patrick.net

SVB loaded up on MBS's that had a long term duration and a really low yield. You would have to be a total moron to do that. They deserve to go under.

Massive story, will take a week or two for most people to realize that. Maybe less if there is contagion.

zzyzzx says

SVB loaded up on MBS's that had a long term duration and a really low yield. You would have to be a total moron to do that. They deserve to go under.

They aren't an outlier in that regard, just first to fall.

I wonder if it's too late to take Cramer's advice?

CNBC’s Jim Cramer urged viewers to buy Silicon Valley Bank stock last month
https://nypost.com/2023/03/10/cnbcs-jim-cramer-touted-silicon-valley-bank-stock/

Hey, wasn't Cramer 'all in' with Sam Bankman-Fried?

There's a hedge fund that specializes in shorting Cramer's picks. I'm not shitting you.

whats that?

And lets forget this happened a couple of weeks ago.
Columbia Property Trust, which owns top-tier office properties in gateway cities from New York to San Francisco, has defaulted on a $1.72 billion floating-rate loan backed by seven of its owned towers housing well-known tenants including WeWork, Twitter, BuzzFeed and Snapchat.
It’s the latest sign that higher interest rates, cost-cutting efforts by large technology firms and a pandemic-driven hybrid working trend are increasingly pressuring even some of the largest real estate investors and office developers.
The loan, which has a current interest rate of 5%, is 30 days delinquent, according to CoStar data. Borrowing costs have risen after the U.S. central bank raised its benchmark interest rate eight times since March to nearly 5% from less than 1%.

https://www.costar.com/article/2019256472/columbia-property-trust-defaults-on-172-billion-loan-backed-by-big-city-office-towers

I've been wondering when commercial would start going under. The losses have been mounting for years now.

A simpler explanation from my link above, depositors are pulling their cash because interest rates at banks are too low, something we've all known for years. They can't afford to raise them, so as people keep pulling their money for higher interest investments, or simply because confidence in banks continues to decline, this will keep happening. Again, SVB will not be the last:

https://wolfstreet.com/2023/03/09/bank-stocks-got-wacked-between-a-rock-and-a-hard-place-as-banks-run-out-the-free-money/

NuttBoxer says

zzyzzx says

SVB loaded up on MBS's that had a long term duration and a really low yield. You would have to be a total moron to do that. They deserve to go under.

They aren't an outlier in that regard, just first to fall.

They are a big outlier after 2008, we shall see next week though.

https://youtu.be/_MWXaXTBIhU

mell says

They are a big outlier after 2008, we shall see next week though.

From what I read they just followed the plan all banks who were bailed out did and shuffled their liabilities around to make it seem as if they weren't insolvent. And as long as interest rates were able to be suppressed, it worked.

I've been looking for a new job, and talking to recruiters, I pick up the same underlying fear almost everywhere. No one trusts the economy right now, and these are companies who are hiring.

Both articles stated clearly the underlying issue is not unique to SVB, and will spread. Whether it's Monday, or next month, it doesn't matter. If you aren't prepared, you will go down with them.

Does Deposit Insurance apply here?

Ceffer says

Does Deposit Insurance apply here?

Yes, but I'm guessing deposits in a bank called Silicon Valley, many were over $250k. Over that they're fucked. Poof gone. My mom is financially illiterate, my dad is dead. She has $1M in cash sitting in the bank. Having dinner with her Sunday. Our banks are solid here (IL) as far as I researched.

I'm going to suggest she gift the money $250k to my sister and $250k to me, and keep $250k in a FDIC insured CD. She's buying my house and won't have a mortgage. She gets $90k/yr pension and social security, tax free. Basically she doesn't need the money to live, has no interest in investment. She could literally spend $40-60k per year on travel or renting a place in the Caribbean for 6 months of the year as a widow and no interest at 70 dating or anything.

