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Bank run on Silicon Valley Bank

techcrunch.com

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Re: Bank run on Silicon Valley Bank

#291

Post by honeybadger1 »

gnicholas wrote: post #282
honeybadger1 wrote: post #262

Earlier quoted context omitted.

[flagged]

TBH I wasn't sure what the commenter was trying to communicate. That she had been cancelled? That she should be cancelled? I definitely wouldn't have flagged such a comment, but I would agree that it wasn't exactly adding to the discourse.

It seemed like a tongue in cheek joke about people projecting that women are strong(like south park style joke I guess) and if you say they are not..you are cancelled? I dunno, I appreciate humor, but yeah that was swift admin action on that.

Re: Bank run on Silicon Valley Bank

#292

Post by sanderjd »

honeybadger1 wrote: post #262
cm2187 wrote: post #188

Earlier quoted context omitted.

A variant of Thatcher's "Being powerful is like being a lady, if you have to tell people you are, you aren't".

[flagged]

Seems like a very unclear and incredibly low value comment to me... :shrug:

Re: Bank run on Silicon Valley Bank

#293

Post by tyre »

hollerith wrote: post #276
FormerBandmate wrote: post #137

Earlier quoted context omitted.

They’re selling equity to get capital. That’s pretty dire straits, FTX was doing that before they went under (I’m not saying this is FTX, I’m just saying it can be akin to the nuclear option)

For what reason besides raising cash does a company ever sell shares in itself? How does your statement make any sense? (I am assuming that by "capital" you mean cash.)

Because in this case it’s a bank and they aren’t selling equity to invest in new business/products.

SVB had to liquidate good assets quickly, so it sold them at a loss. That means its capitalization compared to liabilities (deposits) could be in “uh oh” territory.

So it sells capital on the open market to shore up its liquid capital. Yes, most every capital raise works mostly like this. But it’s notable here because of what it portends.

Re: Bank run on Silicon Valley Bank

#294

Post by chollida1 »

jongjong wrote: post #243
chollida1 wrote: post #82

Earlier quoted context omitted.

I assume you are trolling, but in case you are not. How would you provide loans to help get businesses started? How would you provide loans to people to buy their first homes? How would you provide loans so people can afford to go to school? How would you provide loans to buy a vehicle so people can get to/from their job before they get a paycheck? How would farmers afford to buy land, equipment and plant crops befor…

Why does a business need a loan? They can just sell shares/equity to raise funds. It's better in every way; there's skin in the game. Why would anyone even want to loan money to a startups? If the startup founders go out of business and flee the country, the lender loses everything. The downside is unlimited. Yet if the startup does well and it becomes a billion dollar company, the lender will get maybe 20% return on…

Well before mortgages home ownership was about 2% and we had a very small number of people who owned all the real estate because people couldn’t afford it without a loan.

If your happy with going back to this that is your perogative but I would Be against your world view.

Re: Bank run on Silicon Valley Bank

#295

Post by sroussey »

oa335 wrote: post #143
chollida1 wrote: post #82

Earlier quoted context omitted.

I assume you are trolling, but in case you are not. How would you provide loans to help get businesses started? How would you provide loans to people to buy their first homes? How would you provide loans so people can afford to go to school? How would you provide loans to buy a vehicle so people can get to/from their job before they get a paycheck? How would farmers afford to buy land, equipment and plant crops befor…

Sell equity stakes or form a joint partnership. This is exactly how most startups get funding. Also, it’s not clear to me that credit has lifted people out of poverty; I’d argue that interest based lending has kept people in poverty, transferring wealth to those who already have it.

I dunno, people buying a house (and the mortgage that goes with it — their biggest loan of their life) is (to me) a good thing, rather that everyone a renter.

Re: Bank run on Silicon Valley Bank

#296

Post by recursive »

rootusrootus wrote: post #217
recursive wrote: post #101

Earlier quoted context omitted.

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.

Nah, especially among older folks, 100K+ in a bank account is fairly common. My mom does, my grandmother did, my stepmother does, and trust me none of these folks are 1%ers or even close.

Huh. Well, I'm surprised. $100k in a bank account is earning next to nothing, and is probably (opportunity) costing at least $5k/year. I would have assumed that people that can afford not to care about that would be in the highest tiers of wealth.

Re: Bank run on Silicon Valley Bank

#297

Post by tyre »

boringg wrote: post #116
rippercushions wrote: post #15

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.

Poor move by the CEO. It's like he wanted to be honest with everyone but that wasn't a strong signal. Also out most of the banks - you would expect that the clients of SVB are a little more sophisticated than your retail bank demographic being start-up companies and all (big assumption).

They’re a public company with known exposure to startups. If he lies, that’s securities fraud and he could go to prison.

Is that worth it?

Re: Bank run on Silicon Valley Bank

#298

Post by chollida1 »

njarboe wrote: post #132
WJW wrote: post #80

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.

If 30 year housing loans were not available, housing would be a lot cheaper.

Or, and this seems far more likely, it would be owned by a very small group of people or corporations or the government.

Someone will always have money.

The system we have now may not be perfect but it a far far more egalitarian than the past when there were no loans

Re: Bank run on Silicon Valley Bank

#299

Post by ttt333 »

Retric wrote: post #255
ttt333 wrote: post #246

Earlier quoted context omitted.

respectfully, I'm not so sure. The decline in bonds applies to all fixed-rate securities. The only alternatives would have been just straight up cash (bad with inflation) or riskier, less-liquid assets (non-tradable loans with floating rates, for example). They are limited on the latter by risk weighting, and I'm not sure having looser risk controls on the asset side would really help confidence in the banking sector…

Inflation isn’t a concern here. Depositors hand a bank 1 billion and X% inflation hits, well the bank still only owes them 1 billion.

Yeah that's true, it matter more for net-interest-margin / interest income generation in a rising-rate environment. Good point

Re: Bank run on Silicon Valley Bank

#300

Post by boringg »

bink wrote: post #190
boringg wrote: post #147

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.

Lehman brothers had over 640 B$ in assets. Not even remotely comparable.
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