Where can we find a list of startups that have large quantities of deposits at SVB?
FDIC Takes over Silicon Valley Bank
651–660 of 1001 posts
Re: FDIC Takes over Silicon Valley Bank
#652Earlier quoted context omitted.
Agreed. Lots of people here in the comments are making assumptions about a system they don't understand. Depositors with > $250k aren't necessarily going to "take a haircut," for the reason you mentioned, plus a few others. Additionally: 1. Any financial advisor who recommended to these startups that they should keep >250k in a regular bank account should be fired. It's totally possible (and regularly done) to spread…
SVB is not a typical regional bank taking deposits from middle-class workers, where most accounts are under the 250k insurance limit. Banks that primarily serve ordinary workers typically have over 50% of total deposits in accounts that are under the limit, and are fully insured. But for SVB, less than 3% of deposits are in accounts with less than $250k . The cold, hard fact is that if the bank doesn't have sufficien…
> The cold, hard fact is that the bank doesn't have sufficient assets to pay back depositors
This is not obvious at this time. This is not a cold hard fact. They absolutely, undeniably had assets in excess of depositor liabilities at the end of Dec 2022. They incurred losses since then. The accountants are still accounting.
> and no regulatory sleight of hand changes that fact.
There literally is regulatory "sleight of hand" to do this, and the FDIC has a demonstrated history of doing it, many times. When banks like this fail, they shop the assets and existing customers around to other banks, and critically: will pay the acquiring bank to close the gap between assets and liabilities + provide liquidity while assets mature.
> There's a reason why large deposits aren't insured, and that's because the rich have the knowledge and resources to take care of themselves, and shouldn't force ordinary people to subsidize them when their bets go bad.
The FDIC is entirely funded by insurance premiums paid for by the banks themselves. They are not tax payer funded.
Your fear is causing you to spread misinformation and scare people more than necessary.
Re: FDIC Takes over Silicon Valley Bank
#653Earlier quoted context omitted.
The thing that's strange is FDIC took control and setup a receiving bank for liquidation. That's not normal; FDIC works quite hard to find a bank willing to take over - usually they can work out what the "cost" is to take over, and FDIC pays the receiving bank that amount to "eat" the dying one. If they don't announce they have a bank to assume SVP by Monday, it's quite abnormal.
What is "SVP"?
I suspect a typo for SVB, "Silicon Valley Bank".
Re: FDIC Takes over Silicon Valley Bank
#654Does the US and SVB have bail-in laws? There is a huge difference between a preferred creditor and being at the back of the line. As SVB has a rather low percentage of FDIC insured coverage at ~5.69% compared to a more normal 40-60% they can't rely on FDIC to get the more typical 90c on the dollar. But then again SVB might have been healthier than other banks so maybe the dilution won't be so bad. Historically deposi…
Replying since I can't edit: FDIC is issuing a Receivership Certificate which I am assuming has first cut priority so it does not appear to be a bail-in. Debtors and equity will get hosed, as it should be, hopefully they can avoid a bail-out as well.
Edit: I just noticed that it says that in the link of the thread. I'm tired and I didn't read it carefully, my mistake.
Re: FDIC Takes over Silicon Valley Bank
#655An explainer post [1] connected to that Tweet is something I found extremely informative (assuming it's accurate): "- In 2021 SVB saw a mass influx in deposits, which jumped from $61.76bn at the end of 2019 to $189.20bn at the end of 2021. - As deposits grew, SVB could not grow their loan book fast enough to generate the yield they wanted to see on this capital. As a result, they purchased a large amount (over $80bn!…
"97% of these MBS were 10+ year duration, with a weighted average yield of 1.56%." I'd like to learn more about the dramatic drop in MBS - elsewhere, downthread, it is asserted that they have dropped 30-50% ? I understand the inverse relationship between bond price and yield ... ... but I am surprised that an asset yielding ~1.5% drops 30% in value when treasuries of similar duration rise to 3-4%. Are there other fac…
Interest rate rise will cause the same loss for bonds of the same duration. However MBS don’t have fixed durations. As interest rates go up, borrowers are expected to hold onto their mortgage longer. So the expected duration goes up for an MBS as well and loss is expected to be higher than bonds with similar duration to begin with.
However there is a mitigating factor for MBS in a rising rate environment, that is they are amortizing instruments. So the duration doesn’t go up as dramatically as callable bonds/CDs.
Re: FDIC Takes over Silicon Valley Bank
#656An explainer post [1] connected to that Tweet is something I found extremely informative (assuming it's accurate): "- In 2021 SVB saw a mass influx in deposits, which jumped from $61.76bn at the end of 2019 to $189.20bn at the end of 2021. - As deposits grew, SVB could not grow their loan book fast enough to generate the yield they wanted to see on this capital. As a result, they purchased a large amount (over $80bn!…
When the fuck are retail banks going to be ring-fenced away from being able to trade in MBS. They're consistently cancerous to our banking systems.
This isn't an MBS problem. It's just a poorly performing asset problem.
Re: FDIC Takes over Silicon Valley Bank
#657Better call Gavin Belson.
Re: FDIC Takes over Silicon Valley Bank
#658Earlier quoted context omitted.
I have some family who (with some other partners) founded a small community bank that has grown over the years. They expanded in some areas by buying other small community banks, specifically in areas where there was a big increase in income in the local area (from mineral rights, etc). The smaller banks that they bought were in a situation where suddenly they had large amounts of cash incoming, and customers who wer…
At first glance, bank balance sheets are unintuitive and feel 'the wrong way round'. When someone deposits $1m at a bank, the bank doesn't have $1m more assets, it has $1m more liabilities. (Yes, this is a gross over-simplification)
Yes, bank deposits are a liability for the bank, which is why a bank won’t increase the amount you have in your account if you ask nicely. You have to pay them. If someone’s bank account went up by $1 million, the bank better have gotten $1 million more in assets from them somehow, or something weird is going on.
(Often, the asset comes from the bank making a loan. You can pay later.)
Re: FDIC Takes over Silicon Valley Bank
#6592008 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…
> And any accounts over $250K, poof. That's not quite true; the FDIC will pay uninsured depositors an advance dividend within the next week.
And they'll probably get 90%+ back eventually. The bank's money isn't gone it just isn't liquid.
Re: FDIC Takes over Silicon Valley Bank
#660Earlier quoted context omitted.
Edit - this has been the first fdic takeover since 2020, so no, it does not happen often. This chart of historic bank failures paints a different picture: https://www.fdic.gov/bank/historical/bank/
And this chart paints an even different picture: https://twitter.com/alistairmbarr/status/1634275645235793920
lehman brothers had total assets of $639B when it filed for bankruptcy on September 15, 2008. adjusted for inflation that's ~$800B.