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

[Car-Guy]

But why? What possible benefit is there to a company keeping millions in a bank? We’ve only got $3 million but less than 70K of it is in a bank (plus a few brokered CDs at Vanguard).

I can’t imagine keeping millions in uninsured accounts like that.

I assume for cash flow/accounts payable/payroll/etc. I suspect most companies (big and small) need large cash balances in their "checking accounts".

 

[Car-Guy]

There were some insider stock sales in the past couple of weeks at SIVB, including the CEO.

Well they got theirs, as usual.

 

[explanade]

SVB was the leading bank for Northern CA wineries.

Not just for deposits but for loans. Wineries were 2% of their loan portfolio.

Since 1994, Silicon Valley Bank has extended more than*$4 billion in loans to wineries and vineyards, providing financing for endeavors like vineyard acquisition and development, real estate and equipment purchases, according to the bank’s website. McMillan carved out a niche by establishing the bank as one of the few institutions that could cater to the nuanced needs of the wine industry. Wineries tend to make substantial investments in land, equipment and other assets years before they can sell a bottle of wine — a complex system that McMillan made a business of understanding.*

Read in San Francisco Chronicle: https://apple.news/Aa25LqeTLSRSbE65My8OGmw

The bank surveyed its winery clients and published an annual report on the trends in the regional wine business, which wineries depended on for capital deployment decisions.

 

[Car-Guy]

SVB was the leading bank for Northern CA wineries.

Not just for deposits but for loans. Wineries were 2% of their loan portfolio.



Read in San Francisco Chronicle: https://apple.news/Aa25LqeTLSRSbE65My8OGmw

The bank surveyed its winery clients and published an annual report on the trends in the regional wine business, which wineries depended on for capital deployment decisions.

Unfortunately these big bank failures are like Cancer... We can only hope they caught this one in time before it has metastasized to other banks/financial institutions/etc. Terrible analogy but......

 

[frayne]

Their problem was not so much the loss of mark to market, it’s they couldn’t raise the cash to meet withdrawals.

Makes one wonder if any US bank could meet a sudden run on deposits ?

 

[njhowie]

There were some insider stock sales in the past couple of weeks at SIVB, including the CEO.

Nothing underhanded there.

Filings indicate:
1. Exercise of expiring options and sale of those underlying shares

2. Sale based on previously filed 10b5-1 trading plan - pre-planned sales, specifically to avoid appearance of trading on non-public material information

 

[DAYDREAMER]

Ug, i hope JP Morgan Chase bank and Charles Schwab Bank are sufficiently funded. Out of greed and stupid, we are exceeding the $250 fdic limits for Brokered CD's

 

[Freedom56]

Ug, i hope JP Morgan Chase bank and Charles Schwab Bank are sufficiently funded. Out of greed and stupid, we are exceeding the $250 fdic limits for Brokered CD's

The limit is $250K per account holder. For joint tenancy accounts it would be $500K.

https://www.fdic.gov/deposit/diguidebankers/documents/joint-accounts.pdf

 

[DAYDREAMER]

Within wife's IRA at vangaurd, she has 250k cd at Charles Schwab bank, and Roth...176K cd at charles schwab bank

We knowingly did this of course because the cd yields looked great. Seemed like a low risk bet. Now, well, seems pretty stupid after recent bank failure

 

[Car-Guy]

Ug, i hope JP Morgan Chase bank and Charles Schwab Bank are sufficiently funded. Out of greed and stupid, we are exceeding the $250 fdic limits for Brokered CD's

Are you buying Charles Schwab CD's or are you buying brokered CD's through Charles Schwab?

 

[Quattro73]

Ug, i hope JP Morgan Chase bank and Charles Schwab Bank are sufficiently funded. Out of greed and stupid, we are exceeding the $250 fdic limits for Brokered CD's

If JPM goes under the whole country and possibly world is screwed.

 

[Quattro73]

I wonder if Thiel shorted this bank.

I have thought the same thing all day.

 

[DAYDREAMER]

Are you buying Charles Schwab CD's or are you buying brokered CD's though Charles Schwab?