My sister and I our the only two kids and we only have two kids so my sister and I are beneficiaries already with our kids secondary if either of us died. My sister is a widow and the cash wouldn't hurt, plus at our age we can be riskier and make it grow faster if she doesn't need it. Just makes sense as she's 70 and has health care. Her TRS pension is funded. 3% auto COL increases annually.

Ultimately this is likely a domino from the FTX collapse in my opinion. Crypto is shit. This is and always has been fact. I don't think many banks will fail though. Billions in crypto funds don't disappear and not effect banks since all of it pegged against the USD and the cash in bank accounts.

cisTits says

Yeah. It as if the Housing Experts of PatNet were running the place.

And the intelligent comments keep flowing. Actually make a statement, argument, anything. You post boobs and make no intelligent comments. Sometimes trannies too. I don't agree with every poster here, but they at lease attempt to make an argument to change my mind on something instead of shit posting.

WookieMan says

She gets $90k/yr pension and social security, tax free.

Illinois does not tax pensions or SS, but how does she not pay Federal tax?

NuttBoxer says

mell says

They are a big outlier after 2008, we shall see next week though.

From what I read they just followed the plan all banks who weren't bailed out did and shuffled their liabilities around to make it seem as if they weren't insolvent. And as long as interest rates were able to be suppressed, it worked.

I've been looking for a new job, and talking to recruiters, I pick up the same underlying fear almost everywhere. No one trusts the economy right now, and these are companies who are hiring.

Both articles stated clearly the underlying issue is not unique to SVB, and will spread. Whether it's Monday, or next month, it doesn't matter. If you aren't prepared, you will go down with them.

NuttBoxer says

mell says

They are a big outlier after 2008, we shall see next week though.

From what I read they just followed the plan all banks who weren't bailed out did and shuffled their liabilities around to make it seem as if they weren't insolvent. And as long as interest rates were able to be suppressed, it worked.

I've been looking for a new job, and talking to recruiters, I pick up the same underlying fear almost everywhere. No one trusts the economy right now, and these are companies who are hiring.

Both articles stated clearly the underlying issue is not unique to SVB, and will spread. Whether it's Monday, or next month, it doesn't matter. If you aren't prepared, you will go down with them.

As much as I loathe the xiden and commiefornia administration, they said they stepped in early and it sure looks like it. This was one of the swiftest takeovers, so they may be able to contain it. This doesn't fix the general fractional reserve lending system, but for the purpose of consumer exposure we will see next week if they're full of shit or indeed put the brakes on early enough. I expect initial jitters, but if contained, eventually a strong market rebound/rally.

WookieMan says

She has $1M in cash sitting in the bank.

That's crazy. At the very least she should split it among 4 institutions so that it's all FDIC insured. I think you can even have $250K insured per account at the same institution, but multiple institutions sounds safer to me.

WookieMan says

I'm going to suggest she gift the money $250k to my sister and $250k to me

Beware of gift tax on anything over $10K. Used to be $10K anyway. The giver has to pay the tax just to give the money away, iirc.

mell says

As much as I loathe the xiden and commiefornia administration, they said they stepped in early and it sure looks like it. This was one of the swiftest takeovers, so they may be able to contain it. This doesn't fix the general fractional reserve lending system, but for the purpose of consumer exposure we will see next week if they're full of shit or indeed put the brakes on early enough. I expect initial jitters, but if contained, eventually a strong market rebound/rally.

I think it has more to do with FTX collapse/fraud and crypto than anything. I know midwest tech guys and none of them touch crypto. I think it's a CA coastal and Northeast thing. Hard to know depositors in those banks, but if you knew I'd be looking at shorting them if publicly traded. It takes time for the money chain with something like FTX to be fully realized. A lot of money just went away or is worth pennies on the dollar.

Bitcoin lost about 78% from peak to the recent low in December. Number of coins traded spiked: https://www.coindesk.com/price/bitcoin/ Scroll to mid page. SBF is from CA so I imagine there's a good amount of tech money tied up in the whole thing.

