351–360 of 889 posts
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We have been banking with SVB for the last 5 years. Not even once, they have done something for us.
I mean, you just said you backed with them, so clearly they provided you a service, one that other banks may have been hesitant to (traditionally)
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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.
Why though? It perpetuates real-estate bubbles by incentivizing a large portion of the populace to speculate on non-productive assets. If real estate weren’t so highly incentivized in the US, I’d rather be a renter with a long term lease with all its legal protection and invest my money in a business or something. We’d have a much larger renting class and likely would be able to push through much more renter friendly…
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I know the answer; it's because being able to issue unlimited money, diluting the public's savings and salaries and then collecting interest on it benefits certain powerful people in a risk-free manner. That's not the answer which an economics professor would give me though. They are not trained to use their analysis skills so much as providing canned explanations. These economics professors have to pay their bills t…
This is a very good Dunning-Kruger effect example. You aren't being screwed, you are swimming in water you can't see.
If I befriend Elon Musk and he makes one tweet about any of my existing projects, I'll be a millionaire within a year. 100% guaranteed. I wouldn't have to change anything or know anything more. Then I would have impostor syndrome instead.
It's easy to claim that anyone who doesn't receive any help suffers from Dunning-Kruger effect and someone who receives a lot of help and had it easy 'suffers' from impostor syndrome. I know how this works. Only those who really struggled can see both sides.
The system is constantly trying to rationalize and justify itself to its beneficiaries. It doesn't quite invest as much effort to rationalize itself to its victims; and also, it's just not as effective when victims have no financial incentive to believe it.
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Why though? It perpetuates real-estate bubbles by incentivizing a large portion of the populace to speculate on non-productive assets. If real estate weren’t so highly incentivized in the US, I’d rather be a renter with a long term lease with all its legal protection and invest my money in a business or something. We’d have a much larger renting class and likely would be able to push through much more renter friendly…
The end game of everyone is a renter is the government owns all residential.
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That's not a real problem as long as banks are adequately capitalized. Shareholders might get wiped out but that's fine, they know the risks.
You may be confusing solvability and liquidity. You may be well capitalised but if you run out of cash it's game over. Being well capitalised only protects you against losses (eg bad loans).
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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?
As you know, we are limited in what we can share until the transaction formally closes next week but in the meantime I’m attaching concise information on the strength of our business, based on our recent mid-quarter update and financial announcements.
Our Moody’s Deposit Rating is Prime
Our credit ratings are also investment grade
SVB took action this week designed to:
Strengthen our financial position Enhance profitability Improve financial flexibility now and in the future
Our financial position enables us to take these strategic actions
SVB is well-capitalized Has a high-quality, liquid balance sheet Peer-leading capital ratios
Even before these actions:
We had ample liquidity and flexibility to manage our liquidity position SVB has one of the lowest loan-to-deposit ratios of any bank of our size
The improved cash liquidity, profitability and financial flexibility resulting from the actions we announced today will bolster our financial position and our ability to support clients through sustained market pressures.
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.
Matt Levine is fond of this highly relevant quote by Bagehot: “Every banker knows that if he has to prove that he is worthy of credit, however good may be his arguments, in fact his credit is gone.” It seems that CEOs of banks haven't learned anything since 1873 when this was observed.
A bank can follow a lower risk strategy and accept lower profits, but that's not necessarily what shareholders want. Some risk of failure is acceptable.
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This is kind of like saying we can eliminate most automobile fatalities by eliminating cars and making everyone walk or take the train everywhere. Yes, it would solve one type of problem. But nobody wants your solution because it’s an unreasonable trade off for everyone to solve an extremely rare edge case. Single-minded optimization for single edge cases is really easy in fantasy worlds, but in the real world people…
> Yes, it would solve one type of problem. But nobody wants your solution because it’s an unreasonable trade off for everyone to solve an extremely rare edge case. Can you explain why this is bad? People lived with hard-ish money systems for extremely long periods of time. > The concepts of assets and liabilities are well understood in the business world. Banks aren’t “lying” and fractional reserve banking does not m…
Fractional reserve banking has been the dominant form of banking for the last 300 years, and has roots well beyond that.
SVB is our bank, I got in touch with a member of the senior team there and got the following message to share. (My own interpretation is I'm comfortable and I'm not planning to pursue it further at the moment): As you know, we are limited in what we can share until the transaction formally closes next week but in the meantime I’m attaching concise information on the strength of our business, based on our recent mid-q…
If the subprime crisis taught us anything it was that ratings go for marginally usefull to utterly useless the second sht gets real and there is actual stress in the system