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Post by mnfish on Mar 11, 2023 17:59:05 GMT
It'll be interesting to see if someone steps up to buy SVB next week. We'll get a much better idea of what their $200b in assets are really worth and if anyone wants their debt. Posted by Fearchar mnfish errh....SVB failed! That is it was shut down by the California Department of Financial Protection and Innovation, citing inadequate liquidity and insolvency. The state regulator appointed the Federal Deposit Insurance Corporation as receiver. The FDIC transferred insured deposits to a new institution, the Deposit Insurance National Bank of Santa Clara. The failure of SVB was the largest of any bank since the 2008 financial crisis and the second-largest in U.S. history. Fearchar, "Or the FDIC could find a buyer through a bidding process. The main precedent for such a bank failure is Washington Mutual's collapse during the global financial crisis. In 2008, regulators seized Washington Mutual and sold it to JP Morgan for $1.9 billion following a series of rating agency downgrades and a plummeting stock price." |
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Post by Mustang on Mar 11, 2023 18:23:38 GMT
From WSJ: The Federal Deposit Insurance Corp. shut down Silicon Valley Bank Friday after a run on deposits doomed the tech-focused lender's plans to raise fresh capital.
In a press release, the FDIC said it created the Deposit Insurance National Bank of Santa Clara, where all Silicon Valley Bank's insured deposits have been transferred.
At the time of the bank's closing, the FDIC said the amount of deposits in excess of insurance limits was undetermined.
As of the end of last year, Silicon Valley Bank estimated that the amount of uninsured deposits that exceed FDIC insurance limits was around $151 billion, according to parent company SVB Financial's annual report.
Customers will have full access to their insured deposits no later than Monday morning, the FDIC said.
The FDIC will pay uninsured depositors an advance dividend within the next week.
Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds.
As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.
The FDIC said Silicon Valley Bank's main office and 17 branches in California and Massachusetts will reopen on Monday.
--------------------------------------------- Interesting...FDIC CREATED this Santa Clara facility!!
And once again, the gvt is bailing out the big investors (uninsured depositors with millions). Heaven forbid they should lose money.
Edit to add: Gotta keep those NAPA Valley winery owners whole! Oops, my daughter works for a NAPA valley winery.
R48
Perhaps, but I didn't read the portion you posted that way and I've not seen the original article. Any depositor, rich or poor, has FDIC insurance up to $250,000. If the bank has asset greater than that then when liquidated it would go to the depositors that had balances greater than $250,000. FDIC obviously thinks the assets are worth more than the advanced dividend. And future dividends will be issued as assets are sold.
That seems reasonable to me. And since the money is from the bank's assets I wouldn't call that a government bailout. It doesn't seem any different to me than a mortgage company foreclosing on a house then selling the house applying the money to existing debts.
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Post by newtecher on Mar 11, 2023 18:33:59 GMT
From WSJ: The Federal Deposit Insurance Corp. shut down Silicon Valley Bank Friday after a run on deposits doomed the tech-focused lender's plans to raise fresh capital.
In a press release, the FDIC said it created the Deposit Insurance National Bank of Santa Clara, where all Silicon Valley Bank's insured deposits have been transferred.
At the time of the bank's closing, the FDIC said the amount of deposits in excess of insurance limits was undetermined.
As of the end of last year, Silicon Valley Bank estimated that the amount of uninsured deposits that exceed FDIC insurance limits was around $151 billion, according to parent company SVB Financial's annual report.
Customers will have full access to their insured deposits no later than Monday morning, the FDIC said.
The FDIC will pay uninsured depositors an advance dividend within the next week.
Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds.
As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.
The FDIC said Silicon Valley Bank's main office and 17 branches in California and Massachusetts will reopen on Monday.
--------------------------------------------- Interesting...FDIC CREATED this Santa Clara facility!!
And once again, the gvt is bailing out the big investors (uninsured depositors with millions). Heaven forbid they should lose money.
Edit to add: Gotta keep those NAPA Valley winery owners whole! Oops, my daughter works for a NAPA valley winery.
R48
Perhaps, but I didn't read the portion you posted that way and I've not seen the original article. Any depositor, rich or poor, has FDIC insurance up to $250,000. If the bank has asset greater than that then when liquidated it would go to the depositors that had balances greater than $250,000. FDIC obviously thinks the assets are worth more than the advanced dividend. And future dividends will be issued as assets are sold.
