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

[Dtail]

I’m not worried either. I bought a third no penalty CD yesterday.

I have plenty of liquid investments at other locations if needed but I don’t expect any disruptions.

Not worried about Ally either.

 

[Niuatoputapu]

Interesting aside, I bank at a credit union. The CU's CEO just sent an email to the entire membership noting the CU is financially strong and always will be. She attached a link to their 2022 Annual Report. The CU, Golden One (here is California) claims to be the nation's 7th largest CU with almost $19 billion in assets. I clicked the link. My quick read suggests they had about $400 million of write-downs on their investment portfolio in 2022 taking their net assets (equity) down to $1.35 billion. That is just above 7% net worth to total assets ratio (well capitalized for a CU), but I suspect that ratio has weakened in the 70 some days since year end.


With 1.1 million members and member deposits of $16 billion, the average account balance must be about $1500. Probably everyone is fully insured. Not likely to be a run on the CU.


I understand the purpose of the CEO's rainbow and unicorns happy email even if 2022 reality was not so fantastic. Calm any fears.

 

[Car-Guy]

Interesting aside, I bank at a credit union. The CU's CEO just sent an email to the entire membership noting the CU is financially strong and always will be. She attached a link to their 2022 Annual Report..

How can a CEO claim they always will be financially strong. Stuff happens.

 

[jazz4cash]

How can a CEO claim they always will be financially strong. Stuff happens.

Yeah. That caught my attention also. I know someone that went to work for them a couple years ago and seems to really like working there.

 

[ERD50]

How can a CEO claim they always will be financially strong. Stuff happens.

Well, maybe it is actually written into their guides of how they invest? Sure, someone could circumvent those, I think they were just pointing out how their portfolio is different from these failing banks?

-ERD50

 

[JackJester]

Not worried about Ally either.

+2. I think Ally is solid, and probably not where most folks park a large majority of their $ anyway. Ally is just part of my flow to maximize returns and transition from investments to paying bills. Schwab Brokerage Socks/Bonds/CDs -> Schwab MM SWVXX -> Ally Savings -> Local credit union to pay bills.

 

[audreyh1]

+2. I think Ally is solid, and probably not where most folks park a large majority of their $ anyway. Ally is just part of my flow to maximize returns and transition from investments to paying bills. Schwab Brokerage Socks/Bonds/CDs -> Schwab MM SWVXX -> Ally Savings -> Local credit union to pay bills.

I suspect their customers are way more the retail customers most of who would be within FDIC limits. But I don’t know that for sure. It’s the way they seem to market themselves.

 

[latexman]

Here's an angle I haven't thought about or heard here yet.

Silicon Valley Bank collapse was driven by 'the first Twitter fueled bank run'

The massive amount of customer withdrawals that led to the collapse of Silicon Valley Bank had all the hallmarks of an old-fashioned bank run, but with a new twist befitting the primary industry the bank served: much of it unfolded online.

Customers withdrew $42 billion in a single day last week from Silicon Valley Bank, leaving the bank with $1 billion in negative cash balance, the company said in a regulatory filing. The staggering withdrawals unfolded at a speed enabled by digital banking and were likely fueled in part by viral panic spreading on social media platforms and, reportedly, in private chat groups.

In the day leading up to the bank's collapse, multiple prominent venture capitalists took to Twitter in particular, and used their large platforms to raise alarms about the situation, sometimes typing in all caps. Some investors urged startups to rethink where they kept their cash. Founders and CEOs then shared tweets about the concerning situation at the bank in private Slack channels, according to The Wall Street Journal.

If your bank goes viral, whatcha going do? Be sure you are under the FDIC limit and hold on?

It's simply social media induced mass hysteria!

 

[Car-Guy]

If your bank goes viral, whatcha going do? Be sure you are under the FDIC limit and hold on?

It's simply social media induced mass hysteria!

Who is next? (Rhetorical) IMO, it's not if one will be next, but how many and how soon.

 

[pb4uski]

Perhaps the banks need to adopt a model similar to money market mutual funds for their demand deposits... backing them with very short term commercial paper, repurchase agreements, etc. ... adopt the break the buck rules for bank demand deposits.

Only problem is that would make a huge dent in bank profits if the yield curve is normal but it would avoid most run risk scenarios and probably make the FDIC unnecessary.

 

[audreyh1]

If your bank goes viral, whatcha going do? Be sure you are under the FDIC limit and hold on?

It's simply social media induced mass hysteria!

Yes.

Who is next? (Rhetorical) IMO, it's not if one will be next, but how many and how soon.

Credit Suisse?

 

[Bigdawg]

Here's an angle I haven't thought about or heard here yet.

Silicon Valley Bank collapse was driven by 'the first Twitter fueled bank run'



If your bank goes viral, whatcha going do? Be sure you are under the FDIC limit and hold on?

