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Bank run on Silicon Valley Bank

techcrunch.com

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Re: Bank run on Silicon Valley Bank

#471

Post by borski »

toast0 wrote: post #113
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.

They've got an FDIC page, https://www.svb.com/fdic , and they show up in the FDIC bank finder https://banks.data.fdic.gov/bankfind-suite/bankfind/details/... Although the Assets, Liabilities, and Capital reporting available if you click "create financial reports for this institution" estimates 5.69% of deposits are insured. Is a corporate account limited to $250K of deposit insurance? If so, I imagine many of them ma…

Also investments aren’t insured by FDIC, but by SIPC.

Re: Bank run on Silicon Valley Bank

#473

Post by freddie_mercury »

wbl wrote: post #396
freddie_mercury wrote: post #389

Earlier quoted context omitted.

The very earliest banks didn't do fractional reserve banking so it isn't true to say it is how every bank worked since banks were invented. The first known instance of fractional reserve lending was with an medieval Italy but banks have been around since 2000BCE. You are right that it definitely explains 99.99% of banks in history. But there are a handful of historical examples -- even after "modern banking" began in…

So did Louisiana banks issue loans?

Yes, they still issued loans. Louisiana banks weren't true "narrow banks" but were much tighter regulated with much higher reserve requirements than other states at the time (or today). This was a reaction to the financial crisis of 1837.

Re: Bank run on Silicon Valley Bank

#476

Post by borski »

jimbob45 wrote: post #408
dheera wrote: post #328

Earlier quoted context omitted.

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?

Wouldn’t that just be a storage facility?

Essentially yes, but presumably one that’s safer than your home safe or under your pillow.

Re: Bank run on Silicon Valley Bank

#477

Post by borski »

koromak wrote: post #429
thepasswordis wrote: post #422

Earlier quoted context omitted.

That sounds remarkably similar to a crypto exchange blowing up.

its almost like making bets with money you don't actually have yet is a bad idea

This is literally the definition of fractional reserve banking, used by almost every bank worldwide.

Re: Bank run on Silicon Valley Bank

#478

Post by blululu »

TheAlchemist wrote: post #318
dublinben wrote: post #176

Earlier quoted context omitted.

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.

100% true ! They are already gone. However, not to defend the guy, but as a CEO of this bank he ... has to say something. And whatever he says it will be bad anyway.

Nope. This is the line of thinking that gets people into hot water. He could have said nothing and he would be better off. When in doubt, just say nothing. Nobody asked him about a run on his bank - he just blurted that out in a public call with shareholders on the line. Any bank would be in a bad position if all of its customers withdrew at once. Everyone knows this, but banks that are doing well don't think about this. The fact that it is clearly top of mind does not inspire confidence.

Re: Bank run on Silicon Valley Bank

#479

Post by orangepurple »

eshack94 wrote: post #392
orangepurple wrote: post #154

Earlier quoted context omitted.

Regulators have been putting immense pressure on big banks to hold adequate capital reserves since 2008 and they have been especially turning up the heat for the last 5 years. Moreover, it is clear that regulators will never allow a US bank to hold more than 3% of assets as crypto ever again.

Pardon my ignorance (not a crypto guy) — what is it that you're referencing when you mention a bank holding 3% of assets as crypto? My uninformed assumption is that this is either about Silvergate, or something related to SBF's debacle. Just curious. As mentioned, I'm pretty ignorant about this and would like to educate myself.

As part of a general crackdown happening right now regulators put any crypto plans US banks may have had on ice.
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