Silicon Valley Bank - tits up
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Voyageur
Super Anarchist
ghina
Voyageur
Super Anarchist
veni vidi vici
Omne quod audimus est opinio, non res. Omnia videm
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Kinda like a pilot on IFR not trusting the instruments.
The management HAD to have known the perilous situation but seemingly thought they could squeak out.
It was clear that the smart shareholders understood the dire straits, it’ll be interesting to find out if they were shorting the stock after selling their own positions, seems like they would.
This is a C&P
At its peak share price in 2021, SVB had risen more than 100,000% since it first traded publicly in 1987. Even after a steep fall last year, the stock in its lifetime had outperformed the S&P 500.
veni vidi vici
Omne quod audimus est opinio, non res. Omnia videm
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Well prudent banks adjusted their risk as the rates were rising and it was clear interest rates had to rise to combat inflation and the Federal government money infusions.The ironic thing is if you go back to that period, there's a number of analysists saying "The Fed Can't raise rates above 4% ever again - they're locked in now. We've been here too long. If they do, they'll crash the banks..."
Shocking, I know! That's part of the problem with knowing math. Logic says "that can't happen, it's stupid - why would they do something that stuipid?"
giegs
Super Anarchist
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Dealing more with meatbag risk, the strictly quantitative approaches are always kind of amusing to me. There's a built in arrogance that's hard to get away from when you think you've categorized data well enough to reflect reality.
Student_Driver
Super Anarchist
I used to trade IR and other derivatives. Everyone in a position to manage risk, as banks should be, calculate, report and use DV01 calculations not only for overall risk but also for tenor buckets etc. These represent the Dollar Value of a 1 basis point (1/100 of 1.00%) move in rates.
SVB had gone out and bought $20Bio of 10 Yr notes b/c they could not lend out the deposits which grew 200% in a short time. These deposits are over night or short term so they have nearly zero Interest rate risk overall. On the other hand, their assets were in fixed notes. These 10Yr notes have a DV01 of about 7bp so a USD $20 Bio position in 10 Yr notes, would have a DV01 of around $14 million per basis point.
Even if they were in a hold to maturity basket which would obviate the need for recognizing losses into income, there would have been someone with these numbers and responsible for reporting these to the C-Suite.
So this type of risk imbalance is speculation, not a practice which should be supported by ordinary tax payers who would not have shared in profits if the trade had not tanked and rates had remained lower.
SVB had gone out and bought $20Bio of 10 Yr notes b/c they could not lend out the deposits which grew 200% in a short time. These deposits are over night or short term so they have nearly zero Interest rate risk overall. On the other hand, their assets were in fixed notes. These 10Yr notes have a DV01 of about 7bp so a USD $20 Bio position in 10 Yr notes, would have a DV01 of around $14 million per basis point.
Even if they were in a hold to maturity basket which would obviate the need for recognizing losses into income, there would have been someone with these numbers and responsible for reporting these to the C-Suite.
So this type of risk imbalance is speculation, not a practice which should be supported by ordinary tax payers who would not have shared in profits if the trade had not tanked and rates had remained lower.
veni vidi vici
Omne quod audimus est opinio, non res. Omnia videm
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Their computers were screaming at them!
I think people always underestimate the power of being the final option - I know I did.
In that regard, the MMT folks have a point - why care about the deficit? Do what you want. What else are people going to do? Switch to Rubles? Gold? Shiny shells? Marks on a stick? There is a truth to that argument - its much more powerful than what I had originally believed. To quote the Athenians "The strong do what they can and the weak suffer what they must."
Those Greek folks were pretty insightful into human nature.
SloopJonB
Super Anarchist
My understanding is that FDIC covers deposits to $250K.
That should be ample to cover all the regular people - do you know anyone with more than $250K in a bank account?
As for the rest, as you say, fuck'em - they have been creaming the economy since Reagan.
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Short sighted and ignorant
Olsonist
Disgusting Liberal Elitist
JPMorgan and PNC are among the potential suitors in talks to acquire SVB Financial Group in a deal that would exclude the commercial bank currently under U.S. government control, according to sources familiar with the matter.
www.axios.com
I don't know what the proportional amount of debt that that would include but it would have to include that proportional amount of debt. If they just want some nice assets and shed the liabilities onto the remaining commercial bank, nope.
J.P. Morgan, PNC among suitors for SVB holding company
Talks exclude the stricken commercial bank, sources told Axios.
www.axios.com
I don't know what the proportional amount of debt that that would include but it would have to include that proportional amount of debt. If they just want some nice assets and shed the liabilities onto the remaining commercial bank, nope.