It's simply social media induced mass hysteria!

A worry (not for me specifically) is that disruptive groups will see what happened and use the social media avenue to make a run on a bank as a protest or for some other non ligitimate reason to try and get a bank to fail.

 

[Gumby]

A worry (not for me specifically) is that disruptive groups will see what happened and use the social media avenue to make a run on a bank as a protest or for some other non ligitimate reason to try and get a bank to fail.

More likely that someone would short the bank stock, then incite a run on the bank, but I guess that's covered under "other non-legitimate reason". It does raise the question, though - is there ever a legitimate reason to try to make a bank fail?

 

[pb4uski]

Wouldn't it be sweet if some of these VC guys that tweeted to start the run had previously shorted SVB and end up in jail?

 

[captain3d]

is there ever a legitimate reason to try to make a bank fail?

https://apnews.com/article/signatur...licon-valley-6ad86262d9945675a42d735b66ace4f2

“Former U.S. Rep. Barney Frank said Monday that he believes the state officials behind the action were trying to make an example of Signature Bank in takeover that he said was the wrong move. Despite a wave of withdrawals, the bank’s situation was under control before regulators swooped in, he said.

“This was just a way to tell people, ‘We don’t want you dealing with crypto,’” Frank said in an interview.”

 

[Spock]

More likely that someone would short the bank stock, then incite a run on the bank, but I guess that's covered under "other non-legitimate reason". It does raise the question, though - is there ever a legitimate reason to try to make a bank fail?

Shorting the stock is small potatoes for the magnitudes of $ in play.
JPMorgan tanked the repo market in 2019 by suddenly withdrawing from the market sending SOFR up to 10% overnight. This caused the Feds to step in and start buying (I think this is what sarcastically referred to as "Not QE").
If you can profit from a crisis, why not trigger a crisis?

 

[MichaelB]

https://apnews.com/article/signatur...licon-valley-6ad86262d9945675a42d735b66ace4f2

“Former U.S. Rep. Barney Frank said Monday that he believes the state officials behind the action were trying to make an example of Signature Bank in takeover that he said was the wrong move. Despite a wave of withdrawals, the bank’s situation was under control before regulators swooped in, he said.

“This was just a way to tell people, ‘We don’t want you dealing with crypto,’” Frank said in an interview.”

I respectfully disagree with Mr Frank, but I do understand the impulse to redirect blame against an easy target (state regulators and crypto) and away from the Board of Directors.

Signature Bank, like Silicon Valley Bank, failed because of very bad management, and their respective Boards were responsible for evaluating the performance of each bank’s executive team.

 

[cyber888]

Well, now Credit Suisse is on the hot seats.
And the Swiss government won't bail them out.
This won't be just a local problem that needs to be contained, globally, banks abroad are also starting to crack.
I think the ECB will need to do something drastic for Europe.
And the Fed cannot be blind to the inter-connection of global financial systems.

 

[gayl]

Well, now Credit Suisse is on the hot seats. ....

CS @ 1.75 [emoji55]

 

[W2R]

Well, now Credit Suisse is on the hot seats.
And the Swiss government won't bail them out.
This won't be just a local problem that needs to be contained, globally, banks abroad are also starting to crack.
I think the ECB will need to do something drastic for Europe.
And the Fed cannot be blind to the inter-connection of global financial systems.

What a mess! I could hardly believe my eyes when I read the headlines about Credit Suisse this morning.

Hope this can be contained somehow and doesn't end up ruining any of us financially.

Let's face it, many/most of us worked our a$$es off for most of our lives to get to where we are financially. For now, I have everything I want in life; but I'm feeling very old these days and don't think I can do it again.

 

[cyber888]

What a mess! I could hardly believe my eyes when I read the headlines about Credit Suisse this morning.

Hope this can be contained somehow and doesn't end up ruining any of us financially.

I really hope so. The Fed and ECB cannot look the other way. I really hope they do contain any global systemic financial risks.

 

[W2R]

I really hope so. The Fed and ECB cannot look the other way. I really hope they do contain any global systemic financial risks.

If they don't, well, one thing's for sure - - - I'm not going back to work!!! I'd rather starve if it comes to that.

Surely they can't allow total global economic collapse, though. If they did, the "big guys" would suffer too, and we can't have that.

 

[audreyh1]

I’ve been hearing about Credit Suisse issues for a long time now.

 

[cyber888]

CS @ 1.75 [emoji55]

cheap share, or going lower

 

[cyber888]

If they don't, well, one thing's for sure - - - I'm not going back to work!!! I'd rather starve if it comes to that.

Surely they can't allow total global economic collapse, though. If they did, the "big guys" would suffer too, and we can't have that.

Are you still working? in a bank ? You should be fine