And you know, there's probably some big opportunity in this instability, but what is it? Gold?

Or maybe people really can run a positive carry thing, where they borrow at 2% and get a guaranteed 4% from government bonds and such.

Patrick says

Beware of gift tax on anything over $10K. Used to be $10K anyway. The giver has to pay the tax just to give the money away, iirc.

It's $16k now. There are ways around it too. My mom can gift $16k to anyone and they gift it to us. My mom sends my wife $16k and me $16k AND then to 10 of my buddies who proceed to gift me the money to my wife or I. That's $192k tax free. Nothing illegal. Literally have to reporting, nothing. You just have to trust your buddies to give you the cash/check. If you have 100 buddies it's $1.6M. No tax implications for anybody.

She doesn't need the money and it simplifies estate planning unwinding the money. It also doesn't count toward the $12M estate tax limit.

Patrick says

And you know, there's probably some big opportunity in this instability, but what is it? Gold?

Or maybe people really can run a positive carry thing, where they borrow at 2% and get a guaranteed 4% from government bonds and such.

I know real estate. I don't know markets as in stocks, metals and shit like that. I have my money in funds and so does the wife, but we're very much set and forget at our age. Maybe in a decade we'll start caring. When we do watch it, it generally has increased above our additions if that makes sense. Add $5k to $100k and a month later it's $106k. Simplified as an example but I think that should make sense. As long as it's doing that I don't care. Money isn't much of a concern for us.

My wife's 401k is large. Her employer is okay with borrowing against it. Reduces our income paying it back weekly, but we could borrow $200k on that tomorrow.

Regardless of my bitchy real estate comments lately, because I'm right.... I'm in a very good position to suck up properties IF there's a crash. Not happening in my market and I like to be hands on, so no management company for properties 1k miles away. I know RE investors do it, but I couldn't remotely. USVI vacation rental would be one option though because I can write off the travel to go there. He changes his damn user name but the guy with the condo? in Hawaii that recently move to Texas. Vacation and reducing taxable income with travel to "check" on the property.

WookieMan says

I have my money in funds and so does the wife

@WookieMan One clear lesson I learned from working at Schwab for 5 years was to never put money in any mutual fund, except perhaps an index fund with 0.1% annual fees.

Almost all mutual funds underperform the market substantially because they are skimming fees and buying bad stocks with your money because someone is bribing them to, and then deliberately obscuring what they do. Most employers deliberately trap your 401k in high-fee mutual funds because of various backroom deals like that. They almost never offer you the chance to buy index funds or individual stocks.

You could literally throw 20 darts at the stock pages (if they even exist anymore), buy those 20 stocks, and outperform 95% of mutual funds.

Another way to look at it: if they're quietly skimming 1% off of the 5% your investments are earning, that means they're taking 20% of your earnings. And for doing nothing useful.

Patrick says

WookieMan says

I have my money in funds and so does the wife

WookieMan One clear lesson I learned from working at Schwab for 5 years was to never put money in any mutual fund, except perhaps an index fund with 0.1% annual fees.

Almost all mutual funds underperform the market substantially because they are skimming fees and buying bad stocks with your money because someone is bribing them to. Most employers deliberately trap your 401k in high-fee mutual funds because of various backroom deals like that. They almost never offer you the chance to buy index funds or individual stocks.

You could literally throw 20 darts at the stock pages (if they even exist anymore), buy those 20 stocks, and outperform 95% of mutual funds.

Another way to look at it: if they're quietly skimming 1% off of the 5% your investments are earning, that means they're taking 20% o...

I hear ya. Money isn't much of an issue though. We're great on our own without any help, but I have 2 extremely wealthy uncles. I don't expect 0.1¢ from them, but we'll be well off either way. I'm semi retired if I'm being honest at 39. Nothing handed to us either. I was breadwinner with a flexible job and then the wife's career blew up in a good way. Like huge.

