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

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

#251

Post by ancorevard »

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…

"SVB wouldn’t have these issues if they monitored the risk better."

Let's see what happens. If only SVB goes belly up, then yes, only SVB was the one that couldn't read the tea leaves of the government's actions. But if SVB is just the first of more banks that will go belly up, then perhaps it is not just an error on SVB's part.

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

#252

Post by nebulousthree »

brian_cloutier wrote: post #227
mhluongo wrote: post #204

Earlier quoted context omitted.

It's easier when you can print money :)

I believe the implication is: why aren't we using the fed for our banking, this kind of bank run would be impossible. The fed provides guarantees to banks but not to retail and that's a policy decision we could change, if we wanted to.

Try selling socialism to Americans...that's why.

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

#253

Post by [deleted] »

jpmattia wrote: post #11

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.

[deleted]

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

#254

Post by yread »

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…

When interest rates are negative the bank could just stuff the cash in a mattress no? Why do they need to take risks? They don't HAVE to (except profit of course)

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

#255

Post by jpmattia »

jpmattia wrote: post #11

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.

Edits on my original comment are locked, but worth noting: Apparently the banks also thought there was no incentive to buy before the FDIC stepped in as well.

> 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.

The FDIC chose instead to shut the bank in the middle of the business day. They apparently don't see this as inciting a systemic event, where other uninsured deposits at other banks will now begin flowing out.

That imho is not playing it safe, given some of the price drops in the other banks today.

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

#258

Post by kilgnad »

dmix wrote: post #17
rickreynoldssf wrote: post #13

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

The true death of silicon valley will come as a slow burn. Arguably the burn has already begun years ago.

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

#259

Post by mrguyorama »

ancorevard wrote: post #251
mathattack wrote: post #144

Earlier quoted context omitted.

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…

"SVB wouldn’t have these issues if they monitored the risk better." Let's see what happens. If only SVB goes belly up, then yes, only SVB was the one that couldn't read the tea leaves of the government's actions. But if SVB is just the first of more banks that will go belly up, then perhaps it is not just an error on SVB's part.

If the tide goes out and certain groups turn out to be naked, we shouldn't blame the tide going out and try to prevent that.

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

#260

Post by whitemary »

brian_cloutier wrote: post #227
mhluongo wrote: post #204

Earlier quoted context omitted.

It's easier when you can print money :)

I believe the implication is: why aren't we using the fed for our banking, this kind of bank run would be impossible. The fed provides guarantees to banks but not to retail and that's a policy decision we could change, if we wanted to.

> The fed provides guarantees to banks but not to retail and that's a policy decision we could change, if we wanted to.

Who is "we?" The US is not a democracy. Nothing could stop US elites from overturning the Bretton Woods system, passing NAFTA, and bailing out the banks in the mortgage crisis, so what makes you think "we" could change this policy decision?

Karl Marx showed us how capitalism works 150 years ago. The ruling class rules and the working class works. If you don't like it, you need to move beyond capitalism.

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