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FDIC Takes over Silicon Valley Bank
921–930 of 1001 posts
Re: FDIC Takes over Silicon Valley Bank
#922An 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!…
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…
Yes, it's nonintuitive at first glance. A (good) loan is an asset, and a deposit is a liability as far as banks are concerned.
Re: FDIC Takes over Silicon Valley Bank
#923Earlier quoted context omitted.
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.
It is pretty predictable that they would experience a bank run given interest rates going up though. They locked the money up for way too long so it would've impacted the interest rates they could offer, meaning people would want to move their money outside of any panic instinct. Maybe if it were a bit more spread out over time they wouldn't have entirely collapsed, but they put 40% of their deposits in these things, it still definitely would've stung.
Not disagreeing that MBS is irrelevant, and yeah the risk rating of the bond wasn't a problem as this will pay what it said is would. Just saying it was a stupid move to buy such a large amount of such a long term bond when interest rates can't go anywhere but up and you're using borrowed money to do it. From that perspective it was a risky move.
Re: FDIC Takes over Silicon Valley Bank
#924An 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 if you lose 7% of capital on $180 billion in real terms that’s an awkward conversation with your boss?
Re: FDIC Takes over Silicon Valley Bank
#925An 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!…
Nitpick: The Fed isn't selling bonds. Maybe they meant the Treasury?
Yea that bugged me too ha ha. The Fed doesn’t issue any bonds.
Re: FDIC Takes over Silicon Valley Bank
#926An 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!…
Please correct me if i'm wrong since i'm not a finance guy, apart from the loss of $1.8bn and the delta of the interest - growth from their assets. Isn't everyone still going to get their money back - the percentage of the loss that SVB has which should be less than 5-9%? Sure FDIC has to liquidate all the money from the assets and it takes time. But at least the impact is not going to be as hard as losing all the mo…
I mean. If you’re a startup that just had $10 million locked out and can’t make payroll. It doesn’t matter that you’ll “get your money back”. You’re toast.
Re: FDIC Takes over Silicon Valley Bank
#927An 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
In general people pay their mortgages. Just because a financial crisis has happened around it once doesn’t mean the asset class is inherently bad. It’s more regulated than ever, the problem was rising interest rates and not being able to keep their head above water with the position.
Re: FDIC Takes over Silicon Valley Bank
#928Related ongoing thread: The Demise of Silicon Valley Bank - https://news.ycombinator.com/item?id=35098607 - March 2023 (64 comments) The previous major threads appear to be these (did I miss any?): SVB in talks to sell itself after attempts to raise capital fail - https://news.ycombinator.com/item?id=35094466 - March 2023 (270 comments) Ask HN: How is the SVB situation affecting your startup? - https://news.ycombinat…
You’re doing some really great work through all of this
That's nice of you! but that list is hopelessly out of date now.
Re: FDIC Takes over Silicon Valley Bank
#929An 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.
They bought assets and loaned to customers … pretty standard stuff
Re: FDIC Takes over Silicon Valley Bank
#930Please reboot Silly-con Valley...I mean the show. With everything that has happened with crypto and the current mayhem I think two solid additional seasons can be made.
Bring back the whole cast including TJ Miller (sober or not, he brings it) ... but not Middleditch. https://www.usatoday.com/story/entertainment/celebrities/202...
Thomas Middleditch shouldn't earn a living ever again because he made a woman at a nightclub feel uncomfortable?