51–60 of 69 posts
Earlier quoted context omitted.
This is also why small, concentrated merchant banks like this are risky. Deposit base is too homogenous.
It was one of the 15 largest banks in the country.. if depositors lose money here, every bank in US better be ready Monday morning as every company moves all of their funds to one of the top 3.
Wow, how prescient. Articles like this are especially damning to the execs that sold stocks just a few weeks ago. This was not some huge surprise. They may not have anticipated the ferocity with which there would be a run on the bank, but they absolutely knew they were in deep shit and would need to do a capital raise. And I hope nobody tries to defend this with "those stock sales were from 10b5-1 plans!". Those can…
At least so far the story is that SVB got in trouble because it invested in bonds that went down in value, not because of its loan portfolio. We’ll see if that is true or the whole story, but if it is true, the scenario is entirely different from what that article is suggesting.
The article nailed the "unrealized losses in its htm (hold to maturity) fixed income portfolio", and it nailed the risk of deposit bleeds forcing liquidation of the htm assets, realizing the unrealized losses, leading to insolvency.
Wow, how prescient. Articles like this are especially damning to the execs that sold stocks just a few weeks ago. This was not some huge surprise. They may not have anticipated the ferocity with which there would be a run on the bank, but they absolutely knew they were in deep shit and would need to do a capital raise. And I hope nobody tries to defend this with "those stock sales were from 10b5-1 plans!". Those can…
> Articles like this are especially damning to the execs that sold stocks just a few weeks ago. You mean the reverse, right? You can't insider trade if it's not insider information! This article supports the execs, not damns them.
The "inside information" piece is exactly when SVB would need to do a highly risky capital raise, which SVB did (or tried to do) conveniently 2 weeks after the CEO sold millions.
Earlier quoted context omitted.
> “We are selling to willing buyers at the current fair market price.” A line from the really good movie Margin Call : * https://en.wikipedia.org/wiki/Margin_Call Worth checking out.
In my opinion, it’s the best movie ever about finance, and it’s not even close.
Wow, how prescient. Articles like this are especially damning to the execs that sold stocks just a few weeks ago. This was not some huge surprise. They may not have anticipated the ferocity with which there would be a run on the bank, but they absolutely knew they were in deep shit and would need to do a capital raise. And I hope nobody tries to defend this with "those stock sales were from 10b5-1 plans!". Those can…
At least so far the story is that SVB got in trouble because it invested in bonds that went down in value, not because of its loan portfolio. We’ll see if that is true or the whole story, but if it is true, the scenario is entirely different from what that article is suggesting.
if all of their assets were AAA and they were only down 15% they wouldnt be a failed bank right now. nobody knows how big the losses really are, but the people they were in business with knew best, and those people pulled their money as fast as they could, so everyone else can make assumptions based on that.
Earlier quoted context omitted.
Who got hurt by execs selling stock into the market? Hopefully sophisticated investors who should’ve known better. For over a year there were indicators SVB was not healthy. “We are selling to willing buyers at the current fair market price.” Edit: if you don’t like the 10b5-1 rules as they stand, feel free to submit a comment to Gensler and Co at the SEC. If you can’t trade on positive material non public informatio…
> “We are selling to willing buyers at the current fair market price.” A line from the really good movie Margin Call : * https://en.wikipedia.org/wiki/Margin_Call Worth checking out.
Another great quote from Margin Call. Love every bit of that movie. Very underrated too, as it was (unfairly) overshadowed by The Big Short.
Earlier quoted context omitted.
“Sophisticated” doing a lot of lifting in this case. Very aspirational. If you’re buying single named securities without any due diligence, you deserve the returns you encounter. That’s your job! No one index investing is going to feel this in a material capacity. Depositors will be made “whole enough”, and an irresponsible bank got blown out and dismantled. The system worked. If there was fraud, regardless of crimin…
When you say "the system worked" because depositors will get back some as-yet-undetermined percentage of their deposits, that's not relevant to an insider trading discussion -- that's shifting the topic from whether investors in SVB were harmed, to whether depositors were harmed. I don't quite understand your position on insider trading. The idea behind making it a crime is that no matter how "sophisticated" an outsi…
Earlier quoted context omitted.
No bank can bet the deposits will stay the same: Through the short-term economic cycles, people will accumulate for 6 months, 2 years, 10 years, then deplete. Covid hits? Everyone needs 3 grand at the same time. Government gibs money? Everyone has 3 grand extra for a few weeks. Everyone gets paid on the 1st of the month. You can average, but everyone will hit the low at the same time.
Not true. Imagine there was only ONE bank.
A single global bank in a world without paper money/gold/etc might be different.
Earlier quoted context omitted.
It was one of the 15 largest banks in the country.. if depositors lose money here, every bank in US better be ready Monday morning as every company moves all of their funds to one of the top 3.
That is irrational behaviour. Depositors should spread their cash across multiple banks. This is very basic risk management.
Earlier quoted context omitted.
Not true. Imagine there was only ONE bank.
I see what you’re getting at but people could still withdraw paper money or do international transfers. A single global bank in a world without paper money/gold/etc might be different.
But on the international transfer thing... you selling USD and buying EUR doesn't result in the creation or destruction of any USD or EUR deposits overall, unless the central bank/government is intervening.