I do what would be shitty jobs to most but I like it after 15 years in real estate dealing with shit people. 1 minute commute. No boss really. No dealing with people. I'm an introvert so it's perfect. Covers the mortgage payment. Wife's money goes to savings basically. Probably could be better with the money, I might get back into investment properties. Warehouse style though. That's where my mom got her money recently from my dad's investment.

We're very frugal. I know I talk about travel a lot but you've got to figure out the game. We don't actually spend that much on it. I'm a fortunate man to be honest. I sometimes shoot myself in the foot, but I'm getting better. 25 years with my wife, so I'm doing something right (not marriage years). I like investment tips but it's currently not broken, so I'm not going to try and reinvent the wheel. It's a charitable gift to the investment managers... lol. They have families too.

I'm not sure the seriousness or magnitude of the current bust is going to come remotely close to the dot com bust back in 2000.

There were almost countless companies ranging from Garden.com to Pets.com that did not produce a profit and spent a lot of cash. A lot were ecommerce companies with some surviving like Ebay and Amazon.

I wonder what will be the industry types failing this type other than crypto currency companies.

Maybe it will be Artificial Intelligence (AI) companies and green technology companies that fail in large numbers during this bust.

.

NuttBoxer says

Oh yeah, and to once again blow away the bullshit about everyone being insured, read the article about how some depositors will have to pray dividend sales will someday return their deposits to them.

From what I've read of WolfStreet.com, the worst case is that uninsured assets lose about 15% in value after Silicon Valley Bank is liquidated.

Silicon Valley Bank invested in long term bonds and lost a lot of value when interest rates increased. They should have bought no more than intermediate term like 2 and 3 year Treasury notes.

Vanguard Total Bond Market Index Fund ETF (ticker: BND) has lost about 20% from its peak value set in August 2020. I expect bond funds like BND to recover when rates hold steady. I'm not selling BND as rates will go down within the next 2 to 3 years.

.

I've read reports that both Peter Theil and JP Morgan were shit talking SVB in the weeks/ days leading up to its' bank run. Seems like if there is any evidence of a collusion to bring down SVB one of our three letter agencies would be investigating. Yeah right.

This will never get fixed until regulations change to limit the leverage that these 'banks' can underwrite. I remember it was 40:1 in 2007 before you start including derivatives.

In other news, I heard a podcast on Housing wire this week and thought they said that Fannie Mae is considering letting realtors do appraisals - "to speed up the process and improve equity".

ad says

NuttBoxer says

Oh yeah, and to once again blow away the bullshit about everyone being insured, read the article about how some depositors will have to pray dividend sales will someday return their deposits to them.

From what I've read of WolfStreet.com, the worst case is that uninsured assets lose about 15% in value after Silicon Valley Bank is liquidated.

Silicon Valley Bank invested in long term bonds and lost a lot of value when interest rates increased. They should have bought no more than intermediate term like 2 and 3 year Treasury notes.

Vanguard Total Bond Market Index Fund ETF (ticker: BND) has lost about 20% from its peak value set in August 2020. I expect bond funds like BND to recover when rates hold steady. I'm not selling BND as rates will go down within the next 2 to 3 years.

.

Correct, this is a drop in a bucket compared to 2008. However it sucks for those banking with them, incl. startups which may have loan/cap raise money tied up and is a warning sign. They mainly got screwed by their poor bond purchases / interest rate decisions.

Insiders (like Nancy Pelosi) have just a slight advantage over the rest of us.

Silicon Valley Bank CEO Sold $3.6M in Stock Before Collapse, Mysteriously out as Fed Reserve Board Member
https://redstate.com/bobhoge/2023/03/11/silicon-valley-bank-ceo-sold-3-6m-in-stock-before-collapse-mysteriously-out-as-fed-reserve-board-member-n714913

Pretty soon the public will learn the term 'bail-in' and what has been lurking like Pennywise in the Dodd-Frank Act.
I don't imagine it was an accident that they opened the legal door to using OUR MONEY to 'recapitalize' the 'next time'.
They did little to prevent their being a 'next time' they just assured that the Muppets would pay going forward.

