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Bank run on Silicon Valley Bank

techcrunch.com

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Re: Bank run on Silicon Valley Bank

#321

Post by skytreader »

notch898a wrote: post #265
volkk wrote: post #112

Earlier quoted context omitted.

so...it would take actual generations for people to get out of being utterly broke since in your world, you'd have to save up as a poor person to actually open up a business or do anything worthwhile. sounds so fun, sign me up. i want my family to be poor for 250 years until we finally have 2 million that we need to start that farm my great great great grandfather wanted to. some people on this website literally live…

How easy is it for a real life poor person to just get $2M to start a farm? Almost everyone I've met with family farm inherited the land which was probably traced back to it being claimed in the frontier days.

In the agricultural corner of the world I consider my motherland, there are banks that cater specifically for farmers and fishermen. Actually, my first bank ever belong in this category, probably the biggest fish in this pond. It's honestly rather inconvenient if you are not in the agricultural demographic; if you live in the urban areas it's next to impossible finding a convenient branch.

I'm not in a position to elaborate how their loans work but they do exist and I'm also pretty sure two million of our not-USD currency is not a prohibitive amount to loan to start a farm. It's a realistic investment people in rural areas can do.

Re: Bank run on Silicon Valley Bank

#322

Post by dheera »

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.

> if you're CEO of a bank that's facing a bank run

Or just don't mess with money that belongs to customers. Be the world's first reliable bank.

Re: Bank run on Silicon Valley Bank

#324

Post by twblalock »

PeterisP wrote: post #221
twblalock wrote: post #106

Earlier quoted context omitted.

Yeah but I assume you also have money in an account that lets you withdraw it in less than two years? A bank that only offers CDs or other long-duration deposits would be pretty weird.

Well sure, but one could theoretically imagine banks which are prohibited to lend money from their customers' current accounts and only make loans based on their CDs - and one aspect of that is that they'd have to offer much better terms for CDs since they would be in much higher demand.

> and one aspect of that is that they'd have to offer much better terms for CDs since they would be in much higher demand.

Why?

CDs are insured by the FDIC. That gives people the same amount of confidence in all CDs no matter what bank they get them from.

Re: Bank run on Silicon Valley Bank

#325

Post by celestialcheese »

boringg wrote: post #300
bink wrote: post #190

Earlier quoted context omitted.

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.

SVB has ~$200b before today. 30% of Lehman, but not nothing.

Re: Bank run on Silicon Valley Bank

#326

Post by Fomite »

kurthr wrote: post #307
uoaei wrote: post #261

Earlier quoted context omitted.

This pre-supposes a pretty radical (yet normalized nowadays) economic philosophy: that growth per se is good. A more nuanced approach would be to value and triage lending opportunities according to how much they contribute to the heating up of the economy, and how much opportunity for future sustainability they provide.

I'll ask then. What happens to an organism when it stops growing? It's an exponential process and there are really only 2 states except for an infinitesimally small space between.

Most biological processes that apply to organisms aren't exponential, they're logistic. Which means when they stop growing, they're at steady state.

Re: Bank run on Silicon Valley Bank

#327

Post by fullsend »

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).

In the immortal words of Andrew Lahde who closed his hedge fund up 800% in 2008, “I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.”

Assuming these people have any level of sophistication is what gets us into these messes. It’s good to remember they are betting billions of dollars based on nothing but fomo and don’t know anything special at all.

Re: Bank run on Silicon Valley Bank

#328

Post by dheera »

fallingknife wrote: post #57
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.

Every bank is screwed if everybody takes all their money out. And everybody already knows it.

Can't someone open a bank that takes money and just keeps it like a well-behaved child and doesn't secretly mess with it?

Re: Bank run on Silicon Valley Bank

#329

Post by taytus »

vonnik wrote: post #192

SVB is an institution that has supported a lot of businesses in tech. There are a lot of harmful clowns out there fearmongering. They should stop. The failure of a bank like this, if it occurs, would be bad for a lot of people.

We have been banking with SVB for the last 5 years.

Not even once, they have done something for us.

Re: Bank run on Silicon Valley Bank

#330

Post by quickthrowman »

ttobbaybbob wrote: post #151

we're they specifically unsophisticated in the way they bought treasuries/other bonds? One could look at the zero risk weighting of treasuries and buy only those to satisfy capital requirements, but you'd think it would be obvious that you would end up with more exposure to interest rate risk than is prudent. Or is this truly such an improbable swing in interest rates coupled with demand for withdrawals that it is re…

Treasuries only have zero risk if you hold them to maturity, otherwise they’re subject to interest rate risk.
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