Silicon Valley Bank collapse

[rdrr]

Ugh got to start thinking about who I bank with. I do have a modest sum at SoFi.

Silicon Valley Bank Closed by Regulators, FDIC Takes Control

The tech-focused lender was seeking a buyer after scrapping a plan to shore up its finances through a capital raise.

www.wsj.com

 

[Roller]

When I first read a headline about a Silicon Valley bank collapse, I thought it was a weather related building failure.

 

[Citysnaps]

Living in the SF Bay Area I watched some local on-the-scene news coverage of this yesterday. The bank was closed and there were a bunch of people standing outside wondering what was going to happen next.

There was an FDIC official there telling people they can come back Monday and make withdrawals on their accounts up to FDIC limits ($250K single ownership, $500K joint ownership). The official said amounts over those limits would be "on the books" of the bank that would eventually take over SVB. That sounds squishy to me and certainly not guaranteed.

One customer indicated she had much more than $250K and was wondering if she was going to eventually be made whole.

 

[Herdfan]

One customer indicated she had much more than $250K and was wondering if she was going to eventually be made whole.

She will get some of it, but probably not all. What will happen is the FDIC will get banks to bid on the assets (loan portfolio, real estate, etc) and take over the liabilities. If the bank just ran short of cash, but the loan portfolio is sound, then the customers will get most of their money. If the loan portfolio is bad, a bank may only be willing to pay a percentage, and that percentage will determine how much the depositors get.

Simple rule of thumb here folks, don't keep more than $250K in the same bank. Not Chase, BOA, WF or any other no matter how well capitalized you think they are.

 

[rdrr]

Living in the SF Bay Area I watched some local on-the-scene news coverage of this yesterday. The bank was closed and there were a bunch of people standing outside wondering what was going to happen next.

There was an FDIC official there telling people they can come back Monday and make withdrawals on their accounts up to FDIC limits ($250K single ownership, $500K joint ownership). The official said amounts over those limits would be "on the books" of the bank that would eventually take over SVB. That sounds squishy to me and certainly not guaranteed.

One customer indicated she had much more than $250K and was wondering if she was going to eventually be made whole.

I am reading, maybe 10% of anything over the FDIC limits.

Simple rule of thumb here folks, don't keep more than $250K in the same bank. Not Chase, BOA, WF or any other no matter how well capitalized you think they are.

I doubt that there are more than 10% of their individual customers who fit that bill. However you are correct, that would be a good rule of thumb.

What I am really worried about is this problem, this bank was used to fund a lot of west coast startups. This is going to have some domino effects that have me a bit worried about other digital banks.

 

[Cmaier]

I am reading, maybe 10% of anything over the FDIC limits.

There’s a pretty good chance people will get most of their money back. It’s looking pretty likely that the bank will be sold, and the problem with the bank was a liquidity problem and not anything like a ponzi scheme or whatever.

 

[Eric]

It's fun watching all those bashing students for student loan debt forgiveness screaming for the Government to bail out the rich.

 

[Alli]

Got an email this morning from a clothing company where I buy a TON of clothes. They were asking that all their customers shop this weekend as they used SVB. I feel bad for them. I’ll probably wind up ordering something.

 

[Eric]

Got an email this morning from a clothing company where I buy a TON of clothes. They were asking that all their customers shop this weekend as they used SVB. I feel bad for them. I’ll probably wind up ordering something.

It's a shame. Sounds like this could be the tip of the iceberg but it will take these sorts of changes to slow the feds down from raising the interest rates.

 

[rdrr]

Got an email this morning from a clothing company where I buy a TON of clothes. They were asking that all their customers shop this weekend as they used SVB. I feel bad for them. I’ll probably wind up ordering something.

Doesn't happen to be StitchFix does it? My SO ordered a style fix from them, and returned two items. They proceeded to tell us that one of the items, which happens to be the most expensive item in the lot wasn't returned. Tried to contact their support chat, got an automated message that they were busy and we'll get back to you later. Never did...

 

[Alli]

Doesn't happen to be StitchFix does it?

No. Universal Standard. Have your SO give them a try.

 

[Eric]

Federal bailout for Silicon Valley Bank off the table, Yellen says

"We're not going to do that again," the Treasury secretary said.

www.politico.com

Federal bailout for Silicon Valley Bank off the table, Yellen says​

“We’re not going to do that again,” the Treasury secretary said.

 

[Cmaier]

Federal bailout for Silicon Valley Bank off the table, Yellen says

"We're not going to do that again," the Treasury secretary said.

www.politico.com

Federal bailout for Silicon Valley Bank off the table, Yellen says​

“We’re not going to do that again,” the Treasury secretary said.

It was infuriating reading people like Mark Cuban (who has a bunch of money in SVB) demanding a bailout because “it’s not the rich people who will get hurt.”

I don’t know about you, but nobody i know in Silicon Valley has money in SVB. Yeah, some startups might get crunched and some people may lose their jobs, but that’s indirect - the same people demanding this bailout are the same people opposed to programs and spending that directly helps the “not rich people.”

Bail out bank so VC’s don’t get less rich? Check.
Bail out people drowning from student loans? Moral hazard!

 

[dada_dave]

I’ve been reading that a bailout is unlikely to be needed anyway to get most of funds back for account holders. The FDIC will sell the bank and if any additional monies are needed they can raise insurance premiums on banks.

Example:

https://mobile.twitter.com/ArmandDoma/status/1634335394350374912

I’m far from an expert but they appear confident and it makes a certain amount of sense.

 

[Eric]

Wait, what?

 

[dada_dave]

Wait, what?

I was just about to post this - so I’ll post this one from David “this meeting is too technical for me” Sacks.

 

[Cmaier]

Well, the government is bailing out the bank(s) (2 of them now - Signature Bank in NY). At least it looks like taxpayers won’t be footing the bill this time.

 

[rdrr]

Yikes, CEO and CFO sell 3.6 million $$$ in stock two weeks before collapse. Holy schmolly!

Silicon Valley Bank CEO Sold $3.6 Million In Shares Days Before Fatal Loss Disclosed

A trust owned by Silicon Valley Bank Chief Executive Officer Greg Becker sold $3.6 million worth of shares in his bank last week, days before the bank disclosed a $1.8 billion loss that [triggered a fatal run on the bank](https://www.wsj.com/articles/svb-financial-pulls-capital-raise-explores-altern

www.wsj.com

 

[Eric]

Yikes, CEO and CFO sell 3.6 million $$$ in stock two weeks before collapse. Holy schmolly!

Silicon Valley Bank CEO Sold $3.6 Million In Shares Days Before Fatal Loss Disclosed

A trust owned by Silicon Valley Bank Chief Executive Officer Greg Becker sold $3.6 million worth of shares in his bank last week, days before the bank disclosed a $1.8 billion loss that [triggered a fatal run on the bank](https://www.wsj.com/articles/svb-financial-pulls-capital-raise-explores-altern

www.wsj.com

No way they don't get scrutinized by the FTC here, what do they think they're in Congress or something?

 

[Chew Toy McCoy]

Simple rule of thumb here folks, don't keep more than $250K in the same bank. Not Chase, BOA, WF or any other no matter how well capitalized you think they are.

I won't ever have that issue.