patrick.net

Silicon Valley Bank is a Poster Child for the region.

I spent my four decades career in the trenches of tech, in bleeding edge technology. I grew up in the region that became known as "Silicon Valley".
To my thinking, folks like richwicks and Patrick himself are newcomers. There's a slew of patents with my name on them, about a third of those as lead inventor. I am retired now, but members of my nuclear family are employed at some of those household name outfits, including in (senior) leadership positions. I share those personal tidbits not to boast, but for perspective for my next remark:

Silicon Valley Bank is a Poster Child for the region, and for finance about our region. I've been skeptical for decades about the hooplah. Chickens coming home to roost and all that. It's the reason, for my whole adult life, I only use "Silicon Valley" as a Pejorative.

IMO there's also a 50% chance that somebody will buy it and guarantee/return most funds, with the help of regulators/taxpayers. You know how this works by now ;)

RayAmerica says

It's at that point that the elite planners of the world will roll out their Great Reset, whereby, 'you'll own nothing and be happy.' After the kill-off from the 'vaccine,' I wonder how many of us will be left?

Except that they aren't anywhere close to ready, and cannot stop the train wreck. Their arrogance will be their undoing.

Agree that another bankster bailout would be a travesty.

BayArea says

Agree that another bankster bailout would be a travesty.

It depends on what you mean by bankster bailout. Do you consider seizure by the state and liquidation by FDIC as a bailout travesty?

B.A.C.A.H. says

BayArea says

Agree that another bankster bailout would be a travesty.

It depends on what you mean by bankster bailout. Do you consider seizure by the state and liquidation by FDIC as a bailout travesty?

No, this would be the system working as designed.

Patrick says

stfu says

Fannie Mae is considering letting realtors do appraisals

Candidate for worst idea ever.

Why, what would change? All the properties sales/buys I did and all that I know about had the appraisal come in at exactly the asking price. So, in a sense the realtor sets the appraisal anyway. The reason for the appraisal to equal asking price is because if the appraisal is below the asking price it will anger the realtor, while if the appraisal is above the asking price it will anger the banker who wants to prevent money down issues.

mell says

IMO there's also a 50% chance that somebody will buy it and guarantee/return most funds, with the help of regulators/taxpayers. You know how this works by now ;)

yeah i know a very uppity white liberal who was all for giving mortgages to anyone ...

then the housing crash occurred unsurprisingly and he buys a townhome for $115,000 that sold for $270,000 about three years prior ... and he gloats how great of an investor he is...

i think this time there won't be panic and fire sales ... i like how the government took over silicon valley bank quickly in order to avoid a panic sale of their assets at basement prices... i see silicon valley bank getting slowly liquidated so that uninsured deposits only lose at most 15% ....

i remember back around 2008 how some banks were sold off in a panic and many exploited that... this time around, I don't see this happening with banks nor with the housing market as well

B.A.C.A.H. says

I share those personal tidbits not to boast, but for perspective for my next remark:

Even if it was a boast. You experienced it. Journalist don't 9 out of 10 times. I'd take your word for it before the media honestly. If you have patents that you were the lead on, good on you. Anecdotal evidence is MASSIVELY more valuable than what the media puts out. I don't come here for regurgitated news sources that knowingly lie.

mell says

IMO there's also a 50% chance that somebody will buy it and guarantee/return most funds, with the help of regulators/taxpayers. You know how this works by now ;)

Interestingly, my buddy who works for the Federal Reserve said the same thing earlier today.

Patrick says

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.

not one per account. its per account type. so 1 checking, 1 savings total of 500k insured. add spouse to accounts and its double insurance.

if you need more you can pay for more insurance, its cheap btw.

WookieMan says

B.A.C.A.H. says

I share those personal tidbits not to boast, but for perspective for my next remark:

Even if it was a boast. You experienced it. Journalist don't 9 out of 10 times. I'd take your word for it before the media honestly. If you have patents that you were the lead on, good on you. Anecdotal evidence is MASSIVELY more valuable than what the media puts out. I don't come here for regurgitated news sources that knowingly lie.

This.

I think the pull of "Experts" who often aren't experts, or having those 'expert' voices amplified by media, is getting old.

