SVB failure (1 Viewer)

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    MT15

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    This seems to be generating a lot of talk among the on-line tech set. I don’t really care why it failed or about the nuts and bolts, but I found the immediate calls for a government bail out of investors fascinating. This guy’s thread makes a great set of points about it.



    There’s an entire thread, not too long, well worth reading.
     
    This is an example of the Thiel blaming:


    I’m not a mob guy per se, but I am an investor, and I wouldn’t blame anyone for investing in pitchforks and torches.

    This afternoon I had a client ask to open 30 different account (placing $250k in each), I had to explain to him that he either needed to open 29 accounts at 29 different banks, or just pay insurance to cover yourself the delta.

    I think people are learning a lot really quickly.
     
    I just saw a clip of Elizabeth Warren on this, and she made a whole lot of sense. She said there are three components of blame. Congress for repealing the safeguards that were in place that allowed these banks to classify themselves the same as small community banks, when they are anything but that; Trump for signing the bill; and the executives for their reckless disregard for bank safety. She said banking should be boring. If you want to make a killing by pursuing risky strategies you need to find another line of work.
     
    Oh, and she had a story about why this happened that didn’t involve any grand conspiracy by Thiel or anyone else, so this whole thing about Thiel could be totally false. Who knows?
     
    I just saw a clip of Elizabeth Warren on this, and she made a whole lot of sense. She said there are three components of blame. Congress for repealing the safeguards that were in place that allowed these banks to classify themselves the same as small community banks, when they are anything but that; Trump for signing the bill; and the executives for their reckless disregard for bank safety. She said banking should be boring. If you want to make a killing by pursuing risky strategies you need to find another line of work.

    Interesting piece. I forgot about Barney Frank.
     

    Interesting piece. I forgot about Barney Frank.
    I’m always a bit skeptical of a Politico piece. They sometimes don’t let the facts get in the way of a good story. In the interview I saw Warren blamed Congress first, Trump second and the bank executives third. She certainly didn’t dwell on Trump at all, as I remember it.

    I saw a lot of people going back and forth on Frank on Twitter today. MAGA types were sure he was in on everything and it was all a big conspiracy to bring about global electronic currency and get rid of money. Crypto bros were sure Frank was telling the truth and that the deep state was trying to bring crypto down by any means possible, others claimed Frank had endorsed the removal of the safeguards and then yet other people said that’s not true, he had written an op-ed opposing the bill in 2018.

    I have no idea what to think about him.
     
    I thought this was an interesting thread and a good perspective:





    There is more, if you want to read it. But it sort of confirms Warren’s point that banks like SVB lobbied hard to make the exceptions in Dodd-Frank that were intended to exempt small community banks from the more expensive regulations apply to banks that are plenty big enough to be regulated. SVB wasn’t some small town bank, and had been really aggressively growing. She said the CEO of SVB in particular had been all over DC in 2018 and had really pushed for the change that exempted his bank.
     

    Interesting piece. I forgot about Barney Frank.

    Why the F are banks investing in crypto? I can at least understand a bank going under because of risky loan practices, or taking a massive loss on treasury bonds.

    Crypto?

    Now, I really want more regulations.
     
    Why the F are banks investing in crypto? I can at least understand a bank going under because of risky loan practices, or taking a massive loss on treasury bonds.

    Crypto?

    Now, I really want more regulations.
    Great question. I understand being diversified, but having such a large position in such a volatile thing (it’s not a security, at least that’s what XRP is trying to fight the SEC on ), that just spits in the face of what banking is. JPM took a position in crypto and the Metta Verse, KPMG/E&Y have/had practices focused on crypto, I’m pretty sure plenty of firms had their toes dipped in that water, but to take such a large position….sheesh.
     
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    Why the F are banks investing in crypto? I can at least understand a bank going under because of risky loan practices, or taking a massive loss on treasury bonds.

    Crypto?

    Now, I really want more regulations.


    there is an insanely simple answer to that.

    but as i said on page 2, we have arrived at a place where "moral hazard" is ignored. FDIC gives these banks a "get out of jail card"
     
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    Really good thread.

    I think this comment has a good point:




    so its not the banks fault?

    its tech and the FED?

    Lets be clear, banking ( and other institutions like them ) get information regarding market strategy by the Fed well before we do AND pay good $$$ for analysis to forecast and set their goals.

    Fed rate hike #1 took place in March 2022...and consensus was they were going to continue hikes thru/into 2023. The whole " we simply couldnt see this coming" narrative aint gonna play for me.

    failure to plan is planning to fail.

    But when you have a safety net like FDIC, who cares.
     
    so its not the banks fault?

    its tech and the FED?

    Lets be clear, banking ( and other institutions like them ) get information regarding market strategy by the Fed well before we do AND pay good $$$ for analysis to forecast and set their goals.

    Fed rate hike #1 took place in March 2022...and consensus was they were going to continue hikes thru/into 2023. The whole " we simply couldnt see this coming" narrative aint gonna play for me.

    failure to plan is planning to fail.

    But when you have a safety net like FDIC, who cares.
    I don’t think it’s not their fault at all, and you have good points. I think the velocity of communication between the startups that led to the run is new, though.
     
    I don’t think it’s not their fault at all, and you have good points. I think the velocity of communication between the startups that led to the run is new, though.


    Velocity of communication isnt new.

    My god, Banks and investment houses make 100s of millions off the "velocity of communication" trading.

    Thats kinda my point here. If you are operating in an environment that is susceptible to any issues arising out of "Velocity" you better have a plan A.

    Its like we keep discovering things that are known hazards and addressing AFTER the calamity. We arent proactive- we are reactive. Too much $$$ being made for these institutions to NOT have safeguards in place.
     
    Well what I was trying to convey, admittedly poorly, was that supposedly a whole group of start ups, headed up by Thiel, all decided to coordinate their withdrawals which created the run. I’m not sure, but was it a thing in the past for a lot of different startups to communicate with each other?
     
    The WSJ is increasingly looking more like Fox News these days, and that’s not a compliment.

    Also, I’m no corporate expert, but how would the composition of the board been a “distraction” to the chief executives while they were making their stupid decisions? The SVB executive suite was not exactly some sort of rainbow coalition.

    This idea that banks are woke is just as stupid underneath as it appears on first blush.

     
    Just in case you don’t believe me:

    2A274CAD-9E07-4D1D-B3B7-4C9729074EC0.jpeg


    0416F5D0-1348-43F3-BAF4-A388182CEA37.jpeg
     

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