Probably because of this:
https://www.federalreserve.gov/financial-stability/responding-to-financial-system-emergencies.htm
The FDIC is in control at the moment.
https://www.fdic.gov/news/press-releases/2023/pr23016.html
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Probably because of this:
https://www.federalreserve.gov/financial-stability/responding-to-financial-system-emergencies.htm
The FDIC is in control at the moment.
https://www.fdic.gov/news/press-releases/2023/pr23016.html
You'll probably need to explain how that works and the repercussions of it in order for us to assess the possibility of a banking contagion.
Bailouts were outlawed after last time. Now we have bail ins. Exciting stuff and everyone gets to play!
Depositors are protected.
Yep protected up to 250k with a broke insurance fund haha. Theres no fdic insurance money.
If it takes them 10 years to pay you back with worthless paper what good is that. Think about it.
Officially yes, unofficially they'll work as quickly as they can to return all depositor's funds.
I've been listening to some stuff about SVB and I'm going to step back from my statement regarding systemic failure. Im reading that it is a threat to banking stability.
Any guesses when The Fed announces the first 50bps cuts?
Any guesses when The Fed announces the first 50bps cuts?
It means there are $27 Billion in contracts out there that used to derive their value from the performance of this bank and are now worthless and there would no doubt
be other billions of derivatives that were created out of those now worthless derivatives and so on and on.
It is all intertwined within the financial sector and will cause a domino effect across the board unless the FED can pull a rabbit out of the hat, and for them to do that
will mean that they will need to restart QE and not worry about taming the inflation.
You and I agree on that. Monday?
16th largest bank in America
https://www.netinterest.co/p/the-de...ource=direct&utm_campaign=post&utm_medium=web
Driven by the boom in venture capital funding, many of Silicon Valley’s customers became flush with cash over 2020 and 2021. Between the end of 2019 and the first quarter of 2022, the bank’s deposit balances more than tripled to $198 billion (including a small acquisition of Boston Private Financial Holdings). This compares with industry deposit growth of “only” 37% over the period. Around two-thirds of the deposits were non-interest-bearing demand deposits and the rest offered a small rate of interest. All-in, at the end of 2022, the cost of Silicon Valley’s deposits was 1.17% (up from 0.04% at the end of 2021).
The bank invested the bulk of these deposits in securities. It adopted a two-pronged strategy: to shelter some of its liquidity in shorter duration available-for-sale securities, while reaching for yield with a longer duration held-to-maturity book. On a cost basis, the shorter duration AFS book grew from $13.9 billion at the end of 2019 to $27.3 billion at its peak in the first quarter of 2022; the longer duration HTM book grew by much more: from $13.8 billion to $98.7 billion. Part of the increase reflects a transfer of $8.8 billion of securities from AFS to HTM, but most reflected market purchases.
“Based on the current environment, we’d probably be putting money to work in the 1.65%, 1.75% range,” said the bank’s CFO at the beginning of 2022, referring to the yields he wanted to achieve. “The vast majority of that…being agency mortgage backed, mortgage collateral, things along those lines.”
@Oddjob
https://www.netinterest.co/p/the-de...ource=direct&utm_campaign=post&utm_medium=web
Driven by the boom in venture capital funding, many of Silicon Valley’s customers became flush with cash over 2020 and 2021. Between the end of 2019 and the first quarter of 2022, the bank’s deposit balances more than tripled to $198 billion (including a small acquisition of Boston Private Financial Holdings). This compares with industry deposit growth of “only” 37% over the period. Around two-thirds of the deposits were non-interest-bearing demand deposits and the rest offered a small rate of interest. All-in, at the end of 2022, the cost of Silicon Valley’s deposits was 1.17% (up from 0.04% at the end of 2021).
The bank invested the bulk of these deposits in securities. It adopted a two-pronged strategy: to shelter some of its liquidity in shorter duration available-for-sale securities, while reaching for yield with a longer duration held-to-maturity book. On a cost basis, the shorter duration AFS book grew from $13.9 billion at the end of 2019 to $27.3 billion at its peak in the first quarter of 2022; the longer duration HTM book grew by much more: from $13.8 billion to $98.7 billion. Part of the increase reflects a transfer of $8.8 billion of securities from AFS to HTM, but most reflected market purchases.
“Based on the current environment, we’d probably be putting money to work in the 1.65%, 1.75% range,” said the bank’s CFO at the beginning of 2022, referring to the yields he wanted to achieve. “The vast majority of that…being agency mortgage backed, mortgage collateral, things along those lines.”
@Oddjob
The Fed's rate rises caused this, looks like they finally broke something.
Most of svbs deposits arent even insured so those people wont get anything.
I heard individual depositers will but not businesses. Im not positive on that.
I heard individual depositers will but not businesses. Im not positive on that.
^ Assuming all banks face the same level of risk then your concerns would be valid. But they don't.
We had 150 something banks fail in 2010 in the US.
Like the government joke, you can trust the banks or you can know history. Cant do both!
Like the government joke, you can trust the banks or you can know history. Cant do both!
List of failed banks here: https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/
They followed the guidelines apparently re: the assets they held, but in the face of rising rates by The Fed the value of these assets had their feet cut out from under them and SVB wasn't proactive enough to meet the challenge apparently.
And in more SVB news:
https://news.bloomberglaw.com/bankr...-on-san-francisco-feds-board-after-bank-fails
He was a representative of the district banks on the Board.
https://news.bloomberglaw.com/bankr...-on-san-francisco-feds-board-after-bank-fails
He was a representative of the district banks on the Board.
You need a bank to be on the board! Blood, sperm, seed?
Having done some reading on this mob, their last financials, and some informed commentary out there, I think the above comment sums up the SVB situation nicely.
To expand on it slightly, they were a small-ish (on US / global standards) bank, skewed towards the tech sector (business & retail) thus lacked a diversified client and industry portfolio to assist them smooth out the economic / sector cycle & downturns and to add to the mix...mgmt does indeed appear ill equipped when it came to treasury management...Over time such issues will come to bite you in the butt. We had simo
I suspect some larger banks may cop some pain re SVB's failure if they had provided some funding lines (as banks do for each other), but I think given the nature of SVB, their then S&P BBB+ rating at the time, many of the majors probably would have not had any material exposure to SVB be it liquidity or derivatives lines. Risk of knock on effect in the wider bank market is low to nil IMO as SVB are not a major US domestic or global player....thus the only only risk to the other bank's stability is the US media blowing this all out of proportion.....I'm not saying that the US / global banking sector doesn't have it's own issues but SVB ain't one of them.