No, and from a business perspective, it seems like one of those risks that a competent business should be able to manage. I'm not sure what happens regarding Roku, except you subdivide to the point you have sufficient working capital in the various banks to survive for the few weeks necessary to meet payroll until either you rebuild reserves or obtain an emergency line of credit. As established, the FDIC insurance was $2500 in 1934. Adjusted for inflation, that was around $50k. It was never designed to protect Rockefeller or Ford.
I think the reason an exception was made here is because most of the tech companies don't actually have positive cash flow and profitability to obtain a short term loan. The rich people have a lot of money invested in these gambles and don't want to lose it. So the government decided to protect the rich people, but not the banks, instead of protecting the rich people and the banks like last time.
Olsonist
Disgusting Liberal Elitist
Roku won't lose a penny.
SVB was nationalized rather than allowed to go insolvent. The SVB shareholders certainly got nuked by this criminal socialist overreach AS THEY FUCKING SHOULD BE. But they were getting nuked either way. Sucks to be them. Maybe pay better attention next time.
Then according the Treasury Dept, No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer. Instead, For the banks that were put into receivership, the FDIC will use funds from the Deposit Insurance Fund to ensure that all of its depositors are made whole.
I hope the SVB commercial bank survives, independent or as a subsidiary. It is a Silicon Valley institution. But I'll live if it doesn't.
SVB was nationalized rather than allowed to go insolvent. The SVB shareholders certainly got nuked by this criminal socialist overreach AS THEY FUCKING SHOULD BE. But they were getting nuked either way. Sucks to be them. Maybe pay better attention next time.
Then according the Treasury Dept, No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer. Instead, For the banks that were put into receivership, the FDIC will use funds from the Deposit Insurance Fund to ensure that all of its depositors are made whole.
I hope the SVB commercial bank survives, independent or as a subsidiary. It is a Silicon Valley institution. But I'll live if it doesn't.
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Foreverslow
Super Anarchist
Sorry
I mistyped red lining and owe up to it.
Now as to the rest of your bunk:
Rep Frank was in charge of the house banking committee
He was the one who lowered the standards to the point Freddie and Fannie were buying mostly crap that never should have passed muster.
Here is a 2011 article in the Atlantic (not exactly Fox News.) exposing this point after point.
Hey, Barney Frank: The Government Did Cause the Housing Crisis
Of the 19.2 million subprime/low quality loans on the books of government agencies in 2008, 12 million were held or guaranteed by Fannie and Freddie
www.theatlantic.com
To the point he did not run in 2012. No way he was going to win after so many of his constituents lost everything due to being suckered by his lower standards. Greed may have been in a handful of cases but not the majority who were hard workers who wanted the American dream. The banks using the new lower standards and not wishing to be the object of Frank's wrath said they qualified. If those standards had not been relaxed, they never would have qualified and their savings were not have been lost.
The voters in well-heeled Newton were not subprime, but the majority of his district in SE Mass were.
This is a shrewd politician who had survived multiple re-elections including a scandal when it was found his house was being used as a gay brothel. But this time, he knew he was toast.
He had tried to reverse course, but the die had been cast.
I will say it again. You folks need to learn there is no difference in these political hacks regardless of party affiliation. He went from being in charge of bank oversight to bank board member. His involvement with failed SVB is no different than Trump's chief of staff Gen Mattis at Theranos. Big name board members as an insurance policy against congressional investigation.. But it doesn't count for squat when it is a financial scandal.
It doesn't take a lot of staff to need $250k per month for payroll, especially in a technical or professional environment.
This will bounce a lot of paychecks for "regular people"
SloopJonB
Super Anarchist
Good point.
Olsonist
Disgusting Liberal Elitist
The Senate has the Banking Committee. Barney Frank was the Chair of the House Financial Services Committee. That is indeed a powerful Committee and a powerful post. But he was only Chair from January 4, 2007 – January 3, 2011. I'm surprised that you didn't namecheck ACORN.
Also, that wasn't "an article" by the Atlantic. It was a rebuttal written by an American Enterprise Institute staffer to an Atlantic interview of Barney Frank which the Atlantic published, a letter to the editor so to speak.
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VWAP
Super Anarchist
Newsom has deeper ties to Silicon Valley Bank than he let on, report says
Newsom has deeper ties to SVB than he let on, report says
A new report revealed that California Gov. Gavin Newsom has several ties Silicon Valley...