Wisdom is listening to those who have been there, and at least putting it in the brain file for consideration when necessary.

https://www.charlotteobserver.com/news/business/banking/article272975790.html

Wells Fargo apologizes, pledges fix to computer glitch and incorrect account balances

Wells Fargo promised to fix by Saturday a nationwide computer glitch that left irate customers with incorrect — and sometimes negative — balances and missing transactions, according to a spokesman. It will also refund fees customers incurred because of the issue. Some customers started their Friday morning routines hoping to see their latest paychecks directly deposited in their accounts. Instead, they had negative balances, a number of customers reported on social media, and a message from the bank: “If you see incorrect balances or missing transactions, this may be due to a technical issue and we apologize. Your accounts continue to be secure and we’re working quickly on a resolution.”.

https://www.dailymail.co.uk/news/article-11846823/Fears-Silicon-Valley-Bank-collapse-hit-Republic-Bank.html

Fears Silicon Valley Bank collapse could topple First Republic Bank next, as shares slump 40% in a month and investors voice concerns over losses on its investments
Silicon Valley Bank was taken over by the government on Friday morning - the largest bank failure since Washington Mutual's fall in 2008
The bank's demise is a combination of a difficult economic environment and rising interest rates: it remains to be seen whether a savior can be found
Now investors are concerned about First Republic Bank, whose share price plummeted 50 percent on Friday

.

From what I could tell most of the executives at Silicon Valley Bank (SVB) were flunkies from other banks, and I did not see within the SVB executive ranks any alum from Goldman Sachs or Morgan Stanley

Nor did I see any Wharton business school grads

Seems like SVB got the B-listers and Woke brigade for their management

.

Isn't this going to make people less likely to buy mortgage backed securities?

I'd think that this would, at the very least make MBS's less desirable and therefore make mortgage rates higher.

Plus the dump of MBS on the market just from SBV

I've heard a ton of overblown BS over the last 3-4 years now. Hard to believe ANYTHING bad is going to happen.

I'm sorry, folks, but we'll have to bail SVB out, because HARRY & MEGHAN HAD ALL THEIR MONEY THERE!!!! HAVEN'T THEY SUFFERED ENOUGH ALREADY?!!!

The bank employees were inept, but there was a chain of events which also contributed.
Congress was spending too much money so it borrowed money by selling debt/bonds/IOUS.
The US Treasury sells them.
The Federal Reserve bought a LOT of them; everyone was concerned that if they flooded the market (worldwide) with bonds they would get bought for less.
The difference between the price a bond gets at the auction and it's face value=the "interest".
Then, the Federal Reserve started selling some of them off to banks.
Then, bank regulators wanted banks to own some "safe bonds".
Then, the Federal Reserve started raising interest rates quickly; this caused the bonds the bank now owned to lose value.
I experienced this myself; I own a couple funds which contain bonds of various types and the accounts have fallen although I don't need cash so I keep collecting the interest.
The bank which is not careful will need to sell something to pay depositors their money and evidently the house of cards collapsed.

clambo says

The bank employees were inept, but there was a chain of events which also contributed.
Congress was spending too much money so it borrowed money by selling debt/bonds/IOUS.
The US Treasury sells them.
The Federal Reserve bought a LOT of them; everyone was concerned that if they flooded the market (worldwide) with bonds they would get bought for less.
The difference between the price a bond gets at the auction and it's face value=the "interest".
Then, the Federal Reserve started selling some of them off to banks.
Then, bank regulators wanted banks to own some "safe bonds".
Then, the Federal Reserve started raising interest rates quickly; this caused the bonds the bank now owned to lose value.
I experienced this myself; I own a couple funds which contain bonds of various types and the accounts have fallen although I don't need cash so I keep collecting the interest.
The bank which is not careful will need to sell something to pay deposit...

They also were allowed to not mark these bonds to market if they claimed the intent to hold to maturity.

clambo says

The bank which is not careful will need to sell something to pay depositors their money and evidently the house of cards collapsed.

It will unfold and we'll probably never find out the truth. Given the name of the bank and a 78% drop from peak of crypto, methinks that has something to do with it. People lost their asses on crypto and they needed to pay actual bills with actual money. They couldn't loan out and make a profit anymore because these startups were too intertwined with crypto and started pulling out deposits.

I don't claim to know the bond shit or other banking talk. But it makes sense people put a ton of money in crypto that it would go to the moon forever, put $10M into crypto that then went to $3M, only had $5M in cash and had to cover their losses. Pulled deposits and the bank can't lend/borrow from the Fed. The question is how much is wiped out? I never even knew SVB existed. It's not like BOA or Chase in flyover country. Seems like a massive regional bank, so losses are going to hit that region bigly.