That seems reasonable to me. And since the money is from the bank's assets I wouldn't call that a government bailout. It doesn't seem any different to me than a mortgage company foreclosing on a house then selling the house applying the money to existing debts.
Upon second read, R48 was probably joking/sarcastic. |
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Post by Mustang on Mar 11, 2023 22:17:07 GMT
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Post by FD1000 on Mar 11, 2023 22:20:37 GMT
I agree with R48. The rich are usually get saved, they have connections in the right places.
If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem.
J. Paul Getty
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Post by curious1 on Mar 11, 2023 23:18:55 GMT
In Jan 2008 we sold some property and wanted to invest the profits in a 1 yr CD which was earning I believe 5%+ at the time. We walked into Countrywide Bank and opened an acct. 2-3 days later the bank closed (YIKES).. Luckily at the time we spent time and had them look at the FDIC rule. Our investment was more than the $500,000/married couple amount, BUT, since our Trust had beneficiaries we were okay. B of A ended up buying Countrywide.. You can use EDIE edie.fdic.gov/ this calculator to see if you are covered - this was a great tool for us.. (if this posted twice I apologize) |
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Post by retiredat48 on Mar 12, 2023 0:40:09 GMT
And I agree with FD!!!
No, not sarcasm. I'll try to explain.
SVB is not your typical bank. The vast majority of DEPOSITORS are multi millionaires and some institutions. Many of these same depositors are shareholders as well.
Now here's the deal (or scheme). These assets have been primarily used to fund startup companies..(Legal and allowed). However, many such companies have no earnings initially and are usually labeled "junk" rating...like junk bonds.
If junk bond companies fail, no fed gvt bails out the junk bond fund. However, very clever here. SVB got bank status, with the $250,000 guarantee per depositor. And the wealthy depositors with bank status hoping fed would bailout if a collapse.
Well in the past year, the IPO market has dried up, and no-one to lend to. SVB thus buys "safe " treasuries, but at longer maturity dates. When fed raised rates, these treasury bonds fell in price (mark to market). Thus SVB ended up with a loss. And likely unable to meet fed bank capital ratios, etc. Then the "smart" depositors started withdrawing in droves...until fed ended practice. A classic run on the bank.
So some big investors got out out whole on their deposits. Others remaining may get something. Those depositors under $250,000 will be made whole (like they should) quickly.
Fed will likely permit Santa Clara facility to hold treasuries (no forced sales)until they mature, even if years...then make depositors whole.
So I ask: When corporate anfd treasury bond funds tanked in yr 2022, did the fed bail YOU out?
I view the depositor scheme as clever. They got bank status for what is simply a dark pool, or hedge fund type pool of their own money, investing in junk situations. They likely got handsome returns over the years. And will now get bailed out.
R48
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Post by newtecher on Mar 12, 2023 1:08:59 GMT
And I agree with FD!!! No, not sarcasm. I'll try to explain. SVB is not your typical bank. The vast majority of DEPOSITORS are multi millionaires and some institutions. Many of these same depositors are shareholders as well. Now here's the deal (or scheme). These assets have been primarily used to fund startup companies..(Legal and allowed). However, many such companies have no earnings initially and are usually labeled "junk" rating...like junk bonds. If junk bond companies, no fed gvt bails out the junk bond fund. However, very clever here. SVB got bank status, with the $250,000 guarantee per depositor. And the wealthy depositors with bank status hoping fed would bailout iof a collapse. Well in past year, the IPO market has dried up, and no-one to lend to. SVB thus buys "dafe " treasuries, but at longer maturity dates. When fed raised rates, these treasury bonds fell in price (mark to market). Thus SVB ended up with a loss. Then the "smart" depositors started withdrawing in droves...until fed ended practice. So some big investors are getting out whole on their deposits. Others remaining may get something. Those depositors