Silicon Valley Bank: Share Trading Halted

Saturday, March 11, 2023

Trading in shares of Silicon Valley Bank (SVB) has been suspended, as the firm's scramble to raise money provokes fears of wider problems in the banking industry.

Posted by redial at 06:31 PM | 27 COMMENTS | permalink | Comment on This Entry |

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Probably the most significant and worrisome thread on this site.

#1 | Posted by oneironaut at 2023-03-10 07:12 PM | Reply

I'm shocked this isn't on the main page (seriously).

#2 | Posted by Bluewaffles at 2023-03-10 07:24 PM | Reply

Been watching this all day.

From what I can tell they had assets in the form of bonds at like 1.9% they needed to sell them to have cash which caused a loss on the balance sheet, a loss that was already there but didn't have to be realized until they sold. People watching saw the losses stack up got worried and pulled their deposits causing the need for more bonds to be sold prematurely until it spiraled into full bank run territory. Apparently only like 11% of their deposits are covered by FDIC (only covers up to 250k) so people not running the bank because of the FDIC insurance didn't help.

Most banks are probably in a similar positions regarding the bonds issue with interest rates rising so quickly, however most have a much higher percentage of deposits covered by FDIC so there is less risk to them of a bank run, but not no risk. Most banks are in the 50% ballpark so if those big depositors get nervous about all banks then we could see huge issues if the banks have to sell more of their bonds at a loss.

Good news for me I don't have over 250k, bad news for me if the banking system gets that kind of strain my few bucks won't be enough to survive another 2008 let alone a 1929.

#3 | Posted by TaoWarrior at 2023-03-10 07:27 PM | Reply

Yes local regional banks have been exposed by the higher interest rates.

Roku had a lot of it's cash in SVB. NBC Cramer was pushing the stock just recently.

Best to diversify right now.

#4 | Posted by oneironaut at 2023-03-10 07:41 PM | Reply

Investing is inherently risky.
Don't invest money you can't afford to lose.
Especially don't invest money you can't afford to lose in a bank account that is not FDIC insured.

Banking shouldn't be inherently risky, but this bank is, because they're actually just venture capitalists calling themselves a bank.

#5 | Posted by snoofy at 2023-03-10 08:10 PM | Reply

86%.

On March 10, 2023, Silicon Valley Bank collapsed, causing the largest bank failure since the 2008 financial crisis and the second-largest in U.S. history.[1] 86% of the bank's US$175 billion in assets were uninsured.[2]
en.wikipedia.org

#6 | Posted by snoofy at 2023-03-10 08:12 PM | Reply

Genevieve Roch-Decter, CFA
@GRDecter
Only 2.7% of Silicon Valley Bank deposits are less than $250,000.
Meaning, 97.3% aren't FDIC insured.
Ouch.
twitter.com

#7 | Posted by snoofy at 2023-03-10 08:19 PM | Reply

Nice I was only off by 3% not bad for a day spent fixing fireplaces and trying to keep up on the latest in end times news in my "spare" time

#8 | Posted by TaoWarrior at 2023-03-10 08:20 PM | Reply

#7 Yeah I saw that one also. I think 2.7% is the percent of accounts but 14% is the value of deposits or vice versa. I've gotten mixed up a bit.

The bank wasn't so much a venture capitalist mainly a bank for venture capitalists. The VC's kept their money there so the Start-Ups also kept their money there. Seems like a failure of diversification, if a VC funds a company from an account over FDIC limits it would seem prudent for him to have the company he funded who is also over FDIC limits to go to a different bank.

What do I know about finance though.

#9 | Posted by TaoWarrior at 2023-03-10 08:26 PM | Reply

This is a "Never Get High On Your Own Supply" moment for companies funded by VC that kept their funds with the VC.

#10 | Posted by snoofy at 2023-03-10 08:26 PM | Reply

Expect to see more of this thanks to climate change.

#11 | Posted by Mao_Content at 2023-03-10 08:30 PM | Reply

Seems like a failure of diversification, if a VC funds a company from an account over FDIC limits it would seem prudent for him to have the company he funded who is also over FDIC limits to go to a different bank.

Well they shouldn't put money in a bank that is leveraging their deposits to he point the Fed wants to change the rules, but once Glass-Stegall was repealed all bets are off. We learned nothing from 2008 collapse.

Interesting thread, from Jan 18.
twitter.com

#12 | Posted by oneironaut at 2023-03-11 10:06 AM | Reply

The bank wasn't so much a venture capitalist mainly a bank for venture capitalists.

It invests in venture capitalists.

This is a "Never Get High On Your Own Supply" moment for companies funded by VC that kept their funds with the VC.

