171–180 of 310 posts
How do these keep blowing up?
In hindsight they shouldn't have bought those MBSs, should have foreseen the coming inflation and the following interest rate hikes, and of course shouldn't have said those words yesterday. However, sad to see what looks to be another government caused implosion. - First, via the massive government stimulus COVID19 SVB got enormous amount of deposits in 2020/2021. They have to put that money to work, and the traditio…
SVB wouldn’t have these issues if they monitored the risk better. If they put the money in short term govt bonds they would be fine. Or if they kept the rates they paid on deposits low to discourage the excess, they would also be fine. Banks are in the business to manage risk. The sad part is this risk management and investment process is concentrated in a very small group. Most of the bank employees are very good, h…
Earlier quoted context omitted.
I can't count how many times I've read similar comments on HN in the last 10yrs
If everyone’s saying we’re in a bubble, we probably are. Just because it keeps getting bigger doesn’t mean it’s not going to pop. We’ve had 15 years of people getting billions for phone apps made in 12 months and forgotten in 6. Random individual software startups are valued more than basically the entire hardware industry under them. Bitcoin peaked out at 1.28 trillion and it still has no use beyond being a converte…
Sure, you might claim those people are unhinged and don't count, but they'd say the same to you. Unless you actually start going to your broker and buy a bunch of PSQ your comments here carry as much weight as mine.
I don't understand the incentive for a bank to buy them at this point, because any potential buyer might as well wait until the FDIC steps in to resolve the bank. Any banking wizards at HN who can explain the dynamics? edit: At the very least, FDIC should issue a statement guaranteeing beyond the $250K/depositor limit sooner rather than later in order to stem some of the outflow.
If the natural incentive of the bank's assets isn't enough, its literally the job of the FDIC to add that incentive. That's what the FDIC does. "We'll pay you $100M to continue operations of this bank" this happened dozens upon dozens of times during 2008. The insurance component of their mandate is an absolute last ditch "holy shit actually they had nothing it was all smoke and mirrors" tool.
It won't come to that because, well first of all, regulations don't allow banks to get to that point anymore, but also: SVB is actually a solid bank, who made a couple fuck-ups, caused a panic, and their customers are generally more agile and cutthroat than industry average. There are so many tools they, the industry, and regulators have to stabilize things that if you walked into the meetings that are happening about this right now and said "we should raise our insurance guarantees above $250k" you'd be laughed out of the room.
The FDIC doesn't give a shit about stemming outflows from SVB. The FDIC cares about the system, not SVB's bottom line or stock price. Customers should be able to withdraw their money. If they're even involved at this point (and that's a huge if), their primary concern would be to make sure customers still can get money out, not changing the incentive structure or adding limitations toward getting that money out.
Earlier quoted context omitted.
It’s really mind boggling that SVB put so much money into bonds with long maturations at essentially zero or negative interest rates. I wonder how many others did similar?
It's not like they wanted to. Loads of money was coming in from funded companies but the demand for loans was low. So they had to put the money somewhere and banks (not just SVB) began putting record amounts into treasuries. At least they got something from them so they could pay interest on things and keep the lights on. The government printed a ton of money and demand for loans crashed after the pandemic started. P…
The risk has been discussed for almost a year at least:
https://www.fitchratings.com/research/banks/us-banks-face-hi...
In hindsight they shouldn't have bought those MBSs, should have foreseen the coming inflation and the following interest rate hikes, and of course shouldn't have said those words yesterday. However, sad to see what looks to be another government caused implosion. - First, via the massive government stimulus COVID19 SVB got enormous amount of deposits in 2020/2021. They have to put that money to work, and the traditio…
In hindsight they shouldn't have bought those MBSs, should have foreseen the coming inflation and the following interest rate hikes, and of course shouldn't have said those words yesterday. However, sad to see what looks to be another government caused implosion. - First, via the massive government stimulus COVID19 SVB got enormous amount of deposits in 2020/2021. They have to put that money to work, and the traditio…
I'm feeling like this is early days of a disaster in Silicon Valley. We're at the first or second domino teetering right now. I hope a Sequoia or KPB will step up and save the bank, otherwise a lot of their portfolio investments are about to start missing payrolls.
I can't count how many times I've read similar comments on HN in the last 10yrs
What made SVB so attractive to startup founders? All the news reports I'm reading is saying that's their target customer. What advantages did SVB provide that other brand named bank didn't? Wouldn't it have been safer to put your startup's money in Bank of America, or JP Morgan, etc? I've never heard of SVB until the crash.
SVB would be lenient to the entire portfolio in exchange for access to the best performing companies.
i.e. Company A is a Series A start-up that needs non-dilutive financing to bridge itself to the next round. SVB would be willing to lend when no one else would. In exchange, VC’s would introduce SVB to much healthier growth stage or pre-IPO companies that need a banking partner.
In hindsight they shouldn't have bought those MBSs, should have foreseen the coming inflation and the following interest rate hikes, and of course shouldn't have said those words yesterday. However, sad to see what looks to be another government caused implosion. - First, via the massive government stimulus COVID19 SVB got enormous amount of deposits in 2020/2021. They have to put that money to work, and the traditio…
I’d argue preventing a total financial collapse in 2020 is more important than SVB and some startups failing.
You mean the one that would have been caused by the government's draconian lockdowns?
Good thing the government came in to rescue everybody...