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Off-Topic Stock Market & Crypto Discussion

calinative umstudent said:
Sure but at the same time the Fed just raised rates quicker than like ever before in history AND they had a large bank-run. And it's not like taking over their assets would A) lose the Fed money once those mature or B) would really be considered a "bail out".
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Are we assuming that SVB has enough invested in quality mid/long-term investments to pay off all deposits? I'm not sure I'd be willing to assume that at this point.
 
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calinative umstudent said:
Sure but at the same time the Fed just raised rates quicker than like ever before in history AND they had a large bank-run. And it's not like taking over their assets would A) lose the Fed money once those mature or B) would really be considered a "bail out".
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I agree with @90scane , you simply cant reward or encourage risky behavior.

One of the key issues is that last year, fixed income as a whole lost about 15%. You and I felt in our portfolios, but banks do not have to mark to market. So as I noted earlier, ALL of them are sitting on huge mark to market losses, even on their Treasury holdings.
 
90scane said:
Are we assuming that SVB has enough invested in quality mid/long-term investments to pay off all deposits? I'm not sure I'd be willing to assume that at this point.
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They were also heavily dependent on deposits and had little long term debt. First Republic is similar.

Total deposits at First Republic were $176.4 billion, or 90% of its total liabilities, as of Dec. 31. About 35% of its deposits were noninterest-bearing. And $119.5 billion, or 68%, of its deposits were uninsured, meaning they exceeded Federal Deposit Insurance Corp. limits.
 
90scane said:
Are we assuming that SVB has enough invested in quality mid/long-term investments to pay off all deposits? I'm not sure I'd be willing to assume that at this point.
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I think generally it is believed they have assets to cover insured and uninsured deposits, but it's illiquid.
 
SpikeUM said:
I agree with @90scane , you simply cant reward or encourage risky behavior.

One of the key issues is that last year, fixed income as a whole lost about 15%. You and I felt in our portfolios, but banks do not have to mark to market. So as I noted earlier, ALL of them are sitting on huge mark to market losses, even on their Treasury holdings.
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It isn't rewarding or encouraging anything. It would be the Fed guaranteeing deposits immediately and dealing with the assets later. This would hopefully prevent a cascading effect at all other banks that aren't one of the 3 major ones.

Come monday, if there isn't a guarantee that youre deposits >$250k will be there unless they are held by like Bank Of America, why would anyone leave there money at that bank? SVB is done. What can be done now is sending a message that deposits are safe.
 
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calinative umstudent said:
I think generally it is believed they have assets to cover insured and uninsured deposits, but it's illiquid.
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Read my earlier posts, they had huge mark to market losses, and banks are no longer allowed to have massive illiquid investments, but if they had them the regulators should have stepped in earlier. You dont shut down in two days without having serious issues.
 
calinative umstudent said:
It isn't rewarding or encouraging anything. It would be the Fed guaranteeing deposits immediately and dealing with the assets later. This would hopefully prevent a cascading effect at all other banks that aren't one of the 3 major ones.

Come monday, if there isn't a guarantee that youre deposits >$250k will be there unless they are held by like Bank Of America, why would anyone leave there money at that bank? SVB is done. What can be done now is sending a message that deposits are safe.
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Read my earlier posts, bailouts are bad for the future, and why should taxpayers bail out poorly managed companies? If we bail out SVB, what about the trillion dollars of MTM losses that other banks have?

*Maybe* the Feds offer capital to banks in exchange for equity a la the Great Recession. But as @JD08 posted earlier, where were the regulators? This shouldnt have happened.
 
So it appears their assets werent illiquid, they just had YUGE MTM losses, and no long term debt, i.e. managed for short term profits. At least Moody's actually did their job this time.

www.reuters.com

Silicon Valley Bank's demise began with downgrade threat

SVB got an alarming phone call about its credit rating from Moody's last week, one that set the bank on course toward Friday's spectacular collapse that jolted global markets and walloped banking stocks.
www.reuters.com www.reuters.com
 
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SpikeUM said:
Read my earlier posts, bailouts are bad for the future, and why should taxpayers bail out poorly managed companies? If we bail out SVB, what about the trillion dollars of MTM losses that other banks have?

*Maybe* the Feds offer capital to banks in exchange for equity a la the Great Recession. But as @JD08 posted earlier, where were the regulators? This shouldnt have happened.
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Bailouts in what sense? Nobody is claiming the people running SVB or SVB itself should be "bailed out". My position is that the PEOPLE who had deposits at SVB should get protected ASAP with the primary motivation being to protect a major national bankrun from taking place this week that could have major ramifications for all but the few too big to fail banks in the US. You understand that come monday if the deposits at SVB are not protected (and indications are SVB DOES have assets to back the deposits), ANYONE who has >250k at a bank that isn't BofA, Jp Morgan Chase, Goldman Sachs, or Wells Fargo would be kinda dumb to not withdraw/transfer their money... That is the path this is heading towards on monday. Again SVB can fail and it's assets can get seized. But this needs to all happen swiftly if you want to avoid a cascading effect imo.

