We got a bank collapse y'all

[saabguy]

I don’t work in finance, so let me ask this to you or anyone else who’s more knowledgeable than me:

Were there or were there not regulations under Trump that were relaxed that allowed a bank to carry this level of risk in their investment portfolio?

They weren’t leveraged with risky investments.

They had money tied up in bonds, but the value of those bonds went to shit when the fed rapidly increased interest rates. They were holding a portfolio of bonds with a 2% yield…what is that bond worth today when investors are buying bonds with a 5-6% yield?

Their assets tanked in value. That tanked the stock. People got scared and took their money out, and now here we are.

From what I’ve been reading they were a pretty solid bank that ultimately had their legs cut out from under them by Powell and the fed.

 

[saabguy]

interest rate risk always exists though and will always exist. if the interest rate goes up 1% or 4% it doesn't matter... either way it changes the return and cost on investments of all kinds

The difference between 1 and 4% kind of matters

 

[MWHC22]

Silicon Valley Bank has lent to a ton of startups and forced them to keep accounts with them as a condition.

They don’t want those businesses to go under.

soooo all i see you saying is this...

the startups made bad business decisions and we gotta bail them out
they should just fail and go under... thats how risk works... if you eliminate risk by eliminating the responsibility of the possible consequences then we just get repeats of the shit that we keep repeating.

 

[Ron]

They weren’t leveraged with risky investments.

They had money tied up in bonds, but the value of those bonds went to shit when the fed rapidly increased interest rates. They were holding a portfolio of bonds with a 2% yield…what is that bond worth today when investors are buying bonds with a 5-6% yield?

Their assets tanked in value. That tanked the stock. People got scared and took their money out, and now here we are.

From what I’ve been reading they were a pretty solid bank that ultimately had their legs cut out from under them by Powell and the fed.

Or they lacked diversity in their investment strategy and customers and everything collapsed when it wasn’t all sunshine rainbows

 

[MWHC22]

The difference between 1 and 4% kind of matters

let me rephrase
if the interest rate goes up x% you can lose...if it goes up y% you can lose.
either way you lose. its just semantics to argue that 1 or 4 matters as its just the level of loss that happens based on your decision to go down an investment path and then stick with it instead of changing

 

[Kafka]

View attachment 311231

SVB Chief Pressed Lawmakers To Weaken Bank Risk Regs

Collapsed bank’s president told Congress “enhanced prudential standards” should be lifted “given the low risk profile of our activities.”

www.levernews.com

He hires two former McCarthy staffers to lobby too.

 

[Hisma]

They weren’t leveraged with risky investments.

They had money tied up in bonds, but the value of those bonds went to shit when the fed rapidly increased interest rates. They were holding a portfolio of bonds with a 2% yield…what is that bond worth today when investors are buying bonds with a 5-6% yield?

Their assets tanked in value. That tanked the stock. People got scared and took their money out, and now here we are.

From what I’ve been reading they were a pretty solid bank that ultimately had their legs cut out from under them by Powell and the fed.

Nah fam. I'm normally with you but interest rate risk isn't some new concept. And loading up on bonds when rates are historically low should have raised some alarms to any principaled risk manager. But clearly they had incompetent risk management. That's on the bank not the fed.

 

[MWHC22]

The consensus itt is people who put money in banks shouldn’t have to worry about losing their money when they don’t do due diligence to vet the bank they work with

ah the old "i have $80k in my bank account but ill defend the ones with tens or hundreds of millions and billions because someday i might be like them and i want to be bailed out too" argument

 

[Dylith]

They are treasury bonds and MBS that weren't hedged against interest rate risks.

Why are interest rates having to be raised so quickly? What events lead to that having to be done?

Now interest rates are rising so fast traditionally "safe" investments are losing value because of rapidly rising interest rates.

What environment and factors led to interest rates having to be hiked so quickly? Gee I wonder.....

This is where you need to spend time actually looking at supply chains instead of relying on your political feelings.

Also need to spend time focusing on uncertainty within financial markets and how to build adaptive institutions so that you dont have to rely on false "safe" bets.

 

[calisteph6]

An outstanding ESG rating - but no chief risk operator: SVB hired woke board obsessed with diversity, invested $5BN for ‘healthier planet’ and held monthlong Pride celebration —but failed to spot glaring problems with investments​

• Silicon Valley Bank had an A rating for its Environmental, Social and Governance policies as it increased diversity and invested in sustainability startups
• But for eight months last year, the bank did not have a chief risk operator
• At the time, it was investing clients' money in low-interest government bonds and securities that saw their value fall when interest rates rose

SVB hired woke board obsessed with diversity

Silicon Valley Bank had an A rating for its Environmental, Social and Governance policies as it increased diversity and invested in sustainability startups.

www.dailymail.co.uk

It took the GOP all weekend to come up with this???

