Silicon Valley Bank SIVB - $270 to $30 in 48 hours

yhoomajor said:
Why am I not surprised that PNC backed out from buying SVB's assets after they took a look at their so-called assets. Looks like PNC is not interested in getting burdened with Loans to "fine" wineries on west coast and Commercial real estate on west coast :)

https://www.cnbc.com/2023/03/12/pnc...egulators-struggle-to-find-rescue-buyers.html

As usual.. US government (aka tax payers) will bail out the rich. Sorry folks, but most depositors at SVB are not typical small business that you have in mind (like corner shop mom & pop Pizza shop). Nope - they are serial fund raisers who sell vaporware to unsuspecting gullible on wall street (aka Main street).
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Yeah, not surprised, though.

https://www.cnn.com/2023/03/12/investing/svb-customer-bailout/index.html
 
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tulak said:
I didn’t see this part mentioned above from the Federal Reserve press release:



So it sounds like if there are not enough funds to cover depositors, then other banks will make up the difference?

I didn’t realize that’s how it works.
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If that's the case, and please correct me if I'm wrong, this will increase a bank's costs which will result in increase costs to their customers.

So by paying for uninsured deposits, we end up paying it through increased bank fees or reduced deposit rates instead of taxes and these fees will affect lower income households much more than wealthier households. [emoji848]

Here we go again. Privatize the profits and socialize the losses.
 
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I understand why the Fed and the Treasury had to do this to prevent a spreading bank panic. But I still think there is moral hazard in enabling people to knowingly take risks that they shouldn't take, like exceeding the FDIC guarantee amount. It also has not escaped my attention that anyone with over $250K on deposit at the bank is already wealthier than most Americans. It seems that socialism is anathema until rich people need help.

In any event, it's done. Perhaps we can learn some lessons from this and make some necessary changes to prevent it from happening again.
 
GenXguy said:
Yeah, not surprised, though.

https://www.cnn.com/2023/03/12/investing/svb-customer-bailout/index.html
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These rich also started this *possibly*( and I say possibly) unnecessary run. Maybe it was justified. Maybe there is more to the story.

But I still would not be shocked if Thiel and his ilk have major short positions on the bank and on the other regional banks and cleaned up.

This still looks like a weakness, a material management error, but not a fatal one, that the vultures found and exploited. In another scenario I could see a Thiel type, actually investing in this bank at a major discount mind you, in order to prop up. Maybe there is more to this yet unrevealed. I don’t know.
 
I remember cries of moral hazard in 2008.

But the alternative was the Dow plunging over 500 points for several days in a row as the House at first rejected the proposal from the Treasury Dept -- was that TARP?
 
Fair enough. I didn’t think about passing along costs to customers.

Tough situation. I agree with Gumby’s assessment, it would be nice if we could learn from this event.

But based on past history, we won’t. History sure does like to repeat itself...
 
Gumby said:
I understand why the Fed and the Treasury had to do this to prevent a spreading bank panic. But I still think there is moral hazard in enabling people to knowingly take risks that they shouldn't take, like exceeding the FDIC guarantee amount. It also has not escaped my attention that anyone with over $250K on deposit at the bank is already wealthier than most Americans. It seems that socialism is anathema until rich people need help.

In any event, it's done. Perhaps we can learn some lessons from this and make some necessary changes to prevent it from happening again.
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Your everyday business has more than 250 in the bank everyday.
 
Quattro73 said:
Your everyday business has more than 250 in the bank everyday.
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There are ways, some of them explored in this thread, to avoid that. Sure, it's more work for the CFO and his team, but why shouldn't they be the ones burdened with protecting their money?
 
Gumby said:
There are ways, some of them explored in this thread, to avoid that. Sure, it's more work for the CFO and his team, but why shouldn't they be the ones burdened with protecting their money?
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Because w/o someone screaming FIRE, the system is now pretty dang safe?
 
Gumby said:
In any event, it's done. Perhaps we can learn some lessons from this and make some necessary changes to prevent it from happening again.
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I seriously doubt it. Sure, we'll make some changes to pacify the public until this has blown over and then those same changes will be reduced or removed.

I guess it just really irks me that we've been through this before and didn't learn anything.
 
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Quattro73 said:
Because w/o someone screaming FIRE, the system is now pretty dang safe?
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The FDIC runs an insurance program. Like any other insurance policy, there is a coverage limit. If there weren't, premiums would have to be set much higher to cover the possibly unlimited liability to the insurance company. I think that we should keep that limit. If you want to have more than $250k in the bank and be insured against its loss if the bank goes bust, then you should pay the extra premium for that coverage, not every depositor of that bank and other banks.
 
11522914 said:
I seriously doubt it. Sure, we'll make some changes to pacify the public until this has blown over and then those same changes will be reduced or removed.
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Yes, like repealing glass-steagal... or dodd-frank...

It's like watching a pendulum. One side yells, "we need to fix this!" Then the other yells, "there is too much regulations!"
 
Gumby said:
The FDIC runs an insurance program. Like any other insurance policy, there is a coverage limit. If there weren't, premiums would have to be set much higher to cover the possibly unlimited liability to the insurance company. I think that we should keep that limit. If you want to have more than $250k in the bank and be insured against its loss if the bank goes bust, then you should pay the extra premium for that coverage, not every depositor of that bank and other banks.
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I like that Gumby, great idea.

Here's my thought though on that happening [emoji23][emoji23][emoji23][emoji23][emoji23][emoji23]
 
11522914 said:
I like that Gumby, great idea.

Here's my thought though on that happening [emoji23][emoji23][emoji23][emoji23][emoji23][emoji23]
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Actually, I could see that developing as a commercial product - reinsurance for bank deposits.
 
Car-Guy said:
I suspect a buyer will be found before the market opens tomorrow or at the very least, an announcement from the FDIC that says "in effect", the depositors will be made whole. IF that happens, the SVB depositors may turn out to be the lucky ones since more banks are likely to follow and I'm not sure how long other banks and the FDIC can keep it up.

Just me thinking out loud. YMMV
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Even quicker than I thought.


https://www.cnn.com/2023/03/12/investing/svb-customer-bailout/index.html
 
Gumby said:
Actually, I could see that developing as a commercial product - reinsurance for bank deposits.
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I’m skeptical. Why pay for insurance if you know you’ll get your money back?
 
Well, don't know about y'all, but last Friday, while all my covered call options expired worthless and I did not sell any shares, I had many OTM puts assigned due to the unexpected market drop. It's a low 6-figure total purchase of various stocks in different industries like mining, fertilizer, metal, energy, healthcare.

No banking stocks assigned on these puts, but on Friday I bought shares of JP Morgan outright. I remember that in the subprime fiasco of 2007-2009, JP Morgan did very well under Jamie Dimon. And Dimon as of late last year kept saying things could get really bad, but he was prepared for the worst. I believe him.

Anyway, the stock futures are up as I write this. Tomorrow, I will look to sell OTM covered calls on these new shares. Stock AA is inching up past 65%, and I said I wanted to keep it around 60% for a while.
 
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Meanwhile, at 8:22PM Sunday, Dow futures are up 337.

So much for buying a dip tomorrow. My personal jury is out on whether the bailout is better than the consequences, but ...whatever.
 
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What will be interesting (to me anyway) is what JP will do next week... Will he reverse course and drop rates now....:LOL:
 
Toocold said:
It's like watching a pendulum. One side yells, "we need to fix this!" Then the other yells, "there is too much regulations!"
Click to expand...

For some reason when I pictured this it seriously cracked me up.

I needed that. Thanks for the laugh.
 
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