Silicon Valley Bank Fails After Run by Venture Capital Customers

With several other banks named as at risk in the news, I expect that Monday there will be a flurry of withdrawals from them. Plus public companies named as victims will likely have a bad day of trading on the stock market.
 

Lawrence00 said:
With several other banks named as at risk in the news, I expect that Monday there will be a flurry of withdrawals from them. Plus public companies named as victims will likely have a bad day of trading on the stock market.
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Yup, the stock markets will probably past some massive losses in coming days, and many banks may see people lined up at their doors tomorrow morning.
 
Gary O' said:

Silicon Valley Bank Fails​


Hope it's not a domino effect

Hope everybody stands pat

I hear the fed money printers firing up
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Just like panic selling on bad day stock market there will be some pulling money out. The big guys will probably start pulling and spreading their money regardless of bank. As will some individual investors with about 200K-400K.
 

Lawrence00 said:
Yellen says no bailout, but they are trying to do something for the depositors.
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Deposits are only insured up to $250k per account. Many businesses had 100s of millions of dollars in their accounts. Circle (whatever that is) had $3.3 billion! It's going to mean the end of a lot of businesses.
  1. Circle: $3.3 billion
  2. Bill․com: $670 million
  3. Roku: $487 million
  4. BlockFi: $227 million
  5. Roblox: $150 million
  6. Sunrun: $80 million
  7. Ginkgo Bio: $74 million
  8. iRhythm: $55 million
  9. Rocket Lab: $38 million
  10. Sangamo Thera: $34 million
  11. Lending Club: $21 million
  12. Huuuge Inc: $24 million
  13. Payoneer: $20 million
  14. Ambarella: $17 million
  15. Protagonist Thera: $13 million
  16. Oncorus: $10 million
  17. Eiger Bio: $8 million
  18. Repare Thera: $7 million
 
Voila the problem is solved and all is well, including Signature Bank, which was next on the Dimon hit list. No taxpayer bailout money.
 
So joint statement from Treasury, Federal Reserve, and FDIC. They are going to guarantee all deposits by a special assessment tax to banks.
 
From New York Times:
The Federal Reserve, Treasury and Federal Deposit Insurance Corporation announced in a joint statement that “depositors will have access to all of their money starting Monday, March 13.” In an attempt to assuage concerns about taxpayers footing the bill, the agencies said that “no losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”
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Harry Le Hermit said:
...They keep mentioning this is the largest closure since Washington Mutual. Washington Mutual received no bailout money, nor did any depositors lose a dime, all with it not costing the FDIC any money. There was interest in buying Washington Mutual, but highly unlikely anyone is interested in SVB, although there might be some interest within the SVB Holding Company.

There is "talk" of using tax dollars to make the depositors whole. Generally speaking, this is political chatter amongst California politicians, to impress their constituencies. At least I would hope that be the case.
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Exactly. Politicos like Ro Khanna are 'ambulance chasers'. Every big issue that comes up, they posture and say "We should change this xxxxxx to protect consumers!"

Of course they mean voters, not consumers, and almost 100% of the time, the "solution" they offer is a bogus one - either illegal to enact, or contrary to sound business practices. But they get their little 'sound bites' and look trustworthy/dignified for the camera, LOL.

There is absolutely no need to 'bail out' SVB. The assets will be catalogued and either sold or used to form a new, smaller bank.
 
WhatInThe said:
Just like panic selling on bad day stock market there will be some pulling money out. The big guys will probably start pulling and spreading their money regardless of bank. As will some individual investors with about 200K-400K.
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"The Big Guys" already spread their money around. Roku, for example:
"...has built a brand on low-priced streaming devices said in a filing that it had about $487 million of its $1.9 billion at Silicon Valley Bank, about 26 percent of the firm's cash as of Friday .... The San Jose-based company, which went public in September 2017, said it has enough money and cash flows to "meet its working capital" for at least the next 12 months. "

The above is from the following article. As you can see, smaller companies you've never heard of, are the ones hurt the most.

These companies were affected by the Silicon Valley Bank crash
The Washington Post March 11, 2023
[free link through local media source] https://www.sfgate.com/business/article/these-companies-were-affected-by-the-silicon-17834105.php
 
Lethe200 said:
Exactly. Politicos like Ro Khanna are 'ambulance chasers'. Every big issue that comes up, they posture and say "We should change this xxxxxx to protect consumers!"

Of course they mean voters, not consumers, and almost 100% of the time, the "solution" they offer is a bogus one - either illegal to enact, or contrary to sound business practices. But they get their little 'sound bites' and look trustworthy/dignified for the camera, LOL.

There is absolutely no need to 'bail out' SVB. The assets will be catalogued and either sold or used to form a new, smaller bank.
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It's all said and done for now. SVB and Signature, which was next on the Dimon hit list. Oh, and Jim Cramer is having a very terrible week.
 
Interest rates were rat historic lows and these people invested in long term bonds selling at very low interest rates. What could possibly go wrong?
 
March 12 (Reuters) - State regulators closed New York-based Signature Bank (SBNY.O) on Sunday, the third largest failure in U.S. banking history, two days after authorities shuttered Silicon Valley Bank (SIVB.O) in a collapse that stranded billions in deposits.

The Federal Deposit Insurance Corporation (FDIC) took control of Signature, which had $110.36 billion in assets and $88.59 in deposits at the end of last year, according to New York state's Department of Financial Services.
https://www.reuters.com/business/finance/new-york-state-regulators-close-signature-bank-2023-03-12/
 
No taxpayer funder bailout?

