SVB in talks to sell itself after attempts to raise capital fail

Post by mhluongo » Fri, Mar 10, 2023, 4:44 PM UTC

airza wrote: post #185

hnfong wrote: post #148

Earlier quoted context omitted.

> That's a lot but also means depositors get 80-85% of their money back That's not what happens. Let's say 100 clients each deposited $1 in the bank, and the bank loses $20, so only has $80 to pay out when liquidated. Let's say half (50) depositors withdraw their funds early, they each get $1 back. So now the bank has $30 in assets and has to pay 50 people. Suppose 20 people demand withdrawals, and the bank pays $20…

This isn't bitcoin world though, deposits are FDIC insured to stop this

Post by mhluongo » Fri, Mar 10, 2023, 4:44 PM UTC

samstave wrote: post #191

axlee wrote: post #181

Earlier quoted context omitted.

> A bank that can't pay back 100% of deposits has failed. Well, not at the same time. No bank can do that.

The fed seems to have never had a problem when all their customers [i.e. banks/hedgies/wallstreet] come asking.

Post by abarringer » Fri, Mar 10, 2023, 4:45 PM UTC

airza wrote: post #185

hnfong wrote: post #148

Earlier quoted context omitted.

> That's a lot but also means depositors get 80-85% of their money back That's not what happens. Let's say 100 clients each deposited $1 in the bank, and the bank loses $20, so only has $80 to pay out when liquidated. Let's say half (50) depositors withdraw their funds early, they each get $1 back. So now the bank has $30 in assets and has to pay 50 people. Suppose 20 people demand withdrawals, and the bank pays $20…

This isn't bitcoin world though, deposits are FDIC insured to stop this

Post by samstave » Fri, Mar 10, 2023, 4:45 PM UTC

mathattack wrote: post #144

ancorevard wrote: post #112

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…

Post by hnfong » Fri, Mar 10, 2023, 4:45 PM UTC

chollida1 wrote: post #183

rich_sasha wrote: post #87

One thing to bear in mind is that "failing" is not binary. The story seems to be that SV put all their deposits into 10 y bonds in 2021. I'll use that as an approximation. A 10Y bond will usually move about 8x as much as the underlying interest rate (it's called "duration"). So if SVB did nothing but buy these bonds and sit on them, then they would have lost about 36% on these (8 x 4.5% rate movement). That's a lot b…

> The story seems to be that SV put all their deposits into 10 y bonds in 2021. Not sure who told you that, its incorrect. https://twitter.com/jamiequint/status/1633956163565002752?s=...