Silicon Valley Bank collapses after failing to raise capital

[TheX]

Does anyone remember 2008?

Silicon Valley Bank collapses after failing to raise capital

Silicon Valley Bank collapsed Friday morning after a stunning 48 hours in which a bank run and a capital crisis led to the second-largest failure of a financial institution in US history.

amp.cnn.com

 

[Gtarzan81]

 

[Leee]

Saw that on Breitbart earlier.

Posted it over in the Margin Call thread.

 

[Leee]

Should be nothing to worry about, right?

Right……???

 

[SteveC]

Nope - It's actually good time to buy banks stocks, after they get crucified today and early net week.

 

[TheX]

My wife worked in accounting at IndyMac Bank back then. The run on that bank was caused by a single politician out to destroy them. One statement was all it took.

That was a dark time for them. We moved on and never looked back. She went to work for OneWest Bank.

 

[SteveGangi]

How big a bailout will they be getting, at OUR expense?

 

[Olds442]

yep, it's started.

 

[bildozr]

So I was reading more into this. This bank is a very specific bank that caters mostly to start ups. Basically invested a lot of it in longer term investments at the peak of the market a few years ago. Now everybody is folding, and laying off people, and all their cash is tied up.

So maybe it is indicative of a wider problem, but it might just be an isolated case to the tech industry which has taken a hit. Despite that a lot of other industries seem to be chugging along.

 

[SteveC]

Nah, they were a one & done. Much ado about it in the WSJ today. In the end, just another venture capital funded bank going tits up in the Gulch.

All the biggies are just fine. But, their stocks are getting a beating. Wait a few days before you buy 'em up. Should be an easy 25%.

 

[nauc]

 

[MikeyTheCat]

Nah, they were a one & done. Much ado about it in the WSJ today. In the end, just another venture capital funded bank going tits up in the Gulch.

All the biggies are just fine. But, their stocks are getting a beating. Wait a few days before you buy 'em up. Should be an easy 25%.

Wait, are you saying they never made a real profit?

 

[MikeyTheCat]

So let me get this right: A bank who is a lender to a bunch of venture capital firms who then invested in companies without a way to make money but had insanely irrationally high valuations, but now that money isn't cheap and the stock prices of all those non-profitable startups is dropping because we have an over abundance of bullshit, all those VC won't see a return on the cash they handed out and the Silicon Valley Bank won't see those loans paid back so they're now the star of the donkey show?

Wow, I never would have seen this coming.

But 89% of the bank's $175 billion in deposits were uninsured as the end of 2022, according to the FDIC, and their fate remains to be determined.

The FDIC is racing to find another bank over the weekend that is willing to merge with Silicon Valley Bank, according to people familiar with the matter who requested anonymity because the details are confidential. While the FDIC hopes to put together such a merger by Monday to safeguard unsecured deposits, no deal is certain, the sources added.

Kind of reminds me of a guy I knew whose girlfriend stood him up at the alter. Thank goodness Babs the Burro stepped in and saved the wedding.

 

[MikeyTheCat]

But they didn't see that interest rates would rise. Now that's some proactive guidance.
Now that's some super smart leadership team right there.

 

[disaffected]

Never bet that there are no more roaches after seeing only one.

 

[SteveGangi]

So let me get this right: A bank who is a lender to a bunch of venture capital firms who then invested in companies without a way to make money but had insanely irrationally high valuations, but now that money isn't cheap and the stock prices of all those non-profitable startups is dropping because we have an over abundance of bullshit, all those VC won't see a return on the cash they handed out and the Silicon Valley Bank won't see those loans paid back so they're now the star of the donkey show?

Wow, I never would have seen this coming.



But 89% of the bank's $175 billion in deposits were uninsured as the end of 2022, according to the FDIC, and their fate remains to be determined.

The FDIC is racing to find another bank over the weekend that is willing to merge with Silicon Valley Bank, according to people familiar with the matter who requested anonymity because the details are confidential. While the FDIC hopes to put together such a merger by Monday to safeguard unsecured deposits, no deal is certain, the sources added.

If I "owned" a bank - CEO, president etc, I would NEVER tie myself to a ship that's already sinking.

 

[TheX]

Not a single US bank can survive a run like that. They don't have enough cash to let everyone pull their money out.

 

[Olds442]

Never bet that there are no more roaches after seeing only one.

for every one you see, there are 100 more you can't.

college roommate's family was in "pest control".

 

[KSG_Standard]

Back in the good old days, before Quantitative Easing, banks made money on the spread between interest paid on savings and interest collected on loans.

When the interest rates started to approach zero, the banks found a better way to make money. They took the free or nearly free money from Uncle Sugar Daddy and invested it in stocks and bonds.

There are other banks that are in trouble too.

The weirdest thing is that much of what’s happening today in terms of inflation, commodity inflation, public debt, mal-investment and other stuff, was predicted and predictable. All of it has to do with loose money, the “dual mandate” given the Fed, inflation targeting and all the other pipe dreams that you can effectively manage and plan an economy.

 

[six-string]

I don't mind running on banks...