Its not exactly like that, but pretty darn close. SVB invests in those that invest in startups.

www.svb.com

#13 | Posted by oneironaut at 2023-03-11 10:08 AM | Reply

Fed is going to say on Monday that they will bail out 100% of the deposited funds with SVB and any other bank that faces the same liquidity crunch.

There is no way in the world the US gov lets Americans begin losing trust in banks.
twitter.com

This comment is probably more likely BUT
My bet is they'll first try a more circuitous approach. They'll strongarm one of the big banks to take over the accounts, supply all necessary liquidity to bridge the gap to maturity for the bond assets. The question is which one will it be, and how will they persuade them ...

If this is true, it would be outrageous! I would rather payoff student loans than fund these people.

#14 | Posted by oneironaut at 2023-03-11 10:13 AM | Reply

"SVB invests"

Already that makes them Not A Bank.

#15 | Posted by snoofy at 2023-03-11 02:55 PM | Reply

Dave Troy
@davetroy
A thing to consider: if Thiel blew up SVB to spark bailout anxiety and/or contagion " but it wasn't quite enough to achieve his goal--what else might he try to blow up to spark contagion?

And it's worth remembering they've been planning for exactly this sort of thing. The best way to predict the future is to create it.

I wrote about this plan last month and have been tracking Thiel's moves in this area for the last 18 months or so. Bottom line appears to be what they think they are doing, only question is when and how.

twitter.com

#16 | Posted by Gal_Tuesday at 2023-03-11 04:34 PM | Reply

My son was strugling with taxes today and kept texting me for advice at the end he was commenting about how dumb he was with that kind of stuff.

My response "No matter how bad you are with money you can rest easy knowing at least you aren't as bad as the idiots at Silicon Valley Bank."

#17 | Posted by TaoWarrior at 2023-03-11 07:07 PM | Reply

"My son was strugling with taxes today and kept texting me for advice at the end he was commenting about how dumb he was with that kind of stuff."

I'm always talking clients down from the ledge. Nobody knows this stuff coming out of the womb.

#18 | Posted by Danforth at 2023-03-11 07:14 PM | Reply

Danforth, the State of California eventually corrected their correction of my taxes and I don't owe them taxes for when I didn't live there.

Of course, they still charged me interest and penalties for the time they thought they were right, since I never paid the money they now agree I don't owe. LOL.

#19 | Posted by snoofy at 2023-03-11 08:25 PM | Reply

(I haven't called them on that. I probably should, it seems like they might be able to see it my way.)

#20 | Posted by snoofy at 2023-03-11 08:30 PM | Reply

""SVB invests"
Already that makes them Not A Bank.
#15 | POSTED BY SNOOFY"

They don't invest per se. They make loans and due to the higher risk in start-ups, usually get stock warrants on top of the cash interest.

Speaking from experience with that comment - I have done 2 loan packages for start-ups with them.

#21 | Posted by Claudio at 2023-03-11 09:21 PM | Reply

You Russian clowns are ------- delusional.

#22 | Posted by LegallyYourDead at 2023-03-12 07:36 PM | Reply

It's critical we bail out the crypto bro startups so their independent financial systems that are far superior to legacy banking can continue.

#23 | Posted by sitzkrieg at 2023-03-13 08:34 AM | Reply

The bank invested heavily in government bonds when the interest rates were near zero. Because of excessive federal spending since 2020, inflation went up. To get inflation below 7%, the Federal Reserve was compelled to raise interest rates to about 5%, which dramatically lowered the value of the bonds. When depositors started to withdraw their money, the bank was forced to sell bonds at a loss, resulting in failure.

www.nytimes.com

CV-19 federal spending killed the beast.

#24 | Posted by lee_the_agent at 2023-03-13 04:24 PM | Reply

#24 | POSTED BY LEE_THE_AGENT

Investing in Bonds is still gambling. Gambling killed the best.

#25 | Posted by Sycophant at 2023-03-13 04:28 PM | Reply

#25

And now the government is bailing out the inveterate gambler. A Big Mac meal is $10+ and no one can afford a house. These inflationary actions have to stop, but they won't

#26 | Posted by lee_the_agent at 2023-03-13 04:39 PM | Reply | Newsworthy 1

A Big Mac meal is $10+ and no one can afford a house. These inflationary actions have to stop, but they won't
#26 | POSTED BY LEE_THE_AGENT

I'm in the process of buying a home in San Diego, CA.

But I guess that doesn't necessarily mean I can afford it. LOL

#27 | Posted by rstybeach11 at 2023-03-13 04:42 PM | Reply