Emergency bridge loan for SVB customers

Post by eddsh1994 » Sat, Mar 11, 2023, 1:33 AM UTC

anonu wrote: post #67

eek2121 wrote: post #47

Earlier quoted context omitted.

Uh, no? Do you know how they got into this mess to begin with? They were over-exposed to US treasuries. Let's talk about that for a moment: 1) When yields go up, treasury prices fall. 2) When yields go down, treasury prices rise. 3) The only way you get the basis cost for a treasury back is if you hold to maturity. When a bank run happens, you (if you are bank) need cash. Lots of it. If you own assets, you have to se…

Over exposed to US treasuries? I don't think anyone has put those words together before. It's like saying they were over exposed to cash. You're saying a bank run occurred because they had a duration mismatch on US government debt where maturities were less than 1 year. I don't buy that explanation at all...

Post by NovemberWhiskey » Sat, Mar 11, 2023, 1:39 AM UTC

short_sells_poo wrote: post #83

NovemberWhiskey wrote: post #70

Earlier quoted context omitted.

It’s more complicated than that: debt assets can be classified in a number of different ways i.e. hold-to-maturity, available-for-sale or trading. Hold-to-maturity assets are not required to mark to market, for example.

> Hold-to-maturity assets are not required to mark to market, for example. This is irrelevant in a scenario where every client wants to withdraw their money, because the only way SVB can fulfill that is by selling their HTM assets at the current market price, which will be at a heft discount compared to where they bought them.

Post by 462436347 » Sat, Mar 11, 2023, 1:41 AM UTC

cyberlurker wrote: post #89

462436347 wrote: post #79

Earlier quoted context omitted.

> SVB was a national bank It was more of a regional bank, specifically one servicing SV, with at most sporadic branches elsewhere, usually just one in a given state in its largest major city (e.g., one in NY: in NYC; one in D.C.; one in Colorado: in Denver). In many states they have no branches (e.g., Florida): https://www.svb.com/locations > Nothing they do isn't done by others Then why did so many startups and VCs…

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Post by MrMan » Sat, Mar 11, 2023, 1:43 AM UTC

throwntoday wrote: post #8

nostrebored wrote: post #6

Earlier quoted context omitted.

97% of deposits in SVB exceeded the FDIC threshold. The question is, by how much on average? The amount of risk here is significant. I think this is a desperate play by a company in a struggling industry.

I believe the only ones SOL are SIVB shareholders. It's my understanding that SVB has enough to mostly cover their liabilities.

Post by MrMan » Sat, Mar 11, 2023, 1:48 AM UTC

ummonk wrote: post #52

ivalm wrote: post #14

Earlier quoted context omitted.

No, SVB was solvent as long as their assets didn’t have to marked to market, once there was a bank run they became insolvent. If the SVB assets are liquidated they will not cover the deposits.

They were still solvent despite the mark to market losses - they just couldn't meet reserve requirements (and planned to raise money through a stock sale to that effect) after the assets were marked to market. Meeting reserve requirements is a much higher bar than simply having assets worth more than liabilities.