under $250,000 will be made whole (like they should) quickly. Fed will likely permit Santa Clara facility holding treasuries until they mature, even if years...then make depositors whole. So I ask: When corporate and treasury bond funds tanked in yr 2022, did the fed bail YOU out? I view the depositor scheme as clever. They got bank status for what is simply a dark pool, or hedge fund type pool of their own money, investing in junk situations. They likely got handsome returns over the years. And will now get bailed out. R48 Where did you get this? My understanding is that most of the deposit base ($80B) is non-interest-bearing checking accounts from startups and mid-size companies, not multi millionaires. (Why would multi-millionaires keep their money in checking accounts anyway?). Then about two thirds of deposits is invested in securities and the remaining third in the loan book. If the startups and mid-size companies have their money frozen for a while, they are in deep trouble, unable to meet payroll or otherwise focus on their business. Is this what you are rooting for? Also, the SVB stockholders will most likely get zilch, preferred and bond holders may get a haircut. These are the people who will bear losses and rightly so, just like you or other bondholders in 2022. The deposit accounts should have the most senior unsecured creditor status and, IMO, should indeed get they money back. I really do not understand the desire to punish depositors as opposed to stock and bondholders. Even if some of the depositors happen to be rich individuals. |
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Post by Mustang on Mar 12, 2023 1:12:18 GMT
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Post by newtecher on Mar 12, 2023 1:19:17 GMT
Shareholders as a whole cannot get out. There are reports of management selling a few million dollars in shares a few days before the collapse, which may be insider trading and should be investigated. I do not see what this has to do with depositors. I hope this bank gets taken over by another bank and the depositors just have their accounts transfer over. That is not government bailout, by the way. |
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Post by fishingrod on Mar 12, 2023 12:15:00 GMT
A little levity in this time of disaster.
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Post by mnfish on Mar 12, 2023 13:44:25 GMT
openinsider.com shows the CEO has sold $22m in the last 2 years. Most recent was 2/27/2023 but that sale was announced 30 days ago.
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Post by retiredat48 on Mar 12, 2023 15:49:52 GMT
A little levity in this time of disaster.
 I liked it. Yes...bailouts for all...forever. Why doesn't the fed just allow a complete SVB bankruptcy?? Yes, payoff (or redirect to another bank) the depositors up to $250,000 and under. Let the rest play itself out. Defaults will be sent along to the next person/company until the losses can be absorbed. IOW if you think the fed is not "bailing out the rich here", then why doesn't the fed just stop after relieving the up to $250,000 FDIC depositor. BTW I am not that sympathetic with the (sometimes self-serving) argument by startup companies etc (depositors of millions) that they will not be able to make payroll Monday. First, how many have Monday payrolls? Usually Friday. Second, what are these companies doing having all their cash/assets in one bank. A bank holiday or closing having such a big impact. Heck, I have accounts with three separate banks and monies at both Fidelity and Vanguard, so if anyone is closed, I can still operate. Like, if Fido hacked, I can use Vanguard. I predict what you will see here, when dug down deeper, is that the same people who were investors of SVB, are the same people who received loan benefits, who are the same people who had millions dollar accounts in SVB. Lot of back scratching going on. Like: SVB will loan startup X the money to startup, provided you keep your operational cash in SVB, and perhaps become a shareholder of SVB as well. Keep the bank growing! Some of this comes from skuttlebut from my daughter who works in wine business in NAPA. You will see about 2% of depositors are NAPA wine country people, and the underground always knows what is happening.  R48 We'll see. |
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Post by newtecher on Mar 12, 2023 16:21:41 GMT
A little levity in this time of disaster.