Bought Brokered Cd's through vangaurd, where her IRA and Roth are located.

 

[Car-Guy]

If JPM goes under the whole country and possibly world is screwed.

Probably would be pretty bad if Schwab went under too.

 

[explanade]

Within wife's IRA at vangaurd, she has 250k cd at Charles Schwab bank, and Roth...176K cd at charles schwab bank

We knowingly did this of course because the cd yields looked great. Seemed like a low risk bet. Now, well, seems pretty stupid after recent bank failure

That raises another question. Is the FDIC limit per institution or can you have more than one $250k accounts across different branches of the same bank?

Either retail branches or via broker CDs?

 

[Car-Guy]

Bought Brokered Cd's through vangaurd, where her IRA and Roth are located.

I see... Attractive rates will do it.

 

[DAYDREAMER]

Probably would be pretty bad if Schwab went under too.

That's why i figured it was low risk. If my ship sinks, the whole world's is under anyway, so, no big.

However, now that a bank has failed, no frickn way would i take a similar risk in the future while buying Brokered CD's

 

[Freedom56]

If JPM goes under the whole country and possibly world is screwed.

JP Morgan is not going under. They market time bond purchases just like most reasonable self- directed fixed income investors. While bond funds and apparently many banks were loading up on long duration treasuries at record low yields in 2021, they hoarded an astonishing $500 billion in cash waiting to invest it at higher rates. Yes they market timed and now are in a position to once again swallow up assets of any banks that fail at pennies on the dollar.

https://www.marketwatch.com/story/d...waiting-to-invest-in-higher-rates-11623700397

 

[cyber888]

SIVB - $270 to $30 in 48 hours

I expect Yellen and Powell coming out on Monday to update Wall st on the situation. Is a contagion possible with the bank run. Is there systemic risk. Are more banks going broke with the sudden shock of higher rates. Will banks dump bonds. Will the Fed stop the rate hikes now. Terminal rates is expected to be lower now. Will the Fed inject liquidity.

 

[yhoomajor]

Fed and Yellen have no obligation to update Wall Street on this. They don't work for Wall Street (at least not yet).

So not sure where that expectation is coming from. Appropriate regulatory body (FDIC) is already managing and working through this case.

 

[pb4uski]

Within wife's IRA at vangaurd, she has 250k cd at Charles Schwab bank, and Roth...176K cd at charles schwab bank

We knowingly did this of course because the cd yields looked great. Seemed like a low risk bet. Now, well, seems pretty stupid after recent bank failure

No need to worry. Your entire $426k is covered by FDIC Insurance. Individual accounts are separate from individual retirement accounts.... note the second and eighth rows of the table below from https://www.fdic.gov/resources/depo...ocuments/your-insured-deposits-lp-english.pdf

 

[pb4uski]

Fed and Yellen have no obligation to update Wall Street on this. They don't work for Wall Street (at least not yet).

So not sure where that expectation is coming from. Appropriate regulatory body (FDIC) is already managing and working through this case.

+1 Let Wall Street stew a little.

 

[cyber888]

Fed and Yellen have no obligation to update Wall Street on this. They don't work for Wall Street (at least not yet).

So not sure where that expectation is coming from. Appropriate regulatory body (FDIC) is already managing and working through this case.

I meant the Wall st. media outlet - Bloomberg, CNBC, etc..
They do have an obligation to tell the public if the banks need to be bailed out or not.
Wrong. FDIC is not enough, if there is system risk and the possible start of a contagion.

 

[tmm99]

Both my old 401K and my rollover IRA at Fidelity are way over 250K each... Should I worry?
Not that I can do anything about it except to liquidate, as I don't think I can open a new account at a new firm as this point as I live in Canada now...

 

[audreyh1]

Both my old 401K and my rollover IRA at Fidelity are way over 250K each... Should I worry?
Not that I can do anything about it except to liquidate, as I don't think I can open a new account at a new firm as this point as I live in Canada now...

FDIC coverage applies to bank deposits only. So it would only affect CDs bought through Fidelity and you would need to limit CDs to $250K per institution to stay 100% insured.