Bank run on Silicon Valley Bank • Hacker News Board

Re: Bank run on Silicon Valley Bank

#31

Post by paulgb » Thu, Mar 09, 2023, 9:34 PM UTC

pjc50 wrote: post #13

colesantiago wrote: post #2

Is this an incoming tech crash?

It's more slow dominoes from the crypto crash, I suspect. I'm not worrying about contaigion yet, these guys aren't exactly Lehman.

I think it's more that the crypto crash and SVB liquidity issues are dominoes from the interest rate environment. SVB wasn’t particularly deep in crypto AFAIK, although if I’m remembering correctly I think I once met someone on a specifically crypto-focused team there. (It stands out in my memory because I consider it a minor red flag when dealing with banks.)

Re: Bank run on Silicon Valley Bank

#32

Post by [deleted] » Thu, Mar 09, 2023, 9:35 PM UTC

recursivedoubts wrote: post #21

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…

[deleted]

Re: Bank run on Silicon Valley Bank

#33

Post by phkahler » Thu, Mar 09, 2023, 9:35 PM UTC

recursivedoubts wrote: post #21

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.

Re: Bank run on Silicon Valley Bank

#34

Post by johnbellone » Thu, Mar 09, 2023, 9:35 PM UTC

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.

[flagged]

Re: Bank run on Silicon Valley Bank

#35

Post by thesimon » Thu, Mar 09, 2023, 9:36 PM UTC

recursivedoubts wrote: post #21

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 they locked deposits for a period of time they could safely (and morally) loan that money out without lying

Are fixed deposits not common in the US?

Re: Bank run on Silicon Valley Bank

#36

Post by johnbellone » Thu, Mar 09, 2023, 9:36 PM UTC

mikesun wrote: post #29

cjensen wrote: post #26

Earlier quoted context omitted.

If the Bank is federally insured, it's not a problem that the bank won't be able to make it work. That's why generally speaking bank runs only happen on uninsured banks in the US. SVB is not, as far as I can see, insured and should definitely be careful in their choice of words.

FDIC only insures up to $250K

Per account.

Edit: It seems I am incorrect.

> The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per ownership category. Deposits held in different ownership categories are separately insured, up to at least $250,000, even if held at the same bank.

Re: Bank run on Silicon Valley Bank

#37

Post by daniel-cussen » Thu, Mar 09, 2023, 9:37 PM UTC

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.

[dead]

Re: Bank run on Silicon Valley Bank

#38

Post by nimbius » Thu, Mar 09, 2023, 9:37 PM UTC

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.

its the most cynical response ive seen in a long time, to basically reiterate a fundamental limitation of modern central banking in response to the very event thats occurring.

Re: Bank run on Silicon Valley Bank

#39

Post by majormajor » Thu, Mar 09, 2023, 9:37 PM UTC

recursivedoubts wrote: post #21

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 they locked deposits for a period of time they could safely (and morally) loan that money out without lying, and, in fact, there wouldn't need to be a reserve ratio at all.

Until the borrower doesn't (or can't) pay back the loan...

"Safe" and "moral" seem like inherently relevant words here and I'm unconvinced that you're proposal would be overall beneficial compared to the increased circulation we enable today.

Re: Bank run on Silicon Valley Bank

#40

Post by jjulius » Thu, Mar 09, 2023, 9:37 PM UTC

anon291 wrote: post #19

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.

Perhaps I'm overly skeptical, but everyone should know that all banks have the risk of 'if everyone takes their money out, the bank won't be able to make it work', right?

>... everyone should know...

I'm going to go out on a limb and say that that might not be common knowledge.