I predict what you will see here, when dug down deeper, is that the same people who were investors of SVB, are the same people who received loan benefits, who are the same people who had millions dollar accounts in SVB. Lot of back scratching going on. Like: SVB will loan startup X the money to startup, provided you keep your operational cash in SVB, and perhaps become a shareholder of SVB as well. Keep the bank growing! R48 We'll see. Neat little conspiracy theory but too vague and internally inconsistent. You started by mentioning bailout of multimillionaires that will not get "bailed out". What are these people doing holding money in SVB checking or savings accounts? Also, why on earth would startup companies become shareholders of SVB? |
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Post by retiredat48 on Mar 12, 2023 16:33:41 GMT
It's not a conspiracy theory. It's a business arrangement. Simple...I'll loan you startup money (maybe at a favorable rate) if you agree to deposit all your operating cash with me, the bank. And if some you you starting things up become shareholders, even better. I see some reporters have even called SVB a "woke" bank. NAPA valley startup wineries are usually started by people who are already multi-millionaires!! And my daughter is creating DTC (Direct to consumer) websites for them, and knows they pay well! Deep pockets. Edit to add. Here is startup winery owner racecar driver Danica Patrick:
link
R48 |
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Post by newtecher on Mar 12, 2023 16:55:55 GMT
It's not a conspiracy theory. It's a business arrangement. Simple...I'll loan you startup money (maybe at a favorable rate) if you agree to deposit all your operating cash with me, the bank. And if some you you starting things up become shareholders, even better. I see some reporters have even called SVB a "woke" bank. NAPA valley startup wineries are usually started by people who are already multi-millionaires!! And my daughter is creating DTC (Direct to consumer) websites for them, and knows they pay well! Deep pockets. Edit to add. Here is startup winery owner racecar driver Danica Patrick: linkhttps://www.somniumwine.com/Our-Team/Danica-Patrick
R48 Who is doing the loaning in your example? The multi-millionares or the bank? If the bank, it is common to ask that the loaned money stays in the checking account at the same bank. Multi-millionares who invest in startups are usually getting equity in the startup for their money, not loaning the money. And do you mean that the same multi-millionares also shareholders of SVB? All common shareholders are most likely wiped out completely and no one is talking about bailing them out. |
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Post by retiredat48 on Mar 12, 2023 17:05:23 GMT
Hmmm:
U.S. Federal Reserve governors to hold closed-door Monday
REUTERS - 3:17 AM ET 3/12/2023
TOP NEWS
Email Facebook. Twitter. LinkedIn. Print
(Reuters) - The U.S. Federal Reserve said it will hold a closed-door meeting of its board of governors under expedited procedures on Monday.
The meeting from 11:30 a.m. (0330 GMT) will primarily review and determine the advance and discount rates to be charged by the Federal Reserve banks, the Fed said in a statement.
The central bank offered no further details, but the move follows Friday's collapse of Silicon Valley Bank, was the biggest failure since the 2008 financial crisis. It roiled global markets, walloped banking stocks and left California tech entrepreneurs worrying about how to make payroll.
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Post by retiredat48 on Mar 12, 2023 17:19:21 GMT
An anecdote...
About two years before the financial collapse, a good friend of mine invited me to join him as he was a part of a group starting a bank in California (similar to SVB).
I declined, but said with a $1000 minimum, I would buy, to support him, $1000 worth of shares for my 7 year old granddaughter. Application was accepted.
I got a letter from bank inviting me and granddaughter to their California opening in a few months, as she was the youngest shareholder. Seemed like would be fun.
Then I got a letter stating "sorry, but bank is limiting investors to those at or above age 21." Offer rescinded. $1000 returned to me by bank. shucks.
Turns out the bank completely failed in two years...along with several other banks!
R48
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Post by uncleharley on Mar 12, 2023 19:17:20 GMT
Hmmm: U.S. Federal Reserve governors to hold closed-door Monday
REUTERS - 3:17 AM ET 3/12/2023
TOP NEWS
Email Facebook. Twitter. LinkedIn. Print
(Reuters) - The U.S. Federal Reserve said it will hold a closed-door meeting of its board of governors under expedited procedures on Monday.
The meeting from 11:30 a.m. (0330 GMT) will primarily review and determine the advance and discount rates to be charged by the Federal Reserve banks, the Fed said in a statement.
The central bank offered no further details, but the move follows Friday's collapse of Silicon Valley Bank, was the biggest failure since the 2008 financial crisis. It roiled global markets, walloped banking stocks and left California tech entrepreneurs worrying about how to make payroll.Facilitating a buyer or something like that perhaps. |
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Post by roi2020 on Mar 12, 2023 23:56:43 GMT
A little levity in this time of disaster.
I liked it. Yes...bailouts for all...forever. Why doesn't the fed just allow a complete SVB bankruptcy?? Yes, payoff (or redirect to another bank) the depositors up to $250,000 and under. Let the rest play itself out. Defaults will be sent along to the next person/company until the losses can be absorbed. IOW if you think the fed is not "bailing out the rich here", then why doesn't the fed just stop after relieving the up to $250,000 FDIC depositor. [snip] R48 We'll see.
Equity investors and debt holders are not being bailed out.
Depositors with more than $250K (over FDIC insurance limits) in SVB will be made whole.