This seems like a bank that just had too much $$$ wrapped up in businesses that generally don't cashflow that made risky bets on crypto because it was hip and was appreciating. Just like buying 3-4 houses was hip in 2005 because you could.

I don't think it moves the rest of the country much though if we're being honest.

Supposedly Megan and Harry, as well as Oprah had a bunch of money in SVB.

Apparently SVB was without a chief risk manager for the past 9 months. Meaning there was supposed to be someone over wokie, but there wasn't.

Yellen said they won't bail out. Won't or can't...

Also, executives sold millions in stock before the collapse. Didn't realize insider trading is now legal...

NuttBoxer says

Also, executives sold millions in stock before the collapse. Didn't realize insider trading is now legal...

They said it was part of a plan which is usually legal, however if they changed that plan recently to sell or sell more they should be facing criminal charges.

NuttBoxer says

Yellen said they won't bail out. Won't or can't...

They don't need to. Bunch of startups affected, most people with bank accounts have less than 250k which is the insured amount. Sucks for them, but I'd never open a bank account with svb, they had nothing but negative news for years now and went full retard woke. Don't support woke businesses. Period

mell says

NuttBoxer says

Also, executives sold millions in stock before the collapse. Didn't realize insider trading is now legal...

They said it was part of a plan which is usually legal, however if they changed that plan recently to sell or sell more they should be facing criminal charges.

If they didn't violate the law as written then we need a better law. Can't charge people based on feelz.

Shopify and Roku will lose a bunch of money here as well.

Those MBS's that SVB will be liquidated at a heavily discounted rate so expect the balance sheets of those two companies to take a major haircut.

Suprised they arnt trying to push bailout or maybe they are and I havent seen it.

RWSGFY says

mell says

NuttBoxer says

Also, executives sold millions in stock before the collapse. Didn't realize insider trading is now legal...

They said it was part of a plan which is usually legal, however if they changed that plan recently to sell or sell more they should be facing criminal charges.

If they didn't violate the law as written then we need a better law. Can't charge people based on feelz.

Not sure if you're allowed to make changes to the plan on material information.

Without SVB or FTX, the Dems are going to need a bigger launderer for donations? Was SVB the conduit for DOD and DARPA funds to SiCoValley for all of the surveillance and propaganda strategies to be directed against the populace?

It seems like somebody is pulling the toothpicks out from under the support structures of the Ponzis. Which Ponzi is next, and when will The FED Ponzi collapse?

If they re-name it "Banco Cartel Internacional", then the Rockefellers will bail it out.

No one seems to be talking about this:

What about the derivatives? How many of these bad loans were used as collateral to make new loans, with this insane process being repeated into infinity?

With the size of SVB, this very well could be the colossal, weak link that breaks the financial chain.

Ceffer says

Without SVB or FTX, the Dems are going to need a bigger launderer for donations? Was SVB the conduit for DOD and DARPA funds to SiCoValley for all of the surveillance and propaganda strategies to be directed against the populace?

If I'm being honest I think it's just young gun, moronic Californian's, startup types and even bigger businesses that lost sight of the details that got burned on crypto as I've said. Lost a shitload on crypto and freaked that they "actually" had to run a business and drained their deposits from SVB. This is a basic bank run due to losses elsewhere. Basically venture capital got pissed away into crypto and not the business, yet they still held balances. Shit hits fan and they have to make payroll for mostly useless employees "hanging out" at work. Sell the crypto at a loss and pull money from SVB.

During the housing bust lenders would lend to purchase large parcels to developers with NO buyers. For a while they found the buyers. That stopped and there was then 15 months of inventory on basically worthless land and no buyers because FINANCING changed. Wasn't interest rates. This is a different type of bust. Convinced it's crypto. I don't think I'm wrong. I'll admit if I am, but we'll see as this unfolds.

Booger says

Shopify and Roku will lose a bunch of money here as well.

Those MBS's that SVB will be liquidated at a heavily discounted rate so expect the balance sheets of those two companies to take a major haircut.

They will likely not according to a buddy of mine who works for the Federal Reserve. Looks like all depositors will be made whole with the assets and equity SVB has on the book.

To protect the innocent, I had to blank out his name. Basically, FDIC will provide a backstop on the losses, IF ANY, to the buyer of SVB.

FDIC money is NOT taxpayers money. High probability all uninsured depositors will be made whole. I’m not an expert on this subject so I would prefer to listen to the people who work in the trenches rather than speculating.