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Emergency bridge loan for SVB customers

brex.com

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Re: Emergency bridge loan for SVB customers

#101

Post by 462436347 »

JumpCrisscross wrote: post #88
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…

> was more of a regional bank, specifically one servicing SV, with at most sporadic branches elsewhere Top 20 by assets and with a branch in New York. That’s a national bank. > why did so many startups and VCs bank with them? They were first and did what they did well. That doesn’t make them preciously unique. > would personally be hesitant to use this terminology for others, unless they're actually doing something t…

> Over a bank?

Over a financial contagion that could sap the liquidity and solvency of the startups these VCs have invested in, and possibly cause harm to the wider economy (which I doubt they care very much about)?

Re: Emergency bridge loan for SVB customers

#102

Post by 462436347 »

stefan_ wrote: post #75
462436347 wrote: post #42

Earlier quoted context omitted.

> I think you massively underestimate how hard it is to coordinate under these kinds of conditions. I think you're unfamiliar with the Long-Term Capital Crisis, and the speed with which it was resolved (two days: Sep 22-23). In fact, it's partly because the NY Fed and big banks acted so swiftly and responsibly, that most people have never heard of this and don't realize how close we came to a financial crisis: >The F…

The winning strategy is to pretend you are committing to the group (so as to maximize the time you have) while selling as fast as you can. See also: Bill Hwang's Archegos Capital.

> The winning strategy is to pretend you are committing to the group (so as to maximize the time you have) while selling as fast as you can. See also: Bill Hwang's Archegos Capital.

No, the consortium members actually made money by slowly unwinding LTCM's trade book. It's not clear that a fire sale of LTCM's collateral by a rogue counterparty would have done the same, and at best might have just minimized their losses had LTCM completely collapsed.

Re: Emergency bridge loan for SVB customers

#103

Post by doubleunplussed »

dwater wrote: post #68
hackernewds wrote: post #44

Earlier quoted context omitted.

That's a liquidity crisis, not insolvency. They were invested in long term maturity US treasuries! The safest asset there is (arguably)

All they had to do was freeze withdrawals for 10 years and it all would have worked out fine.

Right. But that is exactly the distinction between being illiquid and being insolvent.

Re: Emergency bridge loan for SVB customers

#104

Post by walnutclosefarm »

nostrebored wrote: post #6
gpm wrote: post #3

Honestly this makes a ton of sense. The FDIC will be returning most (or all) of the deposits in SVB, so the debt is reasonably safe (at least as far as debt that startups take on ever is). Whoever is funding this is probably not taking on all too much liability, and if they're heavily invested in the startup ecosystem could easily be making enough back from this indirectly to make it worthwhile. For brex this has to…

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 wonder though how big the risk is. SVB is, according to the business press, in trouble because they parked a large excess of deposits over loans in low interest rate US government debt. The mark to market value of that debt has fallen as interest rates have risen, but it's not like the bottom has fallen out. The bonds still retain 90+% of their value. Note that the capital hole SVB was trying to plug when the run started was that large relative to their deposits. If Brex is loaning a fraction of verified deposits, against the money those depositors will get back once a buyer is found for SVB, there shouldn't be that much risk. It's likely that depositors will get back most of their money - I don't think you'll see a fire sale, pennies on the dollar deal here.

Re: Emergency bridge loan for SVB customers

#105

Post by barake »

stu2b50 wrote: post #100
bdonlan wrote: post #85

Earlier quoted context omitted.

The issuing bank for loans isn't necessarily where the company keeps the majority of their assets.

OP's claim was that Stripe Capital's loan underwriter was SVB, hence why they weren't extending loans to SVB affected customers. Stripe itself was, and probably still is, using Wells Fargo for US corporate accounting, per https://qr.ae/pvERsZ

Stripe is still saying they are extending loans via Capital with no change to recent terms they've been offering. Confirmed with our account manager this afternoon, just in case.

Re: Emergency bridge loan for SVB customers

#106

Post by metalspot »

gpm wrote: post #16
Blackthorn wrote: post #10

Earlier quoted context omitted.

Solvent how? Their 80 billion of 10 year MBS's are sitting on a tremendous loss.

> As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. Per the FDIC

obviously nobody believed those numbers. i had 50% of my 401K in a AAA bond index fund and it lost 15% in 6 months. SVBs assets aren't even close to AAA. They are loaning money to startups, creating deposits out of those loans, and then using those deposits as collateral to issue 10X more loans. That is all perfectly cool and legal, but when all of those startups run out of runway at the same time the party stops.

Re: Emergency bridge loan for SVB customers

#107

Post by throwntoday »

MrMan wrote: post #97
throwntoday wrote: post #8

Earlier quoted context omitted.

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

that's not true -by "mostly" do you mean 70 to 80%? losing 20% of your principal is a huge loss

Kind of a pedantic comment

Re: Emergency bridge loan for SVB customers

#108

Post by fnordpiglet »

MrMan wrote: post #96
fnordpiglet wrote: post #77

Earlier quoted context omitted.

SVB isn’t insolvent and has more assets than deposits. The FDIC move is meant to instill stability.

it is definitely insolvent

No, it’s not. It couldn’t liquidate assets fast enough to cover a run on the bank. But assets exceed liabilities substantially. What you’ll see is a line of credit issued that props up withdrawals as assets are liquidated until the bank stabilizes and it’ll reemerge under a new charter.

Re: Emergency bridge loan for SVB customers

#109

Post by trappist »

nostrebored wrote: post #6
gpm wrote: post #3

Honestly this makes a ton of sense. The FDIC will be returning most (or all) of the deposits in SVB, so the debt is reasonably safe (at least as far as debt that startups take on ever is). Whoever is funding this is probably not taking on all too much liability, and if they're heavily invested in the startup ecosystem could easily be making enough back from this indirectly to make it worthwhile. For brex this has to…

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.

FTA:

> This credit line is funded by 3rd-party capital (and not Brex directly), who are working with Brex to minimize the impact of this event to the startup ecosystem.

Re: Emergency bridge loan for SVB customers

#110

Post by astura »

gpm wrote: post #3

Honestly this makes a ton of sense. The FDIC will be returning most (or all) of the deposits in SVB, so the debt is reasonably safe (at least as far as debt that startups take on ever is). Whoever is funding this is probably not taking on all too much liability, and if they're heavily invested in the startup ecosystem could easily be making enough back from this indirectly to make it worthwhile. For brex this has to…

>The FDIC will be returning most (or all) of the deposits in SVB

85% of accounts weren't FDIC insured

https://time.com/6262009/silicon-valley-bank-deposit-insuran...

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