Silicon Valley Bank - tits up

[veni vidi vici]

Like I said - just remarkably luck timing.

No … he was probably not getting answers to relevant questions about HIS
Money and didn’t take their BS answers.
Peter is a long term survivor in Silicone Valley, he has seen it all !

 

[veni vidi vici]

Take a look at the rules in countries that don't have 560 failed banks so far this century.

Are you stupidly ideological about everything?

Oh the shithole socialist big government countries banks are and have been in serious financial crisis

 

[Olsonist]

Like I said - just remarkably luck timing.

I'm gonna give Thiel a pass on this. Basically, Founders Fund had a normal VC business transaction on Thursday, a capital call, which would have sent money to SVB. But it had a hiccup, one which never happens, and that's when they pulled their money. The facts of this explanation will get scrutinized though.

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Similarly, the bonuses SVB paid on March 10 just before failing. They were bonuses from last year which were scheduled to be paid on March 10. International bonuses scheduled for later in the month haven't been (and probably won't be) paid.

File this under correlation does not imply causation.

 

[SloopJonB]

File this under correlation does not imply causation.

I'll file it under Remarkably Lucky Timing.

 

[Olsonist]

I'll file it under Remarkably Lucky Timing.

You should and again, this is gonna get scrutinized by lawyers with an axe to grind.

For example, they could have staged the capital call as a pretext for pulling their funds after having been leaked some information. But there would need to be evidence for this. But correlation is a good enough reason to investigate.

DeSantis brings the dumb.

Ron DeSantis blames Silicon Valley Bank’s collapse on DEI

The Governor has no 'specific information' on whether Florida banks may also be affected.

floridapolitics.com

 

[Foreverslow]

Closed door emergency meeting at the Fed Monday morning.
I am sure it must be nothing of importance. Maybe planning for upcoming Christmas party /s
No word where the Plunge Protection Team is this weekend, but based on 2008, my bet is the parking lot of the Eccles building in DC is filled this weekend.

The Silicon Valley startups are screwed.
NOBODY has been going public due to the economic downturn.
Now these companies are seeing their operating funds frozen at banks like SVB which is going to crush them.


Related tangent:
Most layoffs in past 4 month have been in tech.
They have not shown up in unemployment numbers as most get several months severance to walk away quietly and you wonder how many have been taking a break and not finding a new job STAT!.
But finding a new gig in tech now is going to be very hard and many live in a high cost areas.
Same shit as the late 70s/early 80s.


As others have said, depositors are getting miffed.
They see 20% as the interest rate on their credit card bills
They know they can get 5% on a treasury note
They look at their savings account and the bank is paying them 1 percent.
So they want to pull their money and get a return closer to inflation.
The banks cannot afford to give them back their money or pay them 5%.
And they are saddled with all those bogus car loans at 140% LTV on overpriced used shit boxes that are not performing.
The low interest rates of past 15 years are going to skull fuck a lot of banks.


Current banks to watch next week as VC sharks are shorting the shit out of their stock according to GS

• Signature
• Key Bank
• Truist
• 1st republic

This will put pressure on them, as nobody in their mind is going to buy stock in a bank that the VCs are shorting to the moon.

 

[veni vidi vici]

Closed door emergency meeting at the Fed Monday morning.
I am sure it must be nothing of importance. Maybe planning for upcoming Christmas party /s
No word where the Plunge Protection Team is this weekend, but based on 2008, my bet is the parking lot of the Eccles building in DC is filled this weekend.

The Silicon Valley startups are screwed.
NOBODY has been going public due to the economic downturn.
Now these companies are seeing their operating funds frozen at banks like SVB which is going to crush them.


Related tangent:
Most layoffs in past 4 month have been in tech.
They have not shown up in unemployment numbers as most get several months severance to walk away quietly and you wonder how many have been taking a break and not finding a new job STAT!.
But finding a new gig in tech now is going to be very hard and many live in a high cost areas.
Same shit as the late 70s/early 80s.


As others have said, depositors are getting miffed.
They see 20% as the interest rate on their credit card bills
They know they can get 5% on a treasury note
They look at their savings account and the bank is paying them 1 percent.
So they want to pull their money and get a return closer to inflation.
The banks cannot afford to give them back their money or pay them 5%.
And they are saddled with all those bogus car loans at 140% LTV on overpriced used shit boxes that are not performing.
The low interest rates of past 15 years are going to skull fuck a lot of banks.


Current banks to watch next week as VC sharks are shorting the shit out of their stock according to GS

• Signature
• Key Bank
• Truist
• 1st republic

This will put pressure on them, as nobody in their mind is going to buy stock in a bank that the VCs are shorting to the moon.