"Bail-ins work a little differently, providing immediate relief. Banks use money from their unsecured creditors, including depositors and bondholders, to restructure their capital to stay afloat. Put simply, they can convert their debt into equity to increase their capital requirements."

Tucker Has Expert on Regarding the Collapse of Silicon Valley Bank and it Doesn't Look Good

"We are on the brink of a 2008 style financial crisis ..."

https://rumble.com/v2clad2-tucker-has-expert-on-regarding-the-collapse-of-silicon-valley-bank-and-it-d.html

Fasten your seatbelts ... this could get really ugly ... and fast.

I'm still amazed that people keep their money in the bank.
You are lending your capital to a bank for practically nothing.
Banks are greedy; they want to invest your capital and make a bundle on the difference.
Evidently they sometimes lack the ability to succeed.

RayAmerica says

Tucker Has Expert on Regarding the Collapse of Silicon Valley Bank and it Doesn't Look Good

"We are on the brink of a 2008 style financial crisis ..."

https://rumble.com/v2clad2-tucker-has-expert-on-regarding-the-collapse-of-silicon-valley-bank-and-it-d.html

Fasten your seatbelts ... this could get really ugly ... and fast.

Let me guess her company is shorting. I think it's not good of Tucker, who usually always says we don't know and can only speculate until we know more, to imply calamity or contagion with zero evidence so far. While it is possible I'm betting against contagion. This is nothing compared to the overleveraged, sold and packaged umpteenth type MBS that every bank was engaging in in 2008. There will be some startups going bust which would likely have run out of funds sooner or later in this environment anyways. We'll see

Is SVB being deflated to expose the Globalist depositors? One wonders.

"The sky is falling!"
"It's game over man, we're fucked!"

Apparently SVB had the fastest bank run in history, going negative in under an hour. This is something I'm not sure many people consider about a digital world. A company I worked at a few years ago mentioned how fast popular songs traveled around the world. The first one may have been that Fox song, and the second was Gangum Style. The time it took for the second to catch on was exponentially faster, and that was years ago now.

When shit goes bad it will be within hours, not days.

stfu says

I've read reports that both Peter Theil and JP Morgan were shit talking SVB in the weeks/ days leading up to its' bank run.

We all know Morgan Stanley didn't go down by accident, neither did Washington Mutual.

Ceffer says

Is SVB being deflated to expose the Globalist depositors? One wonders.

clambo says

"The sky is falling!"
"It's game over man, we're fucked!"

They just made a lot of shit loans to startups aside from their failed bond plays, which are always dandy as long as we are in a fed supported low interest rate environment. It's been know for a while they weren't doing that great.

I heard on Buck Sexton that SVB chopped up all their commercial loans and sold them off in pieces to other institutions.

I know you really want to deny this is bad, but your outlook is too narrow. Both articles make it clear the underlying issue is not unique to SVB. Further the interest rates are rising because they have to, not because the Fed is raising them. Fed was attempting to suppress them, that created rampant inflation, now they are attempting to suppress the inflation. As they failed at the first, they will fail at the second. Local banks have routinely been short on cash the past few years, as I personally noted here several times. Business's are tightening belts, and even the ones hiring the recruiters are nervous. There are issues with food supply(some real, some false flags), getting parts in EVERY industry, getting products on store shelves. Record homeless, record unemployment(don't bullshit me with government numbers), and RECORD DEBT AT ALL LEVELS.

This will not end will, this was never going to end well. They won't roll out the CDBC slave currency in time to prevent the dollar collapse. You put your head in the sand, the only person who suffers is you, and those you are responsible for.

The market halted trading on three bank stocks Friday. Monday could be a bloodbath.

NuttBoxer says

The market halted trading on three bank stocks Friday. Monday could be a bloodbath.

Buying opportunity?