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Bank run on Silicon Valley Bank

techcrunch.com

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Re: Bank run on Silicon Valley Bank

#721

Post by chii »

helsontaveras18 wrote: post #77
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?

Banks don't understand startups. Startups have no history and just appear out of thin air with millions of dollars in their bank account. And then they proceed to burn tens if not hundreds of thousands of dollars month on month until they die, or get flooded with more millions. That's some weird stuff!! A bank that understands this, knows it's not fraudulent, and makes it easy to withdraw, deposit, get credit cards,…

> knows it's not fraudulent

so a fraudster could easily exploit this bank then?

Re: Bank run on Silicon Valley Bank

#723

Post by pclmulqdq »

Asparagirl wrote: post #540
pclmulqdq wrote: post #309

Earlier quoted context omitted.

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.

2008 also had IndyMac and Wachovia[1] and a whole lot of regional banks, which were not small either. [1] which technically didn't fail but had its retail banking operations forcibly absorbed by Citigroup in an overnight shotgun wedding officiated by the FDIC, but hey who's counting

You can also add Bear Stearns to that list. Another "rescue" merger of a large-cap bank.

Re: Bank run on Silicon Valley Bank

#724

Post by chii »

FactKnower69 wrote: post #481
kurthr wrote: post #307

Earlier quoted context omitted.

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.

Good thing we live in an environment with infinite carrying capacity and natural resources, I could see things getting pretty dicey otherwise

With technological improvement, new exploration and the infinite span of the universe, i don't see why the carrying capacity isn't infinite.

Re: Bank run on Silicon Valley Bank

#725

Post by kasey_junk »

FormerBandmate wrote: post #183
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.

Washington Mutual and Wachovia were both insured

Washington Mutual and Wachovia were both taken over without touching the FDIC insurance funds.

Re: Bank run on Silicon Valley Bank

#726

Post by blippage »

MengerSponge wrote: post #576
cm2187 wrote: post #188

Earlier quoted context omitted.

A variant of Thatcher's "Being powerful is like being a lady, if you have to tell people you are, you aren't".

It's really amazing that both Thatcher and Reagan came to power at around the same time, delivered such fabulous witticisms, and caused very similar societal harm.

One thing I noticed is that political thinking tends to come in waves. Not just for countries individually, but globally. Sure, there are plenty of exceptions, but each age seems to have its own zeitgeist in the world's collective consciousness.

Currently, for example, there is Wokeism in general, with particular emphasis on transgenderism. Transgenderism only "affects" a very small percentage of the population, nobody paid it any mind a decade ago, and yet today it's a thing.

Re: Bank run on Silicon Valley Bank

#727

Post by neilwilson »

brianmcc wrote: post #672

Just to be clear for everyone: banks don't keep 100% deposits in a big vault, where a full-customer-withdrawal can and should be expected and permitted. Banks even at their simplest "Main Street local level", need to keep, say, 15% or 20% of their deposited funds available, as determined centrally e.g. the Fed or the Bank of England. The rest by design is to be lent out, that's how banks offer loans, mortgages etc. S…

"The rest by design is to be lent out,"

It isn't. That's a myth. It never has been how banks work and never will be.

Destructive runs can never happen in a modern banking system if the central bank does their job properly.

If everybody takes their money out of a bank in trouble, then the central bank ends up as the main depositor in that bank.

Which is as it should be - since they were regulating that bank.

The question here is whether the regulator has been asleep at the wheel and whether depositors over the FDIC limit are going to pay for that.

Re: Bank run on Silicon Valley Bank

#728

Post by hnthrowaway0315 »

fullsend wrote: post #327
boringg wrote: post #116

Earlier quoted context omitted.

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 Brothe…

The secret part is: they (yale guys) still bag big money regardless.

Re: Bank run on Silicon Valley Bank

#729

Post by bob_theslob646 »

Havoc wrote: post #360
tito wrote: post #357

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…

>Moody 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

Let's see how credible those credit ratings are over the next few weeks or so

Re: Bank run on Silicon Valley Bank

#730

Post by stephen_g »

MrDresden wrote: post #627
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.

Most if not all banks would have trouble paying out if there was a run. It is called fractional reserve banking.

Not exactly - ‘fractional reserve banking’ only happens in textbooks, it doesn’t actually describe how real banks work. But it is true that basically no bank could immediately pay out all their deposits without running into liquidity issues.
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