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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

#261

Post by cjblack »

ValG wrote: post #186
cjblack wrote: post #101

Earlier quoted context omitted.

Management and shareholders would not be personally on the hook for missed payroll in the event of insolvency. If all the cash evaporated from my company's account, we were forced to declare bankruptcy, that's pretty much game over. The employees would be among other creditors figuring out their turn to pick over the remains. The employees may end up near the top of the list, but they wouldn't get to hold the C-Suite…

I don't which other states may do this, but in Cali Labor Code Section 558.1 - company managers and owners are personally liable for missed wages. It is a codified approach to piercing the corporate veil. I learned this well when we had a single digit bank account and were waiting on funding to get wired in as payroll was coming due.

Ahh I wasn't aware of this - wow. Thanks for informing me. Can't imagine the stress some of these depositors must be under with that added personal liability on top.

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

#262

Post by strbean »

afavour wrote: post #177
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…

“It’s the governments fault the bank mismanaged the money given to them” is certainly one perspective. If it were true why aren’t all banks facing the problem SVB has?

Other banks have diversity of depositors.

SVB didn't implode on their own, Thiel decided all the startups he backed should withdraw their deposits. Then other VCs followed the trend.

SVB was what, $2B short on their balance sheets, out of >$200B assets? VC initiated bank run is the only real issue here.

Waiting to see how this all benefits Thiel.

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

#263

Post by vkou »

flutas wrote: post #196
CydeWeys wrote: post #158

Earlier quoted context omitted.

Yup. FDIC insurance exists for this reason -- you can let a bank that made bad decisions fail without causing a chain reaction through the economy.

> FDIC insurance exists for this reason Good luck to all the startups that might have just lost anything they had in SVB over $250k.

FDIC being involved doesn't actually mean you lose everything above 250k. Assuming that the bank's problem was liquidity, and not fraud, it's very likely that no depositor will end up taking a haircut.

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

#264

Post by orangepurple »

abarringer wrote: post #206
airza wrote: post #185

Earlier quoted context omitted.

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

Insured up to $250k. No guarantee there won't be a delay in withdrawing your funds once the Fed takes over.

After FDIC seizes the bank your funds are available the next business day up to the insured amount. Above the insured amount you have to wait a while longer.

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

#265

Post by vkou »

lvl102 wrote: post #247
dragontamer wrote: post #139

Earlier quoted context omitted.

Inflation is still 6% YoY. Fed hasn't raised fast enough and is looking at +.50% next meeting.

Inflation is alway a monetary phenomenon. They caused this episode of inflation. All of those people at Fed should resign.

They also caused the entire economy not collapsing into a burning pile of garbage in 2020. They are the reason you're not living in a bunker, trading bottle caps for ammunition and fighting for supplies with gangs riding questionably modded dune buggies through the desert.

The Fed has two mandates. Maintain low unemployment and low inflation. There is no way they could have achieved both in the last three years, but inflation is way preferable to economic collapse.

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

#266

Post by dragonwriter »

vkou wrote: post #263
flutas wrote: post #196

Earlier quoted context omitted.

> FDIC insurance exists for this reason Good luck to all the startups that might have just lost anything they had in SVB over $250k.

FDIC being involved doesn't actually mean you lose everything above 250k. Assuming that the bank's problem was liquidity, and not fraud, it's very likely that no depositor will end up taking a haircut.

> It's quite possible that no depositor will end up taking a haircut.

It's possible that uninsured deposits will eventually be recovered at full value, but losing access to depository funds is itself a loss which often has a very real costs, and when the Depository Insurance National Bank taking SVBs place opens no later than Monday, uninsured depositors are going to only have a claim against the potential realized value of SVB assets beyond what is necessary to cover the insured deposits, while insured depositors will have access to actual money in actual deposit accounts in an actual (solvent) bank.

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

#267

Post by ceejayoz »

mynameishere wrote: post #92
ceejayoz wrote: post #62

Earlier quoted context omitted.

If it were to ever run out, though, it's generally assumed taxpayers would make up the rest.

No, the bank could be allowed to collapse or the Fed could arrange a meeting (LTCM style) and basically force a buyout. Nothing is assumed.

That's unrelated. The FDIC isn't gonna renege on the $250k protection, even if they run out of money. The US government will step in.

The bank's continued existence isn't the FDIC's concern. Making the depositors whole is.

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

#268

Post by xenomachina »

batmaniam wrote: post #155

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.

One other thing in recent years: if you used Stripe Atlas to get incorporated, they made it very easy to get an SVB account.

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

#269

Post by tinco »

strbean wrote: post #262
afavour wrote: post #177

Earlier quoted context omitted.

“It’s the governments fault the bank mismanaged the money given to them” is certainly one perspective. If it were true why aren’t all banks facing the problem SVB has?

Other banks have diversity of depositors. SVB didn't implode on their own, Thiel decided all the startups he backed should withdraw their deposits. Then other VCs followed the trend. SVB was what, $2B short on their balance sheets, out of >$200B assets? VC initiated bank run is the only real issue here. Waiting to see how this all benefits Thiel.

1% is a wildly different number from the 20-30% I've seen mentioned here. What makes you say they're only 2B short?

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

#270

Post by ancorevard »

mrguyorama wrote: post #259
ancorevard wrote: post #251

Earlier quoted context omitted.

"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.

Tide is a natural occurring phenomenon.

There is nothing natural about the interest rates policies and stimulus packages from the governments last couple of decades.

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