Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

FDIC Takes over Silicon Valley Bank

fdic.gov

Post reply on HN
Print view View original

711–720 of 1001 posts

Re: FDIC Takes over Silicon Valley Bank

#711

Post by Randalthorro »

tlb wrote: post #109

The regulations that allow a bank to hold long-term fixed-rate bonds backing variable-rate liabilities (since deposit rates float) seems broken. It's straightforward to reckon their exposure to interest rates: they had $90B in 10-year fixed rate bonds, so they lose $9 billion per % of interest increase. They must have known that a 4% increase in interest rates would put them underwater, but they did it (and were allo…

What’s crazy to me is the fed hasn’t been raising rates out of the blue. What the fuck was this bank doing the last two years during every raise? They should have been rebalancing.

Re: FDIC Takes over Silicon Valley Bank

#712

Post by kiratp »

panarky wrote: post #610
bityard wrote: post #299

Earlier 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…

You’re basically saying the employees at a non-tribal number of startups should not be paid payroll because “fat cat VCs”.

Re: FDIC Takes over Silicon Valley Bank

#713

Post by nemothekid »

Eumenes wrote: post #97

Why did startups use SVB over larger commercial banks? Every place I've worked has used them for some reason. I don't get it.

Before the rise of mercury/column/stripe they were also way more amicable to get access to certain banking products. I remember at one point a company I worked for wanted to start doing ACH payments out of their account. Wells Fargo had some incredibly hoops we had to go through whereas SVB was just like "we would give you access, but you need to make us your primary bank".

Re: FDIC Takes over Silicon Valley Bank

#717

Post by PhaedrusV »

bluetwo wrote: post #704
somenameforme wrote: post #367

An 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!…

There are some big parts to this story we don't know. Yes, they sold the treasuries and took a bath. But if that was their best option, it speaks very poorly to the other "assets" they held on their balance sheet. We may find out in the coming days that they had a big position in Silvergate, which went bankrupt yesterday, and they had to mark their position to zero, creating the need for liquidity.

I heard elsewhere they were extending loans to startups with pre-IPO shares as collateral, so yeah, that was their best option apparently.

Re: FDIC Takes over Silicon Valley Bank

#718

Post by nemo44x »

beebmam wrote: post #714

Maybe the federal reserve should slow down its rate increases before we cause a crisis.

Agreed. It has become cargo cult like at this point. The Fed needs to pay attention to more than inflation and consider the time aspect of money and interest rates. Creating unpredictable chaos to optimize around a single (important) metric is not going to create a desirable effect.

Re: FDIC Takes over Silicon Valley Bank

#720

Post by berkle4455 »

Eumenes wrote: post #693
somenameforme wrote: post #367

An 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!…

The team making these poor choices at SVB should be criminally charged ... The tax payer shouldn't have to bail out banks.

Another bank will acquire the company and make depositors whole. Government won't actually do the bailout, just facilitate/force it.
Post reply on HN