SVB is largest bank failure since 2008 financial crisis

https://www.reuters.com/business/finance/global-markets-banks-wrapup-1-2023-03-10/

• California regulator closes SVB, appoints FDIC as receiver
• SVB focused on lending to start-ups; branches to reopen Monday
• FDIC to sell bank assets; 'chaos' reported amid withdrawals
• Bank shares fall in U.S., Europe, but well off lows
• Crisis exposes banking 'vulnerabilities' amid rising rates

Felt this is thread worthy. People are saying this is the biggest banking failure since 2008. Making it one of the biggest bank collapses in US history.

Since SVBs collapse, a second bank has now fallen.

https://www.pbs.org/newshour/economy/stocks-fall-and-wall-street-fearful-after-svb-failure-followed-by-second-bank

From what I understand SVB was giving a lot of loans to tech start ups and this industry has been hit hard recently. A run on SVB was sparked and the bank just doesn't have the money to handle it. Lots to think about.

The FED is talking about raising interest rates higher than they originally were expecting this year. It looks like SVB is going to get some sort of bailout by the government, could other bigger banks fail? Is this a sign of something worse? Or is this just a "one off" due to it's ties in a specific industry?

One thing is for sure, this does not instill confidence in the market.

Thoughts?

Unless full panic, it won't start anything big.

@horgen: I hope so. Hoping it's a one off for the tech market and not a sign of something worse.

Some people saying don't worry, it's nothing. White pilling.

But at the same time i hear alot of black pilling from others.

Gerald Celente for example.

Depositors getting bailed out, not the bank itself.

Indicative of the shit banking system in the US. Way too many banks, way too small, way too poorly regulated.

But in this particular case, who thought it was a genius idea to have a bank version of what is essentially a technology based venture capital fund? Hey guys, let's have an extraordinary risk profile by loaning most of our money to one sector of the economy on end use investments that carry much higher than normal overall risk profile? On top of that, let's try to attract as many people as possible as deposit customers from the very same companies we are loaning money too.

Higher risk times higher risk. Genius. What could go wrong? LMAO.

Obviously we need to vote Republican because rampant deregulation fixes all of these problems…

Well if it is worse, why isn't there stress testing of these banks?

I don't know why, but I will say I don't think the banks are used to interest rates being raised by the FED at the rate it's been going either.

@SUD123456: From what I've heard, it was largely due to them lobbying to be exempt from Dodd Frank, using that exemption to bet heavily on interest rates remaining low without hedging, and then being blindsided when rates rose and they were locked into those long term investments.

They used those investments to offer lucrative account features in exchange for risk.

Yes, this is very much worthy a thread. I was planning on making one myself, but I do prefer my threads to stick to primarily european issues. So I am glad someone else made it :)

That said, things like this are inevitable in a boom and bust economy. And given how important tech is to the economy, this could be deeply troubling. I don't want to say any conclusions or anything, yet, since I am no economist. But I hope economists will find a way to prevent a bad situation from becoming, much, much worse.

@sargentd: @horgen: There used to be stress testing for banks this size, but it got bumped from $50 billion in assets up to $250 billion back in 2017.

my understanding is the bank itself fucked up by not accounting for the risks of higher inflation and getting caught out.

so not so much a massive systemic problem but rather a failure in their particular operation and a few others like it.

Good discussion if anyone's interested

As long as crypto loses money it's all good news to me.

@R4gn4r0k: some crypto is getting hit by this, but Bitcoin is rallying since this happened. The bank institutions are red but Bitcoin is going up. I'm not a crypto fan just saying.

That was thanks to Trump, right?

Also.. Wasn't the CEO of this bank heavily connected to the other bank that started the 2008 financial crisis?

Yes trump rolled back Obama era protections against this happening. He was so bad for the country.

I fully expect the poor to get poorer and the rich to get richer from all this.

Oh, if only this or something like this had happened before and there was someway to learn a lesson from it!!!!🙄

Seems like we keep being given reasons to maybe look into better options than capitalism, or to at least reassess how we approach capitalism in this country.

