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From https://techcrunch.com/2023/03/09/silicon-valley-banks-share... : Becker said the bank has “ample liquidity” to support its clients “with one exception: If everybody is telling each other that SVB is in trouble, that will be a challenge.” Pro tip: if you're CEO of a bank that's facing a bank run, don't tell the press that you'll be in trouble if everybody takes their money out.
From https://techcrunch.com/2023/03/09/silicon-valley-banks-share... : Becker said the bank has “ample liquidity” to support its clients “with one exception: If everybody is telling each other that SVB is in trouble, that will be a challenge.” Pro tip: if you're CEO of a bank that's facing a bank run, don't tell the press that you'll be in trouble if everybody takes their money out.
Matt Levine is fond of this highly relevant quote by Bagehot: “Every banker knows that if he has to prove that he is worthy of credit, however good may be his arguments, in fact his credit is gone.” It seems that CEOs of banks haven't learned anything since 1873 when this was observed.
Reminder - SVB is small bank - highest market cap was 50B -- trading at 5B. Low level of contagion. If it does fail - definitely will be felt by start ups with cash at the bank.
I think you're probably right, but "Low level of contagion" sounds exactly like what we heard in 2007.
SVB was historically such a weird bank - it was the most "famous" tech bank, perhaps solely because of its name - but yet it was so utterly behind in the technology it used for _years_.
What would you name as its peers? I've heard First Republic. What about Bank of the West?
>perhaps solely because of its name
It is a killer name, after all. I bet the First Republics of the world wish that when they were started however many decades ago, their founders had the foresight to name them "High-Tech Bank" or "Sand Hill Bank" or somesuch.
Earlier quoted context omitted.
Thing is, I want to start a business but need several hundred thousand USD in machinery. Lathes or bakery ovens are not free after all. I don't have that right now, and if I need to save up for several decades the opportunity will have passed. How do I convince people to lend me money without any interest? You can replace "want to start a business" with "want to buy a house" if you prefer.
that machinery being so expensive is part of a long tradition of 'developed countries' (powerful peoples) wielding power over other weaker countries by means of technological availability restrictions. The history of the textile industry is but an instance of this historical pattern of behavior. all I'm saying is that it's all part of the same 'power system' of government and order. in the end, interests is comparabl…
I'm having real trouble unpacking what you mean here. Machinery is expensive because... there's a worldwide cartel keeping prices up to keep out new players? Could it also be that making machines is hard and requires a lot of research/labor/material?
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Everyone doesn't need to know or care in many cases. The FDIC insures deposits up to $250k. That covers the vast majority of accounts at most banks. So a run won't occur at most banks. There were hardly any runs in 2008 for this reason - the relatively few "run type things" which happened were where big interbank exposures existed. SVB's customers are weighted significantly more towards businesses who will have more…
That FDIC thing is so laughable to me because it's purely symbolic. Even the feds would have some serious trouble absorbing bank-run losses.
Earlier quoted context omitted.
Here in Europe is's only 100k per account per holder. (Used to be 20K in NL)
Having 100k in a bank account seems to be well into 1%-er territory. I don't think that's going to do much for the alleged PR campaign conspiracy.
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The bank is telling two or more people they own (or, at least, have access to) the same dollar at the same point in time. With duration matching you can have loans, but it is clear that depositor A can't get dollar X back until time point T, and that borrower B can have the dollar until then.
> The bank is telling two or more people they own (or, at least, have access to) the same dollar at the same point in time But they don't do that. Or, I've literally never seen them do that. What the bank tells me is what my current deposit is. That's the truth. They aren't representing that the amount they're listing is a specific dollar somewhere, they're telling me how much money I've given to them.
I use a single dollar just to make the idea concrete.
Daily reminder that bank runs wouldn't be a thing if we did duration matching, forbidding banks from borrowing short and lending long. As always, the underlying problem in banking is that the banks are lying, telling two or more people they own the same dollar at the same point in time. If they locked deposits for a period of time they could safely (and morally) loan that money out without lying, and, in fact, there…
If you loan out deposits you are already set for a bank run. All it takes is the depositors to ask for their money back. One deposit. One loan. One withdrawal request.
So that's either loans, or effectively giving people a negative interest account where you lose your money. Citibank does this, they just call it "fees" and it really, really hurts the people who don't have much money.
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Thing is, I want to start a business but need several hundred thousand USD in machinery. Lathes or bakery ovens are not free after all. I don't have that right now, and if I need to save up for several decades the opportunity will have passed. How do I convince people to lend me money without any interest? You can replace "want to start a business" with "want to buy a house" if you prefer.