Imo something will be announced tomorrow that will ease concerns and prevent a major bank run.
 
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calinative umstudent said:
Bailouts in what sense? Nobody is claiming the people running SVB or SVB itself should be "bailed out". My position is that the PEOPLE who had deposits at SVB should get protected ASAP with the primary motivation being to protect a major national bankrun from taking place this week that could have major ramifications for all but the few too big to fail banks in the US. You understand that come monday if the deposits at SVB are not protected (and indications are SVB DOES have assets to back the deposits), ANYONE who has >250k at a bank that isn't BofA, Jp Morgan Chase, Goldman Sachs, or Wells Fargo would be kinda dumb to not withdraw/transfer their money... That is the path this is heading towards on monday. Again SVB can fail and it's assets can get seized. But this needs to all happen swiftly if you want to avoid a cascading effect imo.

Imo something will be announced tomorrow that will ease concerns and prevent a major bank run.
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They dont have the assets, but I get your point. What do you do about all the MTM losses at the banks? How do you stop banks from takling unnecessary risks if they have a guaranteed lifeline?

Lets see what happens. My sense is that the Fed will announce a stop to QT and a pause in rate hikes, that will calm the markets and ease the pressure on the banks MTM.
 
SpikeUM said:
The may not raise at all, and they may stop QT. Which will make the market rally and add more fuel to inflation. Might be a good time to pare down your equity holdings.

www.investing.com

Fed to hold meeting on Monday in wake of SVB's swift collapse, seeks to avoid widespread panic By Investing.com

Fed to hold meeting on Monday in wake of SVB's swift collapse, seeks to avoid widespread panic
www.investing.com
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You said pare down equity holdings yet the market could rally. Why pare down when the market could rally?
 
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SpikeUM said:
They dont have the assets, but I get your point. What do you do about all the MTM losses at the banks? How do you stop banks from takling unnecessary risks if they have a guaranteed lifeline?

Lets see what happens. My sense is that the Fed will announce a stop to QT and a pause in rate hikes, that will calm the markets and ease the pressure on the banks MTM.
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I get and agree with the argument of allowing the bank to fail. I'm also not saying the Government should be forced to LOSE money over this. My only opinion is that people and small businesses are about to get destroyed at absolutely zero fault of their own. I'm not saying equity holders should be saved either. Specifically my point is only about Depositors. Now at least the actions the FDIC has taken ensure that all insured deposits will be available monday, and some large percentage will be available within a couple days of that, and likely the rest in the following months as the rest of the assets are sold. I was just saying that the Government could pay SVB what the total deposits are in exchange for all the seized assets, which imo will likely end up with a profit for the government. Plus you also have to account that this could lead to the too-big-to-fail banks just become even bigger an way-too-big-to-fail....

And I would also obviously say the people running the bank should get prison time, especially since it appears several high ranking officials sold a large percentage of their stake in the company right before this collapse.
 
SpikeUM said:
They dont have the assets, but I get your point. What do you do about all the MTM losses at the banks? How do you stop banks from takling unnecessary risks if they have a guaranteed lifeline?

Lets see what happens. My sense is that the Fed will announce a stop to QT and a pause in rate hikes, that will calm the markets and ease the pressure on the banks MTM.
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Which will lead to more inflation. This whole thing is becoming a complete ClusterF**k.
 
calinative umstudent said:
I get and agree with the argument of allowing the bank to fail. I'm also not saying the Government should be forced to LOSE money over this. My only opinion is that people and small businesses are about to get destroyed at absolutely zero fault of their own. I'm not saying equity holders should be saved either. Specifically my point is only about Depositors. Now at least the actions the FDIC has taken ensure that all insured deposits will be available monday, and some large percentage will be available within a couple days of that, and likely the rest in the following months as the rest of the assets are sold. I was just saying that the Government could pay SVB what the total deposits are in exchange for all the seized assets, which imo will likely end up with a profit for the government. Plus you also have to account that this could lead to the too-big-to-fail banks just become even bigger an way-too-big-to-fail....

And I would also obviously say the people running the bank should get prison time, especially since it appears several high ranking officials sold a large percentage of their stake in the company right before this collapse.
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Nothing will happen.
 
As a tech startup guy, this could set back usa tech startups for many years. I have to believe public tech will see bigger growth outside of infrastructure plays: Microsoft, Amazon, google. Even those could see opportunities via acquisitions.
 
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