While this plan may not be ideal, it can help restore confidence in the banking system and prevent widespread bank runs from occurring.
I don't like the moral hazard implications but it may have been the best choice available under the circumstances.
Having said that, I don't know the full range of plausible options.
From today's Federal Reserve Press Release:
"After receiving a recommendation from the boards of the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve, Treasury Secretary Yellen, after consultation with the President, approved actions to enable the FDIC to complete its resolution of Silicon Valley Bank in a manner that fully protects all depositors, both insured and uninsured. These actions will reduce stress across the financial system, support financial stability and minimize any impact on businesses, households, taxpayers, and the broader economy."
A special assessment on banks will be implemented (as required by law) to cover Deposit Insurance Fund losses attributed to uninsured depositors.
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Post by oldskeet on Mar 13, 2023 13:11:44 GMT
Hi guys. An update. This follows my post of March 11. Prior to market open today Old_Skeet's Barometer has had a reading change and now reflects that the S&P500 Index is oversold. With this, I plan to do a little buying today in my equity ballast sleeve.
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Post by johnsmith on Mar 13, 2023 13:19:23 GMT
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Post by newtecher on Mar 13, 2023 13:29:59 GMT
It's a loan. The banks would pay 4+ in interest to the Fed for that loan. |
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Post by retiredat48 on Mar 13, 2023 17:53:11 GMT
johnsmith,...Thanks for article. Makes the case for why these actions are bailouts. A variety of articles like this exist. And various financial guru's state that indeed a bailout situation is underway...and that the fed will clearly be spending some money. I note on the large Fidelity Forum postings, the word "bailout" is assigned to this situation, by most posters. R48
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Post by newtecher on Mar 13, 2023 19:30:32 GMT
johnsmith ,...Thanks for article. Makes the case for why these actions are bailouts. A variety of articles like this exist. And various financial guru's state that indeed a bailout situation is underway...and that the fed will clearly be spending some money. I note on the large Fidelity Forum postings, the word "bailout" is assigned to this situation, by most posters. R48 It is a bailout of the uninsured depositors. For political reasons, some commentators prefer to conflate it with 2008 bailouts, where the bondholders made whole and in part even stockholders. Had another company bought SVB, then it would not have been a bailout but that did not happen. Whether the Fed or the treasury ends up paying any money in the end remains to be seen. Most of 2008 bailouts ended with the federal government making a profit. |
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Post by Deleted on Mar 13, 2023 20:16:43 GMT
Regional Banks will be the first domino to fall due to increase in interest rates is quite interesting.
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Post by Fearchar on Mar 13, 2023 20:17:35 GMT
Claiming that taxpayers did not bail out the banks is rather hollow.
The reality is that using made up money (essentially just printing money and handing it out) is still a problem just the same. Yes, it did not come from taxes, but it adds to the balance sheet that the FED has been working with good readon to reduce.
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Post by oldskeet on Mar 18, 2023 1:31:09 GMT
Hi guys.
Old_Skeets barometer continues to reflect that the S&P500 Index remains oversold as of Friday's market close. With this and with the current investment climate I'm thinking we go lower and the fact if I continue to buy on the equity side of my portfolio I will become more overweight than I desire at this time. Therefore, I held off adding to my equity ballast sleeve while I continue to evulate recent market conditions. After all, I am getting better than a 4% return off the cash area. For now, I will continue to sit a while longer.
Wishing all ... Good Investing.
Old_Skeet
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Post by uncleharley on Mar 18, 2023 1:41:59 GMT
I too am stalled out although I am feeling very negative about the value of the USD and as a result very positive about the value of gold and the miners related to it. I'll be watching the news this weekend. My port is more aggressive than yours so we will be finding different solutions.
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Post by retiredat48 on Mar 18, 2023 15:10:23 GMT
I'm currently assessing some PREFERRED STOCK FUNDS, leveraged, such as HPS (now own); FFC (richardsok trade)and PTA (income house guru recommended). Yields in 9+% territory...about 40% leverage. Most of course own many bank preferreds, but the above own mostly the big banks...risk is low of default.
Edit to add: My current ranking (like): HPS (highest Qual, and 9.46% yield) , then PTA; then FFC (most volatile for trade benefit).
R48
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I liked it. Yes...bailouts for all...forever.
