Silicon Valley Banks taken over by regulators

[Irongrip400]

https://www.reuters.com/business/finance/global-markets-banks-wrapup-1-2023-03-10/


Reading this article and a few others, I’m wondering if this is the beginning of something larger. Similar to “novel coronavirus” back in late 2019/early 2020. I know it’s a bank that deals with tech start ups, but I’m sure these higher interest rates for borrowing and having to sell off bonds at a loss to cover losses could happen with any bank that invested in these types of assets. Thoughts my mensa, economist getbiggerz?

[beakdoctor]

I think you should trust your instincts.

Once theres a precedent set next thing you know 'regulators' have taken over your bank. For your own good of course.

Just like mandates were for your own good too.

Its like our government has been taken over. Hijacked. 

It's beginning to look like any dystopian movie or novel come true.

[tommywishbone]

WTF! 

This sucks for everyone. Not just Silicon Valley tech weirdos. Everybody. 

[Lartinos]

There was chatter when FTX went down that that’s why your money should only be in banks.

The crypto exchanges are still a risk obviously, but the sentiment behind what some were saying seems to be BS more or less.

[Mayday]

I’ll give some background.

What has happened to SVB is an ongoing risk to smaller banks up during an inflationary period meaning this will linger on for many years.

2020-22 people deposited oodles of money in banks. Banks purchased govt 2yr-10yr treasuries with those deposits. treasury price goes up if rates fall, treasury price goes down if rates rise.

So these banks Bought a stack of treasuries paying 0.5%. Today it’s 3.5% meaning the price has fallen considerably vs 2021. Now, it’s ok providing nobody wants their money and you can hold out for maturity. However, if people want their money (which is what has happened) the banks must sell their treasuries on the market. Because they have 0.5% treasuries vs 3.5% it’s discounted heavily and they no longer can cover their deposits.

This hasn’t been a problem for over a decade with falling rates making the treasury more valuable. In an inflationary cycle we do the reverse. Rates rise for years making the price of treasuries less valuable over time and therefore a risk on asset for a bank if you get a run on deposits.

[Primemuscle]

There was chatter when FTX went down that that’s why your money should only be in banks.

The crypto exchanges are still a risk obviously, but the sentiment behind what some were saying seems to be BS more or less.

Just moved a large sum to a CD from a savings account with the same FDIC bank. These accounts should be as safe as is possible with a bank. I like that the interest earned will add several thousand to my nest egg each year and the money is still accessible with a small penalty, should something unforeseen come up where I need to access it before the CD matures. 

[GymnJuice]

Just moved a large sum to a CD from a savings account with the same FDIC bank. These accounts should be as safe as is possible with a bank. I like that the interest earned will add several thousand to my nest egg each year and the money is still accessible with a small penalty, should something unforeseen come up where I need to access it before the CD matures.

I put some in short term CD and some in MMA but neither keeps pace with inflation right now.

[Vince G, CSN MFT]

https://www.reuters.com/business/finance/global-markets-banks-wrapup-1-2023-03-10/


Reading this article and a few others, I’m wondering if this is the beginning of something larger. Similar to “novel coronavirus” back in late 2019/early 2020. I know it’s a bank that deals with tech start ups, but I’m sure these higher interest rates for borrowing and having to sell off bonds at a loss to cover losses could happen with any bank that invested in these types of assets. Thoughts my mensa, economist getbiggerz?

They better not let them get a fucking bailout.  But a lot of companies like Roku are going to go out of business.  FDIC only covers for 250k and most of these companies had all of it in

[Mayday]

They better not let them get a fucking bailout.  But a lot of companies like Roku are going to go out of business.  FDIC only covers for 250k and most of these companies had all of it in

Why not?

If the good people of Getbig have funds in these banks would you not want them to be made
Whole? A bailout would help us plebs from losing money.

[Lartinos]

Crypto exchanges risky and banks safer, but maybe not as much as you’d think, makes me think the gold/silver rush of 2023 might not be far away.

Only problem is that it is artificially held down and there is so much “paper” metal out there.

[booty]

Why not?

If the good people of Getbig have funds in these banks would you not want them to be made
Whole? A bailout would help us plebs from losing money.

Higher inflation

[delon]

85%+ uninsured deposits, not great

No wonder people got the yips and started running once things started escalating

[Mayday]

Higher inflation

Having your property worth 50% more than 2020 not working for you yet?

Billions go into Ukraine which is Fed back to the govt senate and business ties but you draw the line at a measly few billion for plebs?

I’m not having a dig but it shows how much the wealthy have brainwashed us plebs into thinking bailing out the plebs is the cause of all our woes.

[Irongrip400]

I’m not sure why these companies have so much money in one account. I was reading about a start up that got their first million in the bank and now it’s frozen and they’re crying about it. FDIC insures up to $250k, not sure why they wouldn’t have a few accounts, especially as a small business. You can’t leave all that money in your business account.

[Never1AShow]

Is the Silicon Valley a reference to BHank's torn pec?

[Tapeworm]

It'll be ok. The government will just rape the taxpayers to cover it.

[Bevo]

Roku just lost 500 million in cash over this , chump change for elite getbiggers

[Flexacon]

There is no conspiracy (unless you count the CEO selling his shares 2 weeks ago)

My only surprise is that it took this long for this kinda thing to happen. Loads of regional and smaller banks will be under similar pressure now

Also there probably wont be a bailout here as it doesn't look like this carries any direct contagion over to any of the big banks. Everyone should get most (90% plus) of their money back.

[GymnJuice]

I’m not sure why these companies have so much money in one account. I was reading about a start up that got their first million in the bank and now it’s frozen and they’re crying about it. FDIC insures up to $250k, not sure why they wouldn’t have a few accounts, especially as a small business. You can’t leave all that money in your business account.

If you have more than one account at the same bank is each account insured to 250k or just the total amount across all accounts? (for example checking, savings, business etc)

[IroNat]

If you have more than one account at the same bank is each account insured to 250k or just the total amount across all accounts? (for example checking, savings, business etc)

https://www.fdic.gov/resources/deposit-insurance/faq/

[Dave D]

Roku just lost 500 million in cash over this , chump change for elite getbiggers

How do companies like this protect themselves?

If you have 5 million in the bank do you just open 20 separate accounts?

[IroNat]

How do companies like this protect themselves?

If you have 5 million in the bank do you just open 20 separate accounts?

They diversify the cash into CDs and money markets with multiple institutions to maximize return.

But there is always risk albeit very very low.

[loco]

Just moved a large sum to a CD from a savings account with the same FDIC bank. These accounts should be as safe as is possible with a bank. I like that the interest earned will add several thousand to my nest egg each year and the money is still accessible with a small penalty, should something unforeseen come up where I need to access it before the CD matures.

Just out of curiosity, what's the APY and term on that CD?

[Abelard Lindsey]

Two good reads on this:

https://market-ticker.org/akcs-www?post=248293

https://alexberenson.substack.com/p/on-bank-runs-mrnas-and-existential

Every financial collapse over the past 40 years has resulted from moral hazard.

[ProudVirgin69]

They diversify the cash into CDs and money markets with multiple institutions to maximize return.

But there is always risk albeit very very low.

a company of any decent size needs cash on hand for payroll, vendors, etc.  it’s not about maximizing return, it’s about working capital