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FDIC Takes over Silicon Valley Bank

fdic.gov

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Re: FDIC Takes over Silicon Valley Bank

#981

Post by chernevik »

kgwgk wrote: post #755
timdaub wrote: post #477

Earlier quoted context omitted.

Would love to understand if this is actually good financial advice here. My bank plays broker for all the assets I own and tbills are part of that. FDIC wrote: > As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors. So to me that sounds like those „risk-free“ assets will get liquidated too. I‘d love to hear an actual professional confirm/deny this. Because…

The bank's assets will be liquidated. If you have a securities account at a bank those are your assets, not the bank's.

But accessing the securities in that account might be delayed if the bank were in receivership -- the FDIC might freeze everything while it sorted out what's what. I don't know how that works.

If the securities are in an account at another institution that certainly wouldn't be a problem.

Re: FDIC Takes over Silicon Valley Bank

#983

Post by ahmedbaracat »

brightstep wrote: post #900
ahmedbaracat wrote: post #806

Earlier quoted context omitted.

This logic is counterintuitive to me “As deposits grew, SVB could not grow their loan book fast enough to generate the yield they wanted to see on this capital.”. Startups are not depositing the money in SVB to invest it, they are storing it for future use. Why the pressure to generate yield and grow the loan book “fast enough”? https://twitter.com/AhmadBaracat/status/1634293096639787008?...

Because the bank, like all capitalist entities, exists to make a profit. Why else?

Can they make profit by charging customers a monthly fee in return for their services instead of investing the money?

Re: FDIC Takes over Silicon Valley Bank

#985

Post by dhosek »

dhosek wrote: post #912

It seems to me that there is an upper limit to a bank where they just cannot do business efficiently. If a bank has more deposits than they can grow their loan book, they’ve crossed that line. This bumps up against the too-big-to-fail problem we had in 2008 as well. If the banks can’t manage their growth, perhaps they should be broken up and/or have limits placed on their size.

And if you think about it in terms of what deposits look like from the bank side, every deposit a bank takes in is effectively money they’re borrowing. SVB borrowed more money than they could afford to borrow.

Re: FDIC Takes over Silicon Valley Bank

#986

Post by unity1001 »

nnx wrote: post #173

But I thought only crypto was risky? And that over-regulated bank sector was totally safe? Imho, this is a great argument for the return of Free banking (including crypto) as we see time and again that regulations do not work. Fail early and fast, let the market innovate and pick its winners and losers.

> And that over-regulated bank sector was totally safe?

SVB got an exemption from those regulations.

Re: FDIC Takes over Silicon Valley Bank

#988

Post by shawabawa3 »

runeks wrote: post #972
Randalthorro wrote: post #711

Earlier quoted context omitted.

What’s crazy to me is the fed hasn’t been raising rates out of the blue. What the fuck was this bank doing the last two years during every raise? They should have been rebalancing.

> They should have been rebalancing. How would that have helped?

Say they have 90B deposits and 100B in long term treasuries

Once that 100B falls to 95B due to interest rate hikes they could sell them all and buy 95B of short term treasuries instead, insulating them from any further rate hikes

Re: FDIC Takes over Silicon Valley Bank

#990

Post by paulddraper »

ecshafer wrote: post #860

I am naive in this area. But what I don't really understand is.. why are all of these start ups using Silicon Valley Bank? It's a relatively small regional bank, that happens to have a ton of cash. Why aren't start ups using Bank of America, Wells Fargo, etc. It's odd to me that >90% of a sector uses this one regional bank.

> relatively small regional bank

Top 1% of U.S. banks is not "relatively small." Technically regional, but had locations across the country. I'm in Utah there's a location across the street from my office.

> why

It was tech-forward and offered debt financing based on ARR.

Why do >90% of online retailer companies use Shopify? If it's better, people will use it.

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