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Silvergate Bank to begin voluntary liquidation

dfpi.ca.gov

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Re: Silvergate Bank to begin voluntary liquidation

#21

Post by londons_explore »

dzdt wrote: post #7

Good context by Matt Levine a few days ago [1]. Basically Silvergate did a lot of business with crypto firms and got burned not by crypto speculation but just by holding long maturity safe assets when too many of their customers wanted to withdraw money on a short term basis. The result was falling below the line of being "well capitalised" as a bank. Bank regulation seems to be working here: there is no indication o…

> holding long maturity safe assets

I thought banks were able to sell those long maturity assets for cash to another bank or investor to avoid exactly that kind of situation?

And my understanding is banks must meet their regulatory requirements overnight each night, so there is a market for overnight loans/swaps/etc to make sure thats the case.

Re: Silvergate Bank to begin voluntary liquidation

#22

Post by dragontamer »

londons_explore wrote: post #21
dzdt wrote: post #7

Good context by Matt Levine a few days ago [1]. Basically Silvergate did a lot of business with crypto firms and got burned not by crypto speculation but just by holding long maturity safe assets when too many of their customers wanted to withdraw money on a short term basis. The result was falling below the line of being "well capitalised" as a bank. Bank regulation seems to be working here: there is no indication o…

> holding long maturity safe assets I thought banks were able to sell those long maturity assets for cash to another bank or investor to avoid exactly that kind of situation? And my understanding is banks must meet their regulatory requirements overnight each night, so there is a market for overnight loans/swaps/etc to make sure thats the case.

> I thought banks were able to sell those long maturity assets for cash to another bank or investor to avoid exactly that kind of situation?

Those assets dropped in value by like 20% last year. Check out the stock ticker "TLT", which tracks 20+ year treasuries to see just how bad it was, zoom out to 1-year or 2-years.

Re: Silvergate Bank to begin voluntary liquidation

#23

Post by dragontamer »

koolba wrote: post #11
elektor wrote: post #4

It's interesting to see how quickly the public interest (and money!) has shifted from cryptocurrency to AI.

5+% US treasuries can quickly shift the calculus for USD holdings. And lack of “real” money in the system cascades quickly.

Given all the economic data + extremely hawkish comments from Powell yesterday/today, it looks like we're going even higher than expected this year.

FFR futures are expecting a +0.50% increase for the March 22nd meeting.

Re: Silvergate Bank to begin voluntary liquidation

#25

Post by yieldcrv »

dzdt wrote: post #7

Good context by Matt Levine a few days ago [1]. Basically Silvergate did a lot of business with crypto firms and got burned not by crypto speculation but just by holding long maturity safe assets when too many of their customers wanted to withdraw money on a short term basis. The result was falling below the line of being "well capitalised" as a bank. Bank regulation seems to be working here: there is no indication o…

Matt Levine is a good example of how writing cynically about crypto matters makes you wind up correcting crypto adversaries so much that you wind up coming across as a crypto proponent, simply from being able to opine accurately on what's going on.

Re: Silvergate Bank to begin voluntary liquidation

#26

Post by yieldcrv »

rippercushions wrote: post #19
the_mitsuhiko wrote: post #2

Necessary context: Silvergate Bank was a major (by crypto standards) bank underpinning crypto companies. https://en.wikipedia.org/wiki/Silvergate_Bank

More to the point, Silvergate was one of exactly two banks serving crypto companies in the US. The other, Signature Bank, is also under a lot of regulatory pressure and it has already cut off eg. Binance and Kraken.

There will be other banks and onramps. There was a time before those two banks. And there are many more institutions open to the business now.

Re: Silvergate Bank to begin voluntary liquidation

#27

Post by Octokiddie »

dragontamer wrote: post #22
londons_explore wrote: post #21

Earlier quoted context omitted.

> holding long maturity safe assets I thought banks were able to sell those long maturity assets for cash to another bank or investor to avoid exactly that kind of situation? And my understanding is banks must meet their regulatory requirements overnight each night, so there is a market for overnight loans/swaps/etc to make sure thats the case.

> I thought banks were able to sell those long maturity assets for cash to another bank or investor to avoid exactly that kind of situation? Those assets dropped in value by like 20% last year. Check out the stock ticker "TLT", which tracks 20+ year treasuries to see just how bad it was, zoom out to 1-year or 2-years.

That TLT story is being severely under-reported.

Re: Silvergate Bank to begin voluntary liquidation

#29

Post by cloudking »

AceJohnny2 wrote: post #6
elektor wrote: post #4

It's interesting to see how quickly the public interest (and money!) has shifted from cryptocurrency to AI.

Heh, cstross even has a "conspiracy" theory about that sudden shift: https://www.antipope.org/charlie/blog-static/2023/02/place-y... (Which I don't buy)

It takes about 5 minutes playing with ChatGPT to realize it has real time saving value, seems like author hasn't really tried to use it in their work.

While I agree there is a hype bubble forming, I disagree with the premise that it only produces garbage.

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