Banks will also now be allowed to borrow essentially unlimited amounts from the Federal Reserve for the next year, as long as the loans are matched by safe government securities, a way to prevent financial firms from having to sell a class of investments that have been losing value because of the Fed’s own high interest rate policies.
https://www.theguardian.com/busines...-valley-bank-collapse-no-bailout-janet-yellen

Here it comes... massive bonuses for all bank executives!
 
SeniorBen said:
March 12 (Reuters) - State regulators closed New York-based Signature Bank (SBNY.O) on Sunday, the third largest failure in U.S. banking history, two days after authorities shuttered Silicon Valley Bank (SIVB.O) in a collapse that stranded billions in deposits.

The Federal Deposit Insurance Corporation (FDIC) took control of Signature, which had $110.36 billion in assets and $88.59 in deposits at the end of last year, according to New York state's Department of Financial Services.
https://www.reuters.com/business/finance/new-york-state-regulators-close-signature-bank-2023-03-12/
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Signature going under was a foregone conclusion, as it was widely considered to be the whale bank that made the FDIC watch list, which was released at the beginning of the year. I should also add, the bank was already on the target list for a bank run tomorrow.

The anti-Powell crowd appears to have won the day.
 
I was wondering where the money was going to come from to cover all the deposits. Turns out, it comes from the FDIC's Deposit Insurance Fund.

The FDIC's Deposit Insurance Fund (DIF) is used to help pay for operating costs as well as to resolve failed banks. It's funded by quarterly fees collected from FDIC-insured banks as well as interest earned from its investments in Treasury securities.

As of December 31, 2022, the DIF's fund balance was $128.2 billion, according to the FDIC.

Under requirements put in place by the Dodd-Frank Act, the FDIC has to have enough in the DIF coffers to cover 1.35% of insured deposits.
https://www.cnn.com/business/live-n...s-03-13-23#h_3f54ce0d1121784d90289002004ff537
 
SeniorBen said:
I was wondering where the money was going to come from to cover all the deposits. Turns out, it comes from the FDIC's Deposit Insurance Fund.

The FDIC's Deposit Insurance Fund (DIF) is used to help pay for operating costs as well as to resolve failed banks. It's funded by quarterly fees collected from FDIC-insured banks as well as interest earned from its investments in Treasury securities.

As of December 31, 2022, the DIF's fund balance was $128.2 billion, according to the FDIC.

Under requirements put in place by the Dodd-Frank Act, the FDIC has to have enough in the DIF coffers to cover 1.35% of insured deposits.
https://www.cnn.com/business/live-n...s-03-13-23#h_3f54ce0d1121784d90289002004ff537
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Very simplified... The banks will pledge high quality securities, such as U.S Treasuries... at face value, in exchange for equivalent "cash". That "cash" will go into the DIF. In theory, the DIF losses should be minimal, with expectations those bank assets will be eventually sold and expectation the DIF would refund the Treasury, in its entirety. That remaining balance/loss would then be assessed.
 
The "Hongkong & Shanghai Banking Corporation" (HSBC), a British bank founded in 1865 with its headquarters in London and assets of $2,966 billion, has acquired the UK branch of Silicon Valley Bank (SVB) today for just £1.

It was reported that some UK tech firms were at risk of going bankrupt without help. Customers and businesses in the UK who had been unable to withdraw their money from SVB UK will now be able to do so as usual. The deal, which involved no taxpayer money, was negotiated by the British government, the Bank of England, HSBC bosses, and civil servants throughout the night.

HSBC boss Noel Quinn said the deal had been "too good an opportunity to miss" and had ensured "that a crisis in one institution did not become a systemic crisis".
 
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Nosy Bee-54 said:
Inside knowledge of pending doom! This happens often with financial institutions where the execs (insiders) sell their stock before a collapse. If it isn't a crime, it should be.

SVB executives and directors cashed out of $84 million worth of stock over the past two years.

https://www.cnbc.com/2023/03/14/svb...of-the-banks-stock-over-the-past-2-years.html
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Silicon Valley Bank parent, CEO, CFO are being sued by shareholders for fraud.

March 13 (Reuters) - SVB Financial Group (SIVB.O) and two top executives were sued on Monday by shareholders who accused them of concealing how rising interest rates would leave its Silicon Valley Bank unit, which failed last week, "particularly susceptible" to a bank run.

The proposed class action against SVB, Chief Executive Greg Becker and Chief Financial Officer Daniel Beck was filed in the federal court in San Jose, California.

It appeared to be the first of many likely lawsuits over the demise of Silicon Valley Bank, which U.S. regulators seized on March 10 following a surge of deposit withdrawals.

SVB had surprised the market two days earlier by disclosing a $1.8 billion after-tax loss from investment sales and that it planned to raise capital, as it scrambled to meet redemption requests.
https://www.reuters.com/legal/silicon-valley-bank-parent-ceo-cfo-are-sued-by-shareholder-fraud-2023-03-13/

Many executives at SVB sold stock days before the collapse plus received bonuses! Lock 'em up!!!
 
Nosy Bee-54 said:
Insiders win again! This time at First Republic Bank just before 70% stock price drop.

https://www.forbes.com/sites/dereks...-in-stock-before-70-collapse/?sh=7b7fc5062de9
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Six First Republic insiders sold 90,682 shares of the firm’s stock between January 17 and March 6 at a share pricqe of between $123 and $145, according to regulatory filings disclosed by the company; they include executive chairman James Herbert, CEO Michael Roffler, head of credit David Lichtman and banking chief Michael Selfridge.

Those shares would be worth just $3.1 million at First Republic’s Thursday share price of $34.355.

Herbert, the company’s founder and longtime CEO before stepping down last spring, was the biggest seller, offloading $4.5 million of his First Republic shares in separate January and February transactions.

That's insider trading, although it's inevitable that they would have insider information, so all of their trading would be "insider trading."

Hopefully, they won't get away with it.
 
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