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FDIC Takes over Silicon Valley Bank

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Re: FDIC Takes over Silicon Valley Bank

#891

Post by inawarminister »

javajosh wrote: post #699
joosters wrote: post #480

Earlier quoted context omitted.

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)

Not an expert, but was having some thoughts. Let debt be a graph where the nodes are people (with ledgers) and the edges are all of the form "alice rents $x from bob for y% APR". Actions that resolve/relax graph are payments of the form "alice pays bob $z", that lead to all balances being 0. Let the edges decay to null when balance is 0, such that a 'resolved graph' is simply a list of nodes with no edges, meaning 'n…

There's a concept in Anthropology/Primitive Economics called "Gift Economy" where participants in a community gifted each other help, goods, food, and rely on being gifted back similar things in higher/lower proportions sometimes in the near future.

If I'm not mistaken, Debt: the First 5000 Years and the Dawn of Everything books examined this.

Your graph is a formalization of such relationship, no?

Re: FDIC Takes over Silicon Valley Bank

#892

Post by morpheuskafka »

eclipticplane wrote: post #849
kmlx wrote: post #215

Silicon Valley Bank UK confirms it’s a standalone independent UK regulated bank. London, 10 March, 2023: Silicon Valley Bank UK, the financial partner of the innovation economy, today moved to confirm to its UK clients, partners and external stakeholders its financial position as a standalone independent banking institution that is regulated and governed by the PRA in the UK. Silicon Valley Bank UK has been an indepe…

This press release didn't age well. https://www.bloomberg.com/news/articles/2023-03-10/svb-s-uk-...

If the assets are separate, it is still a very relevant point for depositors because the outcome of the UK receivership will be based on those separate assets. The amount that depositors in the UK bank recover may be completely different, higher or lower, than the depositors in the main bank.

Re: FDIC Takes over Silicon Valley Bank

#894

Post by morpheuskafka »

jetpks wrote: post #816
theonething wrote: post #813

Earlier quoted context omitted.

If you don't have more that 250k cash in there you should be good.

Unless they needed to pay their employees or vendors today.

Supposedly checks drawn on the old bank will still clear (presumably only up to the insured amount, though it doesn't say that) according to the FDIC. And the non-insured amount will be available in branches tomorrow via the FDIC-operated DINB. So in theory you would be looking at at most one business day late for payments if you are only concerned with the $250k part.

Re: FDIC Takes over Silicon Valley Bank

#896

Post by xwolfi »

weego wrote: post #601
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!…

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.

Come on, where else would they put your money ? When are retail going to understand handling and parking and securing and regulating money has a cost and interest rate have to be chased somewhere.

Narrow banking never works because at the first regulatory lapse (my employer got fined 200M because we used whatsapp, not even for committing crimes), BAM no money left for deposit liabilities.

And dont forget here that as long as people eventually pay their mortgage in the expected default risk, the money will eventually come back, at an opportunity cost.

Re: FDIC Takes over Silicon Valley Bank

#897

Post by acjohnson55 »

javajosh wrote: post #699
joosters wrote: post #480

Earlier quoted context omitted.

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)

Not an expert, but was having some thoughts. Let debt be a graph where the nodes are people (with ledgers) and the edges are all of the form "alice rents $x from bob for y% APR". Actions that resolve/relax graph are payments of the form "alice pays bob $z", that lead to all balances being 0. Let the edges decay to null when balance is 0, such that a 'resolved graph' is simply a list of nodes with no edges, meaning 'n…

Your model feels trueish to me, but I think the analogy is actually overcomplicating it.

The basic nature of finance is that some people have money they don't immediately need and others have needs they can afford over time but not upfront.

It's basically a layer on top of money in general, which is a way of decentralizing value production. Instead of pairwise trades, money serves as credit for value creation, recognized by 3rd parties.

The people running the graph are everyone with excess money or the ability to acquire it. Basically, everyone but the poor.

Re: FDIC Takes over Silicon Valley Bank

#898

Post by notfromhere »

anshumankmr wrote: post #843
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!…

Why would someone buy an MBS after 2008?

MBS is not the problem here. It’s not 2008.

They bought bonds when interest was low, now interest is high and they’re worth less.

SVB wouldn’t have lost cash on those bonds if they didn’t experience a bank run.

Re: FDIC Takes over Silicon Valley Bank

#900

Post by brightstep »

ahmedbaracat wrote: post #806
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!…

This logic is counterintuitive to me “As deposits grew, SVB could not grow their loan book fast enough to generate the yield they wanted to see on this capital.”. Startups are not depositing the money in SVB to invest it, they are storing it for future use. Why the pressure to generate yield and grow the loan book “fast enough”? https://twitter.com/AhmadBaracat/status/1634293096639787008?...

Because the bank, like all capitalist entities, exists to make a profit. Why else?
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