Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Bank run on Silicon Valley Bank

techcrunch.com

Post reply on HN
Print view View original

551–560 of 889 posts

Re: Bank run on Silicon Valley Bank

#551

Post by spaceman_2020 »

thepasswordis wrote: post #422
cj wrote: post #400

I just received an email from one of our investors, sent to all portfolio companies, advising everyone to transfer all of their money out of SVB at 8:30am tomorrow morning. Investment/VC funds are doing the same (we’re talking many, many billions of deposits lost in a span of a few days). There is a chance SVB will freeze assets while they deal w liquidity crunch which may impact startup ability to pay bills, pay sal…

That sounds remarkably similar to a crypto exchange blowing up.

This is the point where you realize most modern startups are built on the same shaky promises as crapto.

Re: Bank run on Silicon Valley Bank

#552

Post by ajross »

amluto wrote: post #483
RC_ITR wrote: post #364

Earlier quoted context omitted.

The point is not what you’re assuming it to be. The point is that a bank run is a liquidity event (i.e. we still own more than what we owe, it’s just hard to turn it into cash fast enough). SVB has a fine balance sheet for now, they’re just running out of easy things to sell. The quote is referencing liquidity events, where the problem is everyone wants their money because they’re nervous about the bank, but the only…

> SVB has a fine balance sheet for now, they’re just running out of easy things to sell. Do they? If SVB is sitting on a pile of Treasury bonds that mature in 20 years, they can “hold to maturity” and get their principal plus some very low interest rate. But this is useless! In a fantasy world in which all their depositors leave and they keep those bonds for 20 years, they are indeed worth that amount in 20 years, wh…

> If SVB is sitting on a pile of Treasury bonds that mature in 20 years, they can “hold to maturity” and get their principal plus some very low interest rate. But this is useless!

No it isn't. Any other bank would be happy to write a loan backed by US treasury holdings, at no more than a moderate profit. If you're sitting on that, it has value. But it doesn't have value in literal dollars by tomorrow morning to pay out a withdrawal. That's what "liquidity" is all about.

Re: Bank run on Silicon Valley Bank

#553

Post by FanaHOVA »

cj wrote: post #400

I just received an email from one of our investors, sent to all portfolio companies, advising everyone to transfer all of their money out of SVB at 8:30am tomorrow morning. Investment/VC funds are doing the same (we’re talking many, many billions of deposits lost in a span of a few days). There is a chance SVB will freeze assets while they deal w liquidity crunch which may impact startup ability to pay bills, pay sal…

I will not be giving advice or opinions, but please don’t post anecdotes as facts to generate panic. This isn’t what most VC funds are doing.

Re: Bank run on Silicon Valley Bank

#554

Post by notch898a »

dheera wrote: post #328
fallingknife wrote: post #57

Earlier quoted context omitted.

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?

Yeah there are precious metals demand deposit vaults that do exactly that. The cost to have that fully insured and also audited to make sure your exact serial numbers are actually stored and not secretly being loaned, etc, it works out to roughly ~0.4%/yr cost to store money in a bank like that. Which compared to ~0% interest rates in a saving account isn't that bad I guess.

Re: Bank run on Silicon Valley Bank

#555

Post by zenmacro »

Something seems wrong with the entire banking sector. I don't know if SIVB triggered it or is just the first domino to fall.

Two of the largest bank ETFs are down around ~8% today. SIVB is only 2% of the holdings of KBE and 3% of KBWB.

https://www.google.com/finance/quote/KBE:NYSEARCA

https://www.google.com/finance/quote/KBWB:NASDAQ

A former Bridgewater guy who I respect very much is saying that the panic is totally uncalled for: https://mobile.twitter.com/BobEUnlimited/status/163395659942...

Re: Bank run on Silicon Valley Bank

#556

Post by FactKnower69 »

PragmaticPulp wrote: post #202
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…

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…

>extremely rare edge case

hilarious attempt at a metaphor, traffic deaths from personal automobiles have been in the top 10 causes of death worldwide for the better part of a century lol

Re: Bank run on Silicon Valley Bank

#557

Post by notch898a »

trogdor wrote: post #399
danielmarkbruce wrote: post #181

Earlier quoted context omitted.

Everyone doesn't need to know or care in many cases. The FDIC insures deposits up to $250k. That covers the vast majority of accounts at most banks. So a run won't occur at most banks. There were hardly any runs in 2008 for this reason - the relatively few "run type things" which happened were where big interbank exposures existed. SVB's customers are weighted significantly more towards businesses who will have more…

>The FDIC insures deposits up to $250k Per depositor, per insured bank, per account category. It’s not that difficult to keep significant excess deposits insured.

... until you find out the FDIC itself has a weak reserve ratio against their insured accounts, meaning they will be as broke as everybody else in a systemic banking failure.

Re: Bank run on Silicon Valley Bank

#558

Post by FactKnower69 »

dang wrote: post #492
antibasilisk wrote: post #55

[flagged]

Please don't post flamebait and/or unsubstantive comments to HN. We're trying for something different here. If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful. (We detached this subthread from https://news.ycombinator.com/item?id=35087135 .)

What exactly is the substance of this post you've just made? Just attacking the parent with no argument?

Re: Bank run on Silicon Valley Bank

#559

Post by kragen »

pclmulqdq wrote: post #309
Terretta wrote: post #64

Earlier quoted context omitted.

It's bizarre a recurring thing recurs? Particularly when 'venturing' into areas more profitable because of more risk? Here's their loan risk analysis as of EOY: https://i.imgur.com/ZWG157R.jpg Don't miss 14% to "innovation economy influencers"…

What's bizarre is that this is a particularly big bank to be going under. Most of the ones that die are tiny because banks have a real economy of scale here. Lehman and Washington Mutual were truly exceptional cases in the 2008 crisis, and SVB may be right there with them in a few weeks.

most banks that fail are tiny because most banks are tiny

Re: Bank run on Silicon Valley Bank

#560

Post by trogdor »

kentonv wrote: post #375
ericpauley wrote: post #58

I'm really curious why banks like this are popular in the first place. I get why startups would want to lend from them, but what is the advantage of parking cash in a "startup-focused" bank? The rest of the business is exciting/risky enough, wouldn't you want your banking to be as boring as possible?

To add to the other comments, SVB also courts startup founders for their private banking arm, and there, too, the benefit is that they actually understand startup founders. Example: After our startup went up in flames in 2017 my wife and I (co-founders) got "regular jobs" with nice salaries. Some time later, we tried to refinance our mortgage with Chase. The banker at Chase was very happy to serve us right up until t…

I understand that a C corp is its own legal entity, but from a risk management perspective, the bank’s approach makes perfect sense.
Post reply on HN