |
Agree with that last point, I would buy the stocks of the larger banks next week if we go any lower. I don't think we are at a Lehman moment and I don't think this becomes a systemic issue. SVB business model was super unique and I don't think outside of some of the regional banks in California anybody else has that much concentrated exposure to startups/VCs.
Coming out of this, the accounting rules that allowed them to not mark the assets on their balance sheet with the current market value also warrants scrutiny here. |
Are you talking about mark to market, if so then plus ça change....
https://www.advisorperspectives.com/commentaries/2018/09/18/did-mark-to-market-r |  |
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| SVB on 19:18 - Mar 12 with 1991 views | nrb1985 |
| SVB on 19:16 - Mar 12 by StokieBlue |
Their Chief Administrative Officer used to be Chief Financial Officer at Lehman's.
Good hiring there.
SB |
Lovely stuff. | | | |
| SVB on 19:22 - Mar 12 with 1962 views | nrb1985 |
Yes exactly.
Slightly different to Lehman as these were liquid securities with live prices.
Lehman's MBS had become so iliquid nobody knew what was in them or how to fairly mark them. | | | |
| SVB on 19:25 - Mar 12 with 1944 views | StokieBlue |
| SVB on 19:22 - Mar 12 by nrb1985 |
Yes exactly.
Slightly different to Lehman as these were liquid securities with live prices.
Lehman's MBS had become so iliquid nobody knew what was in them or how to fairly mark them. |
Absolutely no excuse not to mark liquid securities. Even semi-liquid securities can be proxy marked using a similar asset and some form of basis.
Sounds like the investigation is going to find all kinds of things.
SB | |
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| SVB on 19:26 - Mar 12 with 1947 views | BanksterDebtSlave |
| SVB on 19:22 - Mar 12 by nrb1985 |
Yes exactly.
Slightly different to Lehman as these were liquid securities with live prices.
Lehman's MBS had become so iliquid nobody knew what was in them or how to fairly mark them. |
Were the rules about mark to market changed post Lehman? | |
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| SVB on 19:30 - Mar 12 with 1930 views | nrb1985 |
| SVB on 19:25 - Mar 12 by StokieBlue |
Absolutely no excuse not to mark liquid securities. Even semi-liquid securities can be proxy marked using a similar asset and some form of basis.
Sounds like the investigation is going to find all kinds of things.
SB |
I guess it depends, if being allowed not to mark them to market because you intended to hold them to maturity is a generally accepted accounting practice then technically they didn't do anything wrong?
Probably the bigger issue is the lack of diversity in customer base and having no CRO which is bonkers! Didn't know that until you pointed it out. | | | |
| SVB on 19:33 - Mar 12 with 1922 views | nrb1985 |
| SVB on 19:26 - Mar 12 by BanksterDebtSlave |
Were the rules about mark to market changed post Lehman? |
No idea but as SB says above, sure lots of things that warrant examination will come out of this. | | | |
| SVB on 19:43 - Mar 12 with 1876 views | StokieBlue |
| SVB on 19:30 - Mar 12 by nrb1985 |
I guess it depends, if being allowed not to mark them to market because you intended to hold them to maturity is a generally accepted accounting practice then technically they didn't do anything wrong?
Probably the bigger issue is the lack of diversity in customer base and having no CRO which is bonkers! Didn't know that until you pointed it out. |
Just had a read and they were marking their securities portfolio to maturity which is allowed, however one rates started to rise this would lead to unrealised losses on that portfolio which people would notice.
The issue seems to be that nearly all their portfolio was marked to maturity and needed to be held to maturity in order to realise anything like they predicted and thus they seemed to have very little in the way of disposable liquid assets.
Guess we will know more over the next few days. They will certainly have questions to answer about the diversity of assets and customers and the lack of a CRO.
SB | |
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| SVB on 08:25 - Mar 13 with 1554 views | BlueForYou |
Bought by HSBC. |  | | |
| SVB on 08:29 - Mar 13 with 1544 views | DanTheMan |
| SVB on 08:25 - Mar 13 by BlueForYou |
Bought by HSBC. |
The UK arm has, which is good news for anyone here who had money with them. The company I work for did, they got their money out during the run. |  |
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| SVB on 09:53 - Mar 13 with 1449 views | soupytwist |
This is an interesting perspective on what happened:
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| SVB on 10:57 - Mar 13 with 1362 views | nrb1985 |
| SVB on 09:53 - Mar 13 by soupytwist |
This is an interesting perspective on what happened:
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The tech people in these Whatsapp groups that have emerged over the weekend and the financiers who irresponsibly tweeted over the weekend, encouraging a bank run, should be brought up on market manipulation charges and thrown in jail. | | | |
| SVB on 13:50 - Mar 13 with 1254 views | StokieBlue |
| SVB on 19:09 - Mar 12 by nrb1985 |
Lolz.
I saw some memes doing the rounds that their risk guy had also worked at Lehman I thought? Quite the brace if true! |
Frank of the Dodd-Frank reforms was on the board of just collapsed Signature Bank.
SB | |
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| SVB on 13:54 - Mar 13 with 1226 views | Darth_Koont |
I’m just getting into it now.
Didn’t they successfully go through an audit very recently too? |  |
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| SVB on 14:17 - Mar 13 with 1165 views | CityBlue |
Not a UK retail (ring fenced) bank so that's what happens. People worrying about their high street bank accounts needn't but will and start moving their money somewhere else - which of course will now see a spike in fin crime. |  |
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| SVB on 14:30 - Mar 13 with 1137 views | BanksterDebtSlave |
| SVB on 19:25 - Mar 12 by StokieBlue |
Absolutely no excuse not to mark liquid securities. Even semi-liquid securities can be proxy marked using a similar asset and some form of basis.
Sounds like the investigation is going to find all kinds of things.
SB |
....and then do nothing about it as per usual. | |
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