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Anybody following the Silicon Valley Bank situation?
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The big picture:

https://www.cbsnews.com/news/s...dwide-repercussions/

Monday could be interesting, depending upon what happens tomorrow...

jon, quirt...you guys are probably following this more closely...how bad could it get?


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Posts: 37529 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
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I don’t know about contagion or anything like that. I’m more concerned about whether clients have exposure. It was something like the 14th largest bank in the country … odds are that some law firms are gong to have clients affected.

(I imagine that the Silicon Valley law firms that do a lot of venture capital and start-up work are not having a fun weekend, but that’s just speculation.)
 
Posts: 45708 | Registered: 20 April 2005Reply With QuoteReport This Post
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This is what Kroll's chief economist is saying:

"It has been a long time since we’ve had to face a bank run, but in many ways Silicon Valley Bank (SVB) was a special case. SVB’s client base and funding structure both suggest that it is unlikely to trigger a systemic crisis. There may be some contagion to other small, community banks in the U.S.—particularly if depositors aren’t all made whole--but the larger banks are unlikely to follow in SVB’s footsteps. SVB is yet another example that we can expect market disruptions as central banks raise rates and shrink their balance sheets."
 
Posts: 45708 | Registered: 20 April 2005Reply With QuoteReport This Post
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In the UK:

quote:
The government says it is working "at pace" on a plan to prevent UK tech firms caught in the collapse of Silicon Valley Bank from running out of cash.

The Treasury said it wanted to "minimise damage to some of our most promising companies in the UK" after the US bank's failure on Friday.

Firms could start to run into problems on Monday morning without intervention.

US regulators shut down the lender on Friday in what is the largest failure of a US bank since 2008.

The bank's UK subsidiary will be put into insolvency from Sunday evening.

Prime Minister Rishi Sunak, Chancellor Jeremy Hunt and Bank of England Governor Andrew Bailey "were up late last night" and have been "working through the weekend to come up with a solution" to the collapse of Silicon Valley Bank UK, Mr Hunt told the BBC's Sunday with Laura Kuenssberg programme.

While there's no risk to the UK's financial system as a whole, "there is a serious risk to some of our most promising companies in technology and life sciences", Mr Hunt said.

"These are very important companies to the UK, a very important part of our future.

"We want to find a way that minimises or avoids all losses to those incredibly promising [firms]," Mr Hunt said, although he said he could not commit to companies recovering all of their money.


https://www.bbc.com/news/business-64930944


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Posts: 37529 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
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News from the government.

https://www.federalreserve.gov...onetary20230312b.htm

CNN explains.

https://www.cnn.com/2023/03/12...r-bailout/index.html


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We are all visitors to this time, this place. We are just passing through. Our purpose here is to observe, to learn, to grow, to love… and then we return home. - Australian Aboriginal proverb

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Posts: 37529 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
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To support American businesses and households, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy.

The Federal Reserve is prepared to address any liquidity pressures that may arise.

The additional funding will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution's need to quickly sell those securities in times of stress.

With approval of the Treasury Secretary, the Department of the Treasury will make available up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP. The Federal Reserve does not anticipate that it will be necessary to draw on these backstop funds.

After receiving a recommendation from the boards of the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve, Treasury Secretary Yellen, after consultation with the President, approved actions to enable the FDIC to complete its resolutions of Silicon Valley Bank and Signature Bank in a manner that fully protects all depositors, both insured and uninsured. These actions will reduce stress across the financial system, support financial stability and minimize any impact on businesses, households, taxpayers, and the broader economy.


https://www.federalreserve.gov...onetary20230312a.htm
 
Posts: 45708 | Registered: 20 April 2005Reply With QuoteReport This Post
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Bank stocks, not surprisingly, are taking a huge hit this morning....


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Posts: 37529 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
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Why, I wonder.

Seems like everyone made money in the end.


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Posts: 34710 | Location: Hooterville, OH | Registered: 23 April 2005Reply With QuoteReport This Post
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I thought the stockholders of SVB and Signature all got wiped out...


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We are all visitors to this time, this place. We are just passing through. Our purpose here is to observe, to learn, to grow, to love… and then we return home. - Australian Aboriginal proverb

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Posts: 37529 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
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Seems to me these guys should have known better. .


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Posts: 34710 | Location: Hooterville, OH | Registered: 23 April 2005Reply With QuoteReport This Post
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A few excerpts of posts from a financial forum. Seems there are quite a number of banks teetering on the edge of imploding like Silicon Valley and Signature.

Wonder if we've been on the brink of a bank bubble for a good while without realizing it (and since so much in bank runs is psychological, what would it take for this nascent one to take off?)

Dominos!

Reminds me of 2008 as risky borrowing set that one off. Seems greed (risky greed) overtaken rapidly by fear was the fuse then.

Look how close we are to so many brinks right now! Just how many banks is Yellen keeping a close eye on? And how many SHOULD she be watching? (What good is such scrutiny after the fact, anyhow?)

Do NOT get why all these big (supposedly) savvy firms dare to place their assets way over the FDIC insurance limit.

So many financiers seem to be skating on very thin ice (and who pays the price when they turn out to have been too daring? Somehow not them, but the people who depended on their derring-do to manage their pension funds and so on.)

quote:
Posted: Mar 12, 2023
20 Banks That Are Sitting On Huge Potential Securities Losses-As Was SVB
Silicon Valley Bank has failed following a run on deposits, after its parent company's share price crashed a record 60% on Thursday. Trading of SVB Financial Group's stock was halted early Friday, after the shares plunged again in premarket trading. Treasury Secretary Janet Yellen said SVB was one of a few banks she was " monitoring very carefully."
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51hh
51hh | Mar 12, 2023 | 1,942 posts since 2010
Partial list:

https://www.morningstar.com/ne...ies-lossesas-was-svb
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Rickny
Rickny | 9 hours ago | 507 posts since 2017
Silicon Valley Bank failed just 14 days after KPMG LLP gave the lender a clean bill of health. Signature Bank went down 11 days after the accounting firm signed off on its audit.
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https://rooseveltinstitute.org...ow-to-change-course/

The author argues that “2018’s Regulatory Rollback Made the SVB Catastrophe More Likely” and “S.2155 Allowed Regulators to Miss SVB’s Warning Signs.” Prior to the 2018 regulatory rollback, Dodd-Frank required sharp regulatory monitoring ad “stress testing” of liquidities for banks with assets over $50 Billion — this would have included SVB. But the 2018 regulatory rollback raised that threshold to $250 Billion, that higher threshold allowed SVB (and many other regional banks) to operate under weakened regulatory oversight and a bunch of less stringent rules (examples cited in the article). The argument goes that SVB might not have gotten to where it was had all the original Dodd-Frank rules were left in place.


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UBS buying Credit Suisse.

https://www.cnn.com/2023/03/19...bs-rescue/index.html


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We are all visitors to this time, this place. We are just passing through. Our purpose here is to observe, to learn, to grow, to love… and then we return home. - Australian Aboriginal proverb

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Posts: 37529 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
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Inside SVB, an interview with an employee.

https://www.businessinsider.co...lure-fdic-fed-2023-3


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We are all visitors to this time, this place. We are just passing through. Our purpose here is to observe, to learn, to grow, to love… and then we return home. - Australian Aboriginal proverb

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Posts: 37529 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
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