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Silvergate Bank to begin voluntary liquidation

dfpi.ca.gov

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Re: Silvergate Bank to begin voluntary liquidation

#81

Post by colesantiago »

valcron1000 wrote: post #72
colesantiago wrote: post #66

Earlier quoted context omitted.

I've just went onto Wise and they support Argentina Pesos and lots more, seems to be working all good, you realise that Wise isn't the only company that works in Argentina? Payoneer also works in Argentina and other countries and pays employees / contractors internationally. You really don't need crypto at all, since international payments is pretty a solved problem already and Wise, Payoneer etc is much safer to use…

I'm well aware of most payment options, I even have the Payoneer card. As I mentioned in other comments, I suggest that you look up how those services actually work for Argentinians and why they are not enough. Crypto is the best solution to get paid, and I know it for a fact since I depend on my job to live.

While governments in Argentina and other countries might be poorly run and have unstable currencies, that doesn't mean that one should use an even worse system that loses people's savings together.

The fees on crypto is much higher and is slower than any of the solutions I mentioned when you account for exchange fees, volatility, transfer fees, buy/sell fees, etc.

Yes, my two examples exist but are not enough, but combined with other payments systems is used more than those using unsafe, unregulated, volatile crypto tokens that fits an extremely tiny and miniscule niche that only less than 2,000 people like yourself are unfortunately forced to use.

When Transfers 3.0 hits critical mass in Argentina and links up with Pix, UPI and other real time payment systems, there wouldn't be a need at all for crypto.

Re: Silvergate Bank to begin voluntary liquidation

#82

Post by rkagerer »

johntb86 wrote: post #49
rkagerer wrote: post #32

Earlier quoted context omitted.

Silvergate’s assets are real boring normal stuff Their safe, boring assets weren't safe and boring enough. Why can't there be a bank like this that just keeps your cash as cash?

It would be impractical to keep the cash in the form of 100 dollar bills. Given that, they need to be database entries in the Fed's system, and the Fed has discouraged banks from trying to keep large balances long-term: https://www.chicagobooth.edu/review/safest-bank-fed-wont-san...

Interesting. That article from 2018 speculates on the Fed's motivation, but seems upfront that nobody is certain why they gave TNB such a hard time. Has the story developed since then? Did the suit go to trial?

EDIT: In 2020 the Southern District of New York court dismissed TNB's complaint[1], finding the 18 month wait did not construe a denial (despite the application form saying a decision "may take 5-7 days"). I guess there was no appeal?

[1] https://justmoney.org/the-narrow-bank/

Re: Silvergate Bank to begin voluntary liquidation

#83

Post by ivalm »

eyelidlessness wrote: post #58
ivalm wrote: post #41

Earlier quoted context omitted.

Presumably because then they would have to charge you a percentage of your money for storage and people don’t want to pay the bank.

And for pretty good reason, at least it seems to me. Doing business with physical currency is not just objectively worse than digital transactions under most circumstances, it’s also increasingly untenable for more and more of life. Banking services basically are so successful they became a necessity for the vast majority of people who can access them—you have to have money storage, as a prerequisite to moving money…

As a public good you want all money to be invested. Money that is under lock and key is dead money. So having the bank lend your money IS a societal good. That it generates cash flow is just a bonus.

Re: Silvergate Bank to begin voluntary liquidation

#84

Post by adam_arthur »

HWR_14 wrote: post #73
adam_arthur wrote: post #47

Earlier quoted context omitted.

Not sure why people are upset with this comment. Many banks do put customer funds into T-Bills, or park it with the Fed at the fed funds rate. Both of which are 0 risk and effectively instantly redeemable. And this is still highly profitable right now, if you offer customers yields below fed funds rate (~5%), the money on the spread is risk free. Pretty much every crypto adjacent firm has decided to take excessive ri…

This bank did put a ton of the money in T-Bills. The vast majority of the remainder was in boring stuff like longer-term bonds. A very small amount (relatively) was involved in bitcoin lending. The problem is highly liquid and effectively instantly redeemable wasn't enough when the crypto world melted down and a huge percentage of their depositors needed money back right away. No bank can survive that. Wells Fargo ju…

If they could cover their liabilities with their assets then they would sell the assets to do so. Clearly the assets do not cover the liabilities. It's not a lengthy process to sell a bond on the open market

Re: Silvergate Bank to begin voluntary liquidation

#85

Post by HWR_14 »

adam_arthur wrote: post #84
HWR_14 wrote: post #73

Earlier quoted context omitted.

This bank did put a ton of the money in T-Bills. The vast majority of the remainder was in boring stuff like longer-term bonds. A very small amount (relatively) was involved in bitcoin lending. The problem is highly liquid and effectively instantly redeemable wasn't enough when the crypto world melted down and a huge percentage of their depositors needed money back right away. No bank can survive that. Wells Fargo ju…

If they could cover their liabilities with their assets then they would sell the assets to do so. Clearly the assets do not cover the liabilities. It's not a lengthy process to sell a bond on the open market

A T-bill is very liquid. Municipal bond liquidity dried up during the pandemic and, AFAIK, hasn't fully recovered yet.

Obviously some assets they hold (mortgage backed securities) have declined in value.

Re: Silvergate Bank to begin voluntary liquidation

#86

Post by adam_arthur »

HWR_14 wrote: post #85
adam_arthur wrote: post #84

Earlier quoted context omitted.

If they could cover their liabilities with their assets then they would sell the assets to do so. Clearly the assets do not cover the liabilities. It's not a lengthy process to sell a bond on the open market

A T-bill is very liquid. Municipal bond liquidity dried up during the pandemic and, AFAIK, hasn't fully recovered yet. Obviously some assets they hold (mortgage backed securities) have declined in value.

Munis are liquid, I view (a slice of) the market every day. Volume is down, but not significantly: https://www.sifma.org/resources/research/us-municipal-bonds-...

If you bought them at 2-3% yields then you lost a lot of money, which is probably the case here. If they bought below par they would get their money back at maturity, but that could be 20-30 years from now. Despite being "safe" from a credit perspective, munis are not safe from interest rate risk

Re: Silvergate Bank to begin voluntary liquidation

#87

Post by HWR_14 »

adam_arthur wrote: post #86
HWR_14 wrote: post #85

Earlier quoted context omitted.

A T-bill is very liquid. Municipal bond liquidity dried up during the pandemic and, AFAIK, hasn't fully recovered yet. Obviously some assets they hold (mortgage backed securities) have declined in value.

Munis are liquid, I view (a slice of) the market every day. Volume is down, but not significantly: https://www.sifma.org/resources/research/us-municipal-bonds-... If you bought them at 2-3% yields then you lost a lot of money, which is probably the case here. If they bought below par they would get their money back at maturity, but that could be 20-30 years from now. Despite being "safe" from a credit perspective, mu…

Sorry, you're right that their assets are also down. I didn't mean to deny that. It just seems that it was more a liquidity crunch than a solvency crunch. But maybe they cannot pay all their debtors?
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