More regulation
Bwahahahahaa
At least a hand full of conservatives with a platform get it , but nooo… tin foil hats and conspiracy theorists.
If you don’t understand the massive corruption at every level of government you are part of the problem.
It’s all a giant carnival midway
Still working on #3

 

[Olsonist]

Listening to a Wilmer Hale webinar and there is an auction going on right now.

https://archive.is/XYuBe

 

[jewingiv]

The Europeans are going to have problems later this year for the exact same reasons that the American banks are having problems. They have a decade of securities that were purchased with EVEN lower interest rates - as in zero or negative value. And have to raise rates for similar reasons.




I don't like Akerman at all but there is a point to this. SVB had a disproportionally narrow set of clients focused in Tech and startups. Shocking, I know, for someone named "Silicon Valley Bank". The bank run apparently started in earnest when a couple of the big VCs - including Thiel - started calling up their clients last week and said "get your money out now". If you're one of those clients, there's little risk to following your investor's warning and a lot of risk by blowing them off. So you follow.

This is a problem of concentrated decision making and timing. Its a classic bank run and will be taught in finance schools for the next 100 years.

I haven't seen anything that SVB did that was uniquely risky or particularly unusual. We'll see as the autopsy proceeds. Every bank has its procedures and strategies. But that being said, they clearly didn't balance their risk well enough. They didn't seem to fully appreciate the 'cut bait' nature of the VC industry and how abrupt that decision making can be. Ultimately, their management and investors are going to pay the price for that misjudgement. Their options are worthless. The bank itself is wiped out. Done and done.

The question left for the Government is what's going to happen to the clients. From what's been reported, less than 4% of the money is insured under FDIC - these accounts are, after all, mostly VCs and their clients with large accounts. However, the bank had a lot of assets - most of the money - probably 80-90% - is going to come back out eventually. But startups don't usually have months of runway to get their money back, nor can they just take a 20% haircut without implication. So that's the pressure. But these clients are very profitable for OTHER banks to want to service. Who doesn't want Roku's business? This won't be a fire sale.

So does the government chose to make it 100% and therefore create an implicit guarantee for other banks? This is going to be a tough political decision but this is GA, not PA, so that's for a different thread. Based on what's coming out of the chattering class, I suspect that SVB is going to get the "Countrywide" treatment for all the same reasons, and that's how this particular inning is going to play out - not Lehman. They'll punt the broader question until another example happens.

The depositors will likely be made whole or very close, as much of the mark-to-market losses in the bond portfolio can be absorbed by equity holders, preferred equity holders, and long-term debt holders - all of whom would be fully wiped out before even unsecured depositors should lose a penny.

Finally, of course, there is also the hope of a buyer. Should one come through, this is all academic. But any buyer is going to want guarantees that the government will not come after them for sins committed by SVB prior to the merger (this was an issue after 2008).

 

[VWAP]

Finally, of course, there is also the hope of a buyer.

Elon Musk 'open to the idea' of buying crisis-hit Silicon Valley Bank

Musk, one of the world's richest men who already bought Twitter for $44billion last year, was responding to a Twitter user asking if 'Twitter should buy SVB and become a digital bank.'

www.dailymail.co.uk

 

[Keith]

 

[veni vidi vici]

Elon Musk 'open to the idea' of buying crisis-hit Silicon Valley Bank

Musk, one of the world's richest men who already bought Twitter for $44billion last year, was responding to a Twitter user asking if 'Twitter should buy SVB and become a digital bank.'

www.dailymail.co.uk

Love it !
Can’t imagine it happening however

 

[Lark]

Love it !
Can’t imagine it happening however

I don’t think Mr Musk would do well in banking. He can’t keep his mouth shut.

 

[veni vidi vici]

I don’t think Mr Musk would do well in banking. He can’t keep his mouth shut.

He is a businessman, he would do just fine.

 

[Olsonist]

The govmint isn’t going to sell SVB to Musk. That would be stupid.

 

[SloopJonB]

He is a businessman, he would do just fine.

Like the businessmen who just ran it into the ground?

Trump is a businessman - exactly what business did he do just fine with?

The stupid is strong with you today.

 

[OPAL]

Bank of London has tabled an offer to Silicon Valley Bank UK...

Bank of London submits proposal for SVB's UK arm

 

[veni vidi vici]

Ever simple explanation

 

[veni vidi vici]

 

[giegs]

Cheap money got converted into more leverage. Money isn't cheap anymore. Who can survive the capital contraction without realizing their paper losses? How can those losses be contained within the existing leverage structures? Current paper losses of most financial institutions are extensive and poorly understood by the market due to a lack of transparency, some of that facilitated by regulators as in the SLR updates and delays on swaps reporting. On the topic of swaps, who gobbled up all the assets from Nomura, Credit Suisse, Archegos, etc? It was bigger financial institutions, wasn't it?

Bachman-Turner Overdrive intensifies