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FDIC Takes over Silicon Valley Bank

fdic.gov

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Re: FDIC Takes over Silicon Valley Bank

#231

Post by jitl »

nnx wrote: post #173

But I thought only crypto was risky? And that over-regulated bank sector was totally safe? Imho, this is a great argument for the return of Free banking (including crypto) as we see time and again that regulations do not work. Fail early and fast, let the market innovate and pick its winners and losers.

When a bank fails, it gets put into receivership and you get (some of) your money back. There's enormous protection working in your favor provided by the FDIC. When a crypto token enters free-fall, there's no one to stop the market, and no one to help you get your money back. It's gone.

Re: FDIC Takes over Silicon Valley Bank

#232

Post by [deleted] »

version_five wrote: post #40
game_the0ry wrote: post #11

2008 bear sterns vibes. The fed's move in interests rates was bound to break something. This is the first big name and, while banks are taken over by the FDIC often and it never makes the news, this one will be especially interesting bc it is Silicon Valley Bank. Naturally, people and the media will associate with the rest of silicon valley, bringing extra scrutiny to every brand name tech company, especially the one…

Re Bear Sterns, there were lots of political reasons it was allowed to fail while others were protected. If I remember right something about them not helping with the Long Term Capital Management collapse for example. There will have been people who had the opportunity to help SVB and collectively decided it was better to let it fail. It will be interesting to understand the decisions that were made when the dust set…

[deleted]

Re: FDIC Takes over Silicon Valley Bank

#233

Post by zeitgeistcowboy »

albatross13 wrote: post #29
FormerBandmate wrote: post #8

Turns out Twitter making bank failure a meme didn’t really help anything at all. It’ll be very interesting to see what happens to uninsured depositors

Probably a dumb question, but what determines if a deposit is insured or not at an FDIC insured bank?

I'm not sure if this helps answer your question, but coverage is automatic if you have your funds in an FDIC insurance bank (most all of them) and if it's in a normal savings type account and then any amount 250k or less.

Re: FDIC Takes over Silicon Valley Bank

#235

Post by Macha »

omgomgomgomg wrote: post #132

Hold on, what happens if someone raised money from them for an incorporation? They have to pay backbas usual, right?

Yes, if you owe money to a bankrupt organisation, the creditors of that organisation now have your liability as their asset and will still expect payment.

Re: FDIC Takes over Silicon Valley Bank

#236

Post by cameldrv »

nostromo wrote: post #189
FormerBandmate wrote: post #66

Earlier quoted context omitted.

This case is unique because of the sheer volume of non-FDIC insured deposits. Substantial risk of depositors not being made whole for a while, they’ll probably get all their money but it will still be bad

All their money? I doubt it. SVB owned a bunch of mortgage backed securities and treasuries - both of which are down 30-50% from their peaks, which coincides with our last venture capital boom. SVB was buying at the top because they had so much capital to deploy. Maybe instead of cashing it out, depositors could be given a treasury worth 30% less than SVB paid for it, that pays out 1% a year in interest, redeemable a…

Yes but supposedly if you mark their balance sheet to market, the net is approximately zero, i.e. they have just enough assets to cover liabilities with no reserve. In this case you could say that the reserve requirement is serving its purpose. The stockholders may be wiped out (depending on how much a potential buyer values the goodwill), but the depositors should get all their money back. Worst case I think depositors would take a small haircut.

Re: FDIC Takes over Silicon Valley Bank

#240

Post by shawabawa3 »

FormerBandmate wrote: post #211
banku_brougham wrote: post #107

Earlier quoted context omitted.

Its so funny until you realize your seed-round investment in a friends company used SVB. Gonna be quite a show, this.

Tons of VCs had their assets there too. It could lead to serious ramifications, anyone with substantially more than $250k in that bank is out a lot and only time will tell how much they’ll be able to recoup. It’s not an FTX situation, the assets are somewhat there, but the losses in securities look extreme and unwinding them at a fair price may take months, if not years

It is actually exactly an FTX situation

Not as extreme maybe, and less fraud got us here, but $assets < $deposits

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