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Silicon Valley Bank Collapse

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Joel
Feb
fmod Member
2005

Joel

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Let's pivot away from outright political chat on a narrative that isn't even remotely true or accurate to begin with.

They didn't have enough liquidity on hand to handle a large amount of cash withdrawals, that's the bottom line. Banks with over $50B in assets up until 2018 were required to have a certain amount of cash or liquidity on hand to mitigate the risk of this sort of scenario.

However after 2018 it looks like that $50B cap got raised to $250B which SVP fall under so therefore didn't have to abide by that same level of regulation.

To my understanding, the FDIC stepped in to cover depositors (even above $250k) but stopped short of covering investors in the bank. So while it's debatable, I don't think that's a bad move necessarily.

Investors took risk, it didn't pan out, they lose their investment. Depositors which are small to mid size businesses who through no fault of their own would probably go out of business, their employees would lose their jobs and not get paid. So a "bailout" in this sense wasn't quite the same as what happened in 2008.
Joel

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16-Mar-2023 13:38:32

Joel
Feb
fmod Member
2005

Joel

Forum Moderator Posts: 32,973 Sapphire Posts by user Forum Profile RuneMetrics Profile
What played a major role in this is a combination of relaxed regulation and the fact that SVB parked their assets in government backed bonds (which over time is low risk typically) but with increasing interest rates, the value of those bonds fell, meaning they sold at a loss in order to get some cash assets to support customer withdrawals.

A lot of tech startups used SVB to store their assets and manage payroll. With the tech sector suffering in particular recently there were more startups taking out more cash, thus increasing withdrawals from the bank. Since SVB no longer needed to keep a certain level of liquidity on hand as per previous regulation, they needed to raise capital which then triggered a bank run (a panic of businesses trying to take out their money.

So let's get off the political "woke" train shall we?
Joel

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16-Mar-2023 16:19:27

Tenebri
Jan Member 2015

Tenebri

Posts: 39,133 Sapphire Posts by user Forum Profile RuneMetrics Profile
f a k e news said :
Hiring underqualified people for a job has become in increasing trend for a while now. Look at the transportation industry multiple near plane crashes over the last few years. I believe hiring underqualified people plays a major role in this.

well what believe isnt always what is.

and for this instance that is 100% the case :L
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16-Mar-2023 16:26:01 - Last edited on 16-Mar-2023 16:26:31 by Tenebri

Averia Light

Averia Light

Posts: 28,508 Sapphire Posts by user Forum Profile RuneMetrics Profile
Joel said :
Let's pivot away from outright political chat on a narrative that isn't even remotely true or accurate to begin with.

They didn't have enough liquidity on hand to handle a large amount of cash withdrawals, that's the bottom line. Banks with over $50B in assets up until 2018 were required to have a certain amount of cash or liquidity on hand to mitigate the risk of this sort of scenario.

However after 2018 it looks like that $50B cap got raised to $250B which SVP fall under so therefore didn't have to abide by that same level of regulation.

To my understanding, the FDIC stepped in to cover depositors (even above $250k) but stopped short of covering investors in the bank. So while it's debatable, I don't think that's a bad move necessarily.

Investors took risk, it didn't pan out, they lose their investment. Depositors which are small to mid size businesses who through no fault of their own would probably go out of business, their employees would lose their jobs and not get paid. So a "bailout" in this sense wasn't quite the same as what happened in 2008.

VC backed companies are not your mom and pop stores though. These are companies that seek funding to "scale" and basically get rich quick.

They are literally companies that are looking for an exit - usually being sold to another company for 5x or whatever return but investors will also take an IPO albiet that is usually not the goal.

And, the whole idea of saving jobs is laughable. As soon as these businesses are acquired by another company, more often than not, the employees are let go. Those without stock options are screwed. And I swear I'm not going to let her know all the pain I have known

20-Mar-2023 01:04:35 - Last edited on 20-Mar-2023 01:05:18 by Averia Light

Averia Light

Averia Light

Posts: 28,508 Sapphire Posts by user Forum Profile RuneMetrics Profile
Joel said :
What played a major role in this is a combination of relaxed regulation and the fact that SVB parked their assets in government backed bonds (which over time is low risk typically) but with increasing interest rates, the value of those bonds fell, meaning they sold at a loss in order to get some cash assets to support customer withdrawals.

A lot of tech startups used SVB to store their assets and manage payroll. With the tech sector suffering in particular recently there were more startups taking out more cash, thus increasing withdrawals from the bank. Since SVB no longer needed to keep a certain level of liquidity on hand as per previous regulation, they needed to raise capital which then triggered a bank run (a panic of businesses trying to take out their money.

So let's get off the political "woke" train shall we?

VC panic caused this bank run. They ate their very own the first chance they got. This is just VC. There was blood in the water and they didn't give a fuck if it tanked the economy, they got theirs and fuck everyone else. This is how they operate.

And like I said before, these aren't your typical companies. They are the type to be making acquisition deals that are so confidential they are given code names and then spring it on their employees last second. The government should have backstopped payrolls only and that is it.

As far as the work train, that is dumb af, though. And I swear I'm not going to let her know all the pain I have known

20-Mar-2023 01:09:12 - Last edited on 20-Mar-2023 01:10:05 by Averia Light

XSlay4DeathX
Mar Member 2007

XSlay4DeathX

Posts: 2,634 Adamant Posts by user Forum Profile RuneMetrics Profile
Sadly the USA is on a 'massive dangerous' road of decaying. Sadly only method to stop a worse outcome i can't state. someone has to take all blame and face a 'downfall' event.

It will save 500million+ deaths. "world doesn't want to listen to people like me, other factors will arise to do what needs done."

"one domino falls, another unhides the secrets behind all the way back to the beginning of covid 19, everyone is going to be highly upset with what the truth unearths, it was all a setup from day 1"

"how do you let a country destroy itself as a punishment for Greed and recklessness? Covid 19 and other conflict 'traps' hit the final target, i knew of covid 19 4 years before it even happened......weak systems break like glass" ;)

"Maybe they shouldn't have stolen my lands and continued havoc.....karma is like black magic...." Shh :P

"humanity is very fascinating to watch, Only one way to change the world for the better, 'Evict the one to blame', USA? oh dear someone shot themselves in the foot, this movie has the best plot twist" :D

21-Mar-2023 05:16:11

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