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FDIC Takes over Silicon Valley Bank

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Re: FDIC Takes over Silicon Valley Bank

#821

Post by lapcat »

lapcat wrote: post #608
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!…

> An explainer post [1] connected to that Tweet is something I found extremely informative (assuming it's accurate): [1] - https://twitter.com/jamiequint/status/1633956163565002752 That tweet is unattributed verbatim from https://www.livemint.com/news/world/explainer-silicon-valley... [EDIT:] See the thread, it seems that the story may have stolen from the tweet! Pretty shocking for one of India's biggest business pu…

Some people are downvoting my reply to jamiequint https://news.ycombinator.com/item?id=35100305 but if that comment becomes dead then you won't be able to see his reply to me or the surprising conclusion of the story.

Re: FDIC Takes over Silicon Valley Bank

#822

Post by timdaub »

kgwgk wrote: post #755
timdaub wrote: post #477

Earlier quoted context omitted.

Would love to understand if this is actually good financial advice here. My bank plays broker for all the assets I own and tbills are part of that. FDIC wrote: > As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors. So to me that sounds like those „risk-free“ assets will get liquidated too. I‘d love to hear an actual professional confirm/deny this. Because…

The bank's assets will be liquidated. If you have a securities account at a bank those are your assets, not the bank's.

so if I own $1M in Treasury bills I'll get them back while if I own $1M in cash then I'll get back $250k?

Re: FDIC Takes over Silicon Valley Bank

#823

Post by bdangubic »

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!…

all other details aside - if you purchase $80bn of “mortage-backed” anything you deserve everything that will eventually come your way

Re: FDIC Takes over Silicon Valley Bank

#824

Post by subarctic »

consumer451 wrote: post #818

Wow: > Some banking experts on Friday pointed out that a bank as large as Silicon Valley Bank might have managed its interest rate risks better had parts of the Dodd-Frank financial-regulatory package, put in place after the 2008 crisis, not been rolled back under President Trump. > In 2018, Mr. Trump signed a bill that lessened regulatory scrutiny for many regional banks. Silicon Valley Bank’s chief executive, Greg…

This was new information for me, but somehow I don't share your surprise that there's a NY Times article that mentions that Trump is to blame.

Re: FDIC Takes over Silicon Valley Bank

#825

Post by consumer451 »

subarctic wrote: post #824
consumer451 wrote: post #818

Wow: > Some banking experts on Friday pointed out that a bank as large as Silicon Valley Bank might have managed its interest rate risks better had parts of the Dodd-Frank financial-regulatory package, put in place after the 2008 crisis, not been rolled back under President Trump. > In 2018, Mr. Trump signed a bill that lessened regulatory scrutiny for many regional banks. Silicon Valley Bank’s chief executive, Greg…

This was new information for me, but somehow I don't share your surprise that there's a NY Times article that mentions that Trump is to blame.

My surprise was not partisan in nature.

But that information is not going to come from Fox News, so the system is working as intended then?

Re: FDIC Takes over Silicon Valley Bank

#826

Post by dragonwriter »

subarctic wrote: post #824
consumer451 wrote: post #818

Wow: > Some banking experts on Friday pointed out that a bank as large as Silicon Valley Bank might have managed its interest rate risks better had parts of the Dodd-Frank financial-regulatory package, put in place after the 2008 crisis, not been rolled back under President Trump. > In 2018, Mr. Trump signed a bill that lessened regulatory scrutiny for many regional banks. Silicon Valley Bank’s chief executive, Greg…

This was new information for me, but somehow I don't share your surprise that there's a NY Times article that mentions that Trump is to blame.

I mean, really Clinton is to blame for Glass-Steagall repeal, but Trump weakened the measures put into place that partially mitigated the risk from the Clinton policy. Just as Clinton threw out the risk mitigation measure put into place after the Great Depression, Trump undermined the partial replacement put into place after the Great Recession.

If Trump deserves more blame, its because the reason the idea was bad was much more fresh at the time of his action.

Re: FDIC Takes over Silicon Valley Bank

#827

Post by consumer451 »

dragonwriter wrote: post #826
subarctic wrote: post #824

Earlier quoted context omitted.

This was new information for me, but somehow I don't share your surprise that there's a NY Times article that mentions that Trump is to blame.

I mean, really Clinton is to blame for Glass-Steagall repeal, but Trump weakened the measures put into place that partially mitigated the risk from the Clinton policy. Just as Clinton threw out the risk mitigation measure put into place after the Great Depression, Trump undermined the partial replacement put into place after the Great Recession. If Trump deserves more blame, its because the reason the idea was bad wa…

They can both be wrong in my book.

Re: FDIC Takes over Silicon Valley Bank

#828

Post by ummonk »

voisin wrote: post #469
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!…

> - 97% of these MBS were 10+ year duration, with a weighted average yield of 1.56%. This is a pretty insane bet. Why didn’t they ladder the maturities to have a lower average duration and less risk?

They were probably chasing higher yields in a low yield environment.

Re: FDIC Takes over Silicon Valley Bank

#829

Post by incompatible »

dragonwriter wrote: post #538
323 wrote: post #524

Earlier quoted context omitted.

I had the vague impression that after the 2007 crisis, banks holding retail deposit accounts were not allowed to invest in stuff like MBS, only investment banks (without retail accounts) were.

> I had the vague impression that after the 2007 crisis, banks holding retail deposit accounts were not allowed to invest in stuff like MBS, only investment banks (without retail accounts) were. You are confusing the Great Recession with the Great Depression. The 2007 crisis and subsequent Great Recession was contributed to by the 1999 repeal of that rule, adopted in response to the Great Depression ; there were seve…

The Glass–Steagall rules?

I think the financial crisis ended in 2009, when at the time there was fear that Citibank would be the next to collapse. A rule change was made to allow banks to value "hold to maturity" assets at the purchase price instead of the current market value, so that they could avoid an insolvent balance sheet. The problem for Silicon Valley Bank was apparently that they needed to sell some of the assets and take the loss.

* https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_legisla...

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