 

[Ffej207]

They weren’t leveraged with risky investments.

They had money tied up in bonds, but the value of those bonds went to shit when the fed rapidly increased interest rates. They were holding a portfolio of bonds with a 2% yield…what is that bond worth today when investors are buying bonds with a 5-6% yield?

Their assets tanked in value. That tanked the stock. People got scared and took their money out, and now here we are.

From what I’ve been reading they were a pretty solid bank that ultimately had their legs cut out from under them by Powell and the fed.

but wouldn't they have had more requirements with the $50B floor as opposed to the $250B floor?

 

[rcm]

Some real spicy takes itt






retarded, but spicy

 

[Dylith]

The difference between 1 and 4% kind of matters

Interest rate risk isnt anything new.

 

[JacksonWhite]

soooo all i see you saying is this...

the startups made bad business decisions and we gotta bail them out
they should just fail and go under... thats how risk works... if you eliminate risk by eliminating the responsibility of the possible consequences then we just get repeats of the shit that we keep repeating.

I mean I suppose.

Government made money off the loans in 2008 tho, so I really don’t see the problem.

I get that it’s “unfair”, but at the same time it makes all the sense in the world

 

[Remy Bressant]

LLLOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOLLLLL

 

[sans_pants]

They are treasury bonds and MBS that weren't hedged against interest rate risks.

Why are interest rates having to be raised so quickly? What events lead to that having to be done?

Now interest rates are rising so fast traditionally "safe" investments are losing value because of rapidly rising interest rates.

What environment and factors led to interest rates having to be hiked so quickly? Gee I wonder.....

are you alluding to the covid stimulus and ppp handout passed under the previous admin?

or keeping the rates at zero many years passed when we should have raised them?

or the supply shocks that opened the door for greedy companies to make record profits last year?

 

[Dylith]

This is where you need to spend time actually looking at supply chains instead of relying on your political feelings.

Also need to spend time focusing on uncertainty within financial markets and how to build adaptive institutions so that you dont have to rely on false "safe" bets.

View attachment 311237

LLLOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOLLLLL

Same goes for you.

Also, why arent you using dark theme?

 

[stevezissou]

I agree, I still send wires I just verify the instructions by phone every time. But an incident like that can absolutely make a normally reasonable person unreasonably cautious/skittish.

Same here, call institution via phone using information obtained from a 3rd party source to verify information and check ACH numbers via internet to make sure bank name matches.

 

[Ariez]

interest rate risk always exists though and will always exist. if the interest rate goes up 1% or 4% it doesn't matter... either way it changes the return and cost on investments of all kinds

lol bruh...

25bp means trillions of dollars, let alone 3%.

 

[stevezissou]

I know this is going to be a dumbass question, but I don't know the answer so I'm going to ask anyway. What happens if I have a safe deposit box at a bank that shuts down like this and I have a million dollars in the box? Do people with safe deposit boxes get access to their boxes? I assume that's a yes at some point, just not sure so I figured I would ask.

Might want to call the bank and ask.

 

[DigiCrime]

Client sent a $2m wire to a scammers account a few years ago after they hacked his email and swapped wire instructions. He overnights cashier’s checks now.

This happens a lot in the real estate industry

 

[xenu]

have all my liquid in FRB - theoretically if they ate shit, how long before FDIC would get me access to it?

i have like 8 friends with all their student debt and mortgages through FRB - because I recruited them

 

[Ariez]

I know this is going to be a dumbass question, but I don't know the answer so I'm going to ask anyway. What happens if I have a safe deposit box at a bank that shuts down like this and I have a million dollars in the box? Do people with safe deposit boxes get access to their boxes? I assume that's a yes at some point, just not sure so I figured I would ask.

Those are not part of the bank's books. You may be locked out from accessing them for a few weeks but it should be safe. If the bank was robbed or physically damaged, then you are fucked since theyre not FDIC insured.

 

[10dementianal]

I know this is going to be a dumbass question, but I don't know the answer so I'm going to ask anyway. What happens if I have a safe deposit box at a bank that shuts down like this and I have a million dollars in the box? Do people with safe deposit boxes get access to their boxes? I assume that's a yes at some point, just not sure so I figured I would ask.

As a person who used to work at a bank and dealt with safe deposit boxes, LMAO.

 

[Ron]

have all my liquid in FRB - theoretically if they ate shit, how long before FDIC would get me access to it?

i have like 8 friends with all their student debt and mortgages through FRB - because I recruited them

SVB depositors that were at $250k got their money today