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FDIC Takes over Silicon Valley Bank

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Re: FDIC Takes over Silicon Valley Bank

#951

Post by jen20 »

banku_brougham wrote: post #204
version_five wrote: post #40

Earlier quoted context omitted.

Re Bear Sterns, there were lots of political reasons it was allowed to fail while others were protected. If I remember right something about them not helping with the Long Term Capital Management collapse for example. There will have been people who had the opportunity to help SVB and collectively decided it was better to let it fail. It will be interesting to understand the decisions that were made when the dust set…

great callback. revenge on Jimmy Cayne for when genius failed. Dont forget it was Lehman that failed first, Bear got special treatment amongst the Citi, AIG, et al bailouts.

This is simply not true.

Re: FDIC Takes over Silicon Valley Bank

#952

Post by DeathArrow »

duxup wrote: post #435
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!…

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…

>Until I heard about those banks I hadn’t considered “too much money” was a problem.

You can always buy crypto if you think you have too much money. Or find a nice Ponzi scheme and invest in that.

Re: FDIC Takes over Silicon Valley Bank

#953

Post by ignoramous »

dang wrote: post #589

Related 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…

Sell off in US bank stocks after SVB solvency scare https://news.ycombinator.com/item?id=35091505 - March 2023 (22 comments)

Re: FDIC Takes over Silicon Valley Bank

#954

Post by ignoramous »

FiberBundle wrote: post #948
danielmarkbruce wrote: post #750

Earlier quoted context omitted.

Of course the VCs who told their portfolio companies to pull the money were doing the right thing, by the people they are obliged to do the right thing by. They want to protect their companies and their investors. They'd be mad not to, and they are legally obliged in many cases. I think you'll find a lot of the people complaining are people who got hit and are bitter about it. e.g. some CFO's seem to be complaining a…

No, it actually was incredibly stupid and short-sighted by VCs. Here's Matt Levine on that point [1]: > Also, I am sorry to be rude, but there is another reason that it is maybe not great to be the Bank of Startups, which is that nobody on Earth is more of a herd animal than Silicon Valley venture capitalists. What you want, as a bank, is a certain amount of diversity among your depositors. If some depositors get spo…

> SVB probably would not have collapsed

Probably is doing a lot of heavy lifting without telling how? Because in the first paragraph, Levine himself says SVB wasn't diversified or large enough to make it through £16b write down on their HTM investments: https://twitter.com/RagingVentures/status/163357916752972595...

Re: FDIC Takes over Silicon Valley Bank

#955

Post by havkom »

havkom wrote: post #740

Is this a good guess as any? * With-in a week or so uninsured accounts will get 40-60 cents per dollar * In years when the liquidation process is finished they will have gotten 5-20 cents more in addition per dollar * Shareholders will get nothing in this scenario Are there any better guesses or any flaws that makes this guess unresonable?

I dont see why this was downvoted looking at some historical examples:

* IndyMac Bank: In 2008, IndyMac Bank, a large savings and loan association, failed and was taken over by the FDIC. At the time of its failure, IndyMac had $1 billion in uninsured deposits. The FDIC estimated that it would be able to recover only 50 to 80 cents on the dollar from the bank's assets. As a result, the FDIC paid advance on uninsured funds of 50% of the uninsured amount, or $500 million, to the bank's depositors.

* Washington Mutual: In 2008, Washington Mutual, a large bank, failed and was taken over by the FDIC. At the time of its failure, Washington Mutual had $4 billion in uninsured deposits. The FDIC estimated that it would be able to recover only 30 to 50 cents on the dollar from the bank's assets. As a result, the FDIC paid advance on uninsured funds of 30% of the uninsured amount, or $1.2 billion, to the bank's depositors.

* First National Bank of Nevada: In 2008, the First National Bank of Nevada failed and was taken over by the FDIC. At the time of its failure, the bank had $200 million in uninsured deposits. The FDIC estimated that it would be able to recover only 90% of the uninsured amount from the bank's assets. As a result, the FDIC paid advance on uninsured funds of 90% of the uninsured amount, or $180 million, to the bank's depositors.

The question basically asks humbly what factors may be special now and are important in this specific case and queries others humbly on how to think about this.

Re: FDIC Takes over Silicon Valley Bank

#956

Post by ignoramous »

0x00000000 wrote: post #795
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…

Don’t worry guys, FTX.us is completely separate and independent from FTX.com

We bought two domain names to prove it!

Re: FDIC Takes over Silicon Valley Bank

#957

Post by m101 »

joosters wrote: post #480
duxup wrote: post #435

Earlier quoted context omitted.

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…

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)

It has +1mm cash (asset) and +1mm liability to depositor

Re: FDIC Takes over Silicon Valley Bank

#958

Post by iguana_lawyer »

jaxomlotus wrote: post #794

We bank with SVB and our funds are now frozen. This is going to be an incredibly painful weekend of waiting for news. For anyone else impacted, wishing you the best - stay strong.

You should have deposited your money into a bank that wasn’t going to fail.

Re: FDIC Takes over Silicon Valley Bank

#959

Post by bravo22 »

sacnoradhq wrote: post #941

Friends of mine who were acquired by VMware used SVB 2010-2015 because their investors preferred it. 20/20 hindsight: they were too niche and not diversified. It would've been a slam-dunk to send out flyers to local property owners in the South Bay Area and Santa Cruz Mountains. For my consulting LLC, I went with Comerica because I figured SVB had the issues of being like a credit union but without CU behind it. If I…

Comerica doesn't look so great these days either. I expect something to pop off there in the next little while. I would diversify away from them as well.

Re: FDIC Takes over Silicon Valley Bank

#960

Post by grey-area »

NovemberWhiskey wrote: post #721
kypro wrote: post #671

Earlier quoted context omitted.

> - The issue is that as the Fed raised interest rates in 2022 and continued to do so through 2023, the value of SVB’s MBS plummeted. This is because investors can now purchase long-duration "risk-free" bonds from the Fed at a 2.5x higher yield. Let's be clear, the issue wasn't that the Fed raised rates to a historically average level, it was that they were manipulating the bond market in 2021 with trillions of dolla…

> Let's be clear, the issue wasn't that the Fed raised rates to a historically average level, it was that they were manipulating the bond market in 2021 with trillions of dollars of QE. One of the principle, statutory purposes of the Federal Reserve is to conduct monetary policy to achieve maximum employment and stable prices. That means it's the job of the Fed to manipulate interest rates.

Sure it is their job to set interest rates. It is far less clear that it is their job to buy government and corporate debt, and allow the government to issue unprecedented amounts if debt. Or to attempt to completely erase the business cycle.
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