Based on the articles I skimmed, yes, this is all true.

Joe Biden made comments about consequences for whomever is at fault. Do I believe those words? Not wholeheartedly. My skepticism is not based on his affiliation but rather his occupation. Politicians love giving lip service. Results are sketchy especially when promises are made and rarely kept.

Why is he allowed to be anywhere close to banking business?

@horgen: HAHAHAHA!!!

Don't worry. I'm sure the free market will start weeding out guys like this any day now. 🤣

@judaspete: Maybe I will believe you. This makes sense because this type of bank manager is the "exception and not the rule".

Republicans Have Found a Culprit for SVB’s Collapse - The Atlantic

This is some of the lowest IQ shit I've ever seen. 🤣

But a few prominent Republicans found a third way: Blame it all on wokeness.

“I mean, this bank, they’re so concerned with DEI and politics and all kinds of stuff. I think that really diverted from them focusing on their core mission,” said Florida Governor and presumptive presidential candidate Ron DeSantis.Ronald Brownstein: The contradictions of Ron DeSantis“

SVB is what happens when you push a leftist/woke ideology and have that take precedent over common sense business practices,” tweeted Donald Trump Jr., presumably in contrast to the commonsense business practices that have led Trump family businesses to declare bankruptcy multiple times.

“This won’t be the last failure of this nature so long as people are rewarded for pushing this bs.”“We see now coming out they were one of the most woke banks in their quest for the [Environmental, Social, and Governance]-type policy and investing,” Representative James Comer of Kentucky, chair of the House Oversight Committee, said.

And Representative Marjorie Taylor Green offered a nonsensical statement, even by her standards, saying that “the fools running the bank were woke and almost became broke.”

@zaryia: Well here I was buying into the leftist narrative of high-risk investments blowing up in their face, but thankfully these big-brain patriots are here to set me straight. It was get woke, go broke all along. This is a great example of Ockham's lesser known principle of the dull, rusty butter knife.

Record breaking spending from the FED

Record breaking rate hikes by the FED

Record breaking inflation

@sargentd: Propagandist drivel. How sad. The things happening are because of policies Trump eliminated to save money. It's called the ripple effect. Where actions cause consequences over time.

@sargentd: Did you just complain about inflation and rate hikes in the same post?

I knew you were going to eventually ruin your own thread with far right fiction.

@sargentd: Trump deregulation caused this. Using Jr as a source is laughable.

Coked out of his mind Jr. does not remember reality, but in maga land his word diarrhea is still taken as a fact.

lol desantis and his woke bogeyman.

my shoe came untied? it's the woke left's fault!

my golf day got rained out? damn woke liberals.

i can't imagine there are people stupid enough to believe this crap.

If you look at it objectively, the feds have raised rates substantially in a relatively short period of time.

Due to inflation because of the pandemic. The US is recovering better than many other countries.

Are you advocating that they shouldn't have in order to protect this bank that failed to properly hedge against rates?

And spending

Bidens administration gets an absolute 100% pass by some of you guys no matter what

Like even though the guy has been in office almost 3 years and had control of the house and Senate. Some how everything is always Trump's fault to you guys lol it's comical

Trump signed the deregulation of the banks. Who do you expect to be blamed?

I'd blame the bank itself or the FED for raising interest rates at an intense level.

When I read this story, I definitely don't go " omg looks what Trump did!!"

Fucking insane lol

Deregulation is the problem though.

But the deficit has fallen during the Biden administration.

Fallen compared to what? Compared to the spending that happened during the COVID lockdowns??? When we gave everyone stimulus checks and doubled up unemployment checks to stay home? That ultimately did nothing to stop COVID but ruined the global economy?

Compared to the Trump administration, correct.

Stop saying "due to the pandemic".

I say due to liberals locking us down over political reasons and paying people to stay home and not work, by shutting down businesses and paying out relief checks, it's due to the governments reaction to a novel virus with a 99.9% survival rate lol...

@sargentd: I don't play the YouTube video game. Tell me your point in text.

Why do you post fake garbage so often lol. Your posts are gibberish.

We know you are.