I feel like anything I say here will make me look like an idiot It's legal for the owners of a bank to loan themselves other people's money at cost?
That’s not what he was saying; He was saying they provided private banking solutions to lots of VC and Tech founders and many of them did 100% of their banking with them.
11:46 AM 10 Mar ’23 SIVB-US Silicon Valley Bank closed by California regulators -- FDIC ($106.04, 0.00) Silicon Valley Bank, Santa Clara, California, was closed today by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank. All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors. Silicon Valley Bank had 17 branches in California and Massachusetts. The main office and all branches of Silicon Valley Bank will reopen on Monday, March 13, 2023. The DINB will maintain Silicon Valley Bank’s normal business hours. Banking activities will resume no later than Monday, March 13, including on-line banking and other services. Silicon Valley Bank’s official checks will continue to clear. Under the Federal Deposit Insurance Act, the FDIC may create a DINB to ensure that customers have continued access to their insured funds. As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined. The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers. Customers with accounts in excess of $250,000 should contact the FDIC toll-free at 1-866-799-0959. The FDIC as receiver will retain all the assets from Silicon Valley Bank for later disposition. Loan customers should continue to make their payments as usual. Silicon Valley Bank is the first FDIC-insured institution to fail this year.
who said at cost? they charged interest (i thought you were talking about making loans to CEO/founders of companies that banked with SVB)
We have a lot of clients shitting their pants right now. Payroll companies are telling clients to wire them money from another bank to insure payrolls get paid next Wednesday. The FDIC has set up another bank to handle all insured amounts, and those amounts should be available Monday. Uninsured amounts are completely up in the air right now.
Not quite. In 2008 there was billions , if not trillions, of dollars tied up in derivatives based on horrific mortgages that people didn’t have to even prove income for. When people defaulted those loans defaulted and created a shit show of a domino effect throughout the economy. This bank was trying to generate yield via investments in mortgage backed securities. When interest rates increased it lowered the price of the bonds. So his $100 bond is now worth $95. But when mortgage rates are at 6.5% his 2% bond is now worth probably around $50. He had horrible timing and also shitty risk management around his duration and interest rate risk.
Our CEO had to send out an email to probably calm a lot of people's nerves. I'm sure he wouldn't tell us if things weren't fine but apparently we don't have a ton of exposure to SVB and payroll is fine.
Yeah, posted this last page. It was bad investment and too much expose/risk management vs any tech crypto scam shop.
A CFO friend of mine in a small software startup with ~50 employees uses them and told me she's totally cutoff and trying to figure out what to do with payroll right now. This isn't going to just fuck over "silicon valley", it's going to hurt a lot of small tech companies too.
why? he's right. the assets at SVB are > than the uninsured deposits anyways and everyone is getting back their money eventually. all this does is create liquidity for companies so they don't miss payroll.
duration becomes a huge problem with MBS's. most people are holding onto that 30 year fixed at 2.75% for all 30 years. Terribly risk management, for sure, though. Other banks, like PacWest, are in way better shape.
If that's the actual case great, but that's not how summers is operating Summers is notorious about bailouts when it comes to saving people in his class but almost always against stimulus that helps regular people. He's continuing the surprise stereotype.
Not that I had a lot of faith in my employer's ability to raise enough capital at our upcoming deadline, but I'm sure this dampers any money coming from a VC right now.
Again, the 93% uninsured number is stark. If the company has assets to liquidate to make everyone whole that's great. Normal people will be mostly protected by FDIC.
not necessarily. VCs are just super overwhelmed and busy with this for the next week or two. but i don't think it'll cause any further issues with new investments its a commercial bank. that means it;'s mostly companies that bank with them, not individuals. those companies have employees. those employees get paid every 2 weeks. to make payroll you have to have access to your money. now these companies do not. the working class lives paycheck to paycheck. what is hard about this to get?
UNSUBSTANTIATED INFORMATION TIME. This comes from the COO of a large, regional bank: we can’t really predict/guarantee what’s going on w/ them BUT our COO has said they’re hearing it’s likely that by Monday folks may be able to get like 80% of their balances. Remainder by end of next week…
brother i'm laughing at the idea of bailing out the bank by making depositors whole before we know if there's assets to cover it from Larry Summers you're just flailing around for whatever reason
the bank is already dead. they aren't being "bailed out". Sommers is suggesting bailing out company depositors so they can make payroll. a simple balance sheet from SVBs 12/31 corporate filing tells you that they had assets > non-insured deposits. you are the one flailing outside of your element here.
no, but that's not what's going on here. do you think working class people deserve to be paid for their work?
that is very literally what Summers was advocating and why I posted the tweet you responded to i'm glad we're on the same page and you can stop being a weirdo like you constantly do
granted, it was a bit of hyperbole... but certainly longer holds the lower the rates when rates suddenly later shoot up
Why is it stark? It's business who primarily bank there, not random people. I hate trickle down, but you have an organization that has 3mm in assets in a bank (probably not a massive company) but they might have 200 employees. You just wipe out the assets of those companies in a commercial bank and you aren't just hurting the small investor class, but the massive paycheck employees.
I haven't looked at it recently, but a few years ago the average length of a 30 year mortgage was 7 years.
some of yall are wildly more radical politically than you even know the idea we just save every company and make shady bank investments risk free has some big downsides!
I don't care of Sommers was right for the wrong reasons. He's still right. And that's what I said to begin with. Saying "fuck you" and posting it was your doing, not mine. I simply added proper discussion to an issue of working class people getting paid, which you seem to not care about since you're not personally impacted. you are on another planet, let alone another page. your depth of knowledge on this is poor.
certainly i assume people shorten their mortgage if they can get a new mortgage at the same rate and lower their payment, but that's harder to do when rates shoot up
ok so you think we SHOULD cover deposits if there's not assets to fulfill them. glad we ironed that piece out.