Home Forums Hunting & Shooting Hunter's Campfire Another bank took a schitt

That's an opening position. We'll see how this plays out. There are a lot of uninsured deposits owed to a bunch of primarily tech oriented companies, and there will be a ripple effect that has international ramifications. A lot of the affected people are going to be arguing that the banking regulators were asleep at the wheel and that it is the government's/Fed's fault. It should get interesting.

I sure would like to know what Uncle Warren is thinking right now.

Plenty of sign this was coming for a long time. I only left enough money in the bank to cover the bills. It will get worse before it gets better. If it ever does.

Sure he's going through balance sheets to get prepped to take advantage of any possible blood bath.

A more condensed explanation:

SVB had $100 billion in assets pre Covid. After Covid hit they had a rash of deposits to push their deposits to $200 billion. To protect those assets they did what most banks do and bought treasuries and bonds. The problem starts with they concentrated on buying treasuries and bonds with longer duration (5 to 10 years) and these were paying around 1% at time of purchase. As the Fed raised rates, this pushed up rates on newly purchased bonds and treasuries to 4 - 5%. As clients at SVB started withdrawing deposits they(SVB) had to start liquidating those older treasuries and bonds they bought with a 1% yield before they were fully mature. So with current bonds and treasuries having higher interest, no one wants to buy those older notes at 1% unless they get a steep discount (would you buy your neighbor's 10 year bond paying 1% when you could buy a new 10 year bond paying 4%?). As SVB was raising capital to handle the withdrawals, they took a $2 billion loss from selling those bonds and treasuries before they matured. Investors saw that and sensed trouble so they started withdrawing more capital resulting in a good old fashion bank run.

This won't be the last. Tons of regional banks saw stock market losses the past few days of 20 - 40% so Wall St thinks more banks are at risk. The old where's there's smoke there's fire.

Current

10 banks that may face trouble in the wake of the SVB Financial Group (Silicon Valley Bank) debacle (Ally and Customers Bank included in the list): - Thanks to Midas at Doctor of Credit.



Full Article: https://archive.ph/X5NKa

Customers Bancorp Inc.
First Republic Bank
Sandy Spring Bancorp Inc.
Community Bancorp Inc.
First Foundation Inc.
Ally Financial Inc.
Dime Community Bancshares Inc.
Pacific Premier Bancorp Inc.
Prosperity Bancshares Inc.
Columbia Financial Inc.

I'll be watching BRK.B prices!

That's about the nut of it, but I'm pretty sure there are a host of banks not on that list that will be in trouble. There is also multinational banks like Credit Suisse that are in real trouble and I expect to default soon, Credit Suisse will send some big ripples through the system. Some of us remember the bank crashes of the 80's. There is going to be some real ugly losses realized in 2023.

If I were him I would think I would be looking to get another sweetheart deal from Uncle Sam, aka the taxpayer like he did last time.

I have been reading that some pretty big players like Mark Cuban have significant exposure to SVB. Wonder if he regrets supporting Biden yet? Had the Trump energy policy remained in place, no war, no inflation, no high rates and the bank you have money in not going tits up.

Exactly!!!

The pressure is on Mr. Powell and team.
Inflation or interest rates.
Winds are blowin'......

This could make Penn Square Look like a small piggy bank, that broke in 1982, and took down 3 States and thousands of jobs, in Oklahoma Real estate lost 35% of it's value in 2 weeks then another 20% in a month, property that was worth one million$$$ was now worth $ 500,000 but had a $250 to $350,000 loan on it. the FDIC foreclosed on those loans, unless you could pay it off in 30 day's a lot of people that owed $ 50,000 on a $600,000 property went under because there were no banks they could go to fix their loan.at any interest rate. and interest at that time was 21% on real estate loans if you could get one. The short term and long term effects of this are like ripples on a pond. Rio7

So when’s the housing bubble going to pop

The 1980's caused a huge shift in wealth. The poor guys got foreclosed and the bankers got rich. Then turned around and sold the foreclosed ground to their rich friends. It was some very difficult times in the 1980's. Even more so than 2008. 2008 was a walk in the park compared to 1982 and '83. At least in my neighborhood.

kwg

I’m in a heloc but have funds to pay it off I’m considering doing so 3.2 when it started 7.75 now

The rating agency Moodys just gave SVB a great rating. Just like they did to banks that failed in 2008. And no one was held accountable

Yeah, but what if most of those put a lot MORE than 250K into their account??? Deposit a few mil and get a measly 250K back? In today's world, 250K ain't much.. No wonder 'runs' are a'comin'...

A bond is basically a loan of money for a period of time for a rate of interest. There is an inverse relationship between interest rates and bond prices which trade on an open market. When rates go up bond prices go down and vice versa.

Let's say XYZ corporation, city, or country issues a 10 year bond at 3% and the issue price is $1000 for each one....and Joe Blow investor buys some, loaning them his money. As time passes say rates go up to 5% so in order for someone to be interested in buying Joe's bond he would have to sell it for less than he paid for it because new bonds would be bringing 5% and the only way someone would buy it is at a discount. So if Joe sells he will take a capital loss. Say he gets $800 for his bond instead of 1K. The new buyer only invests $800 for a coupon rate of 3% so he earns closer to 5% over all matching the current rates.

Joe could hold the bond to maturity and get all his money back with 3% interest but might figure a short term loss rolled into bonds yielding a higher rate might be the way to go.

Everyone gets a AAA, it just the way they roll. Credit ratings are worth nothing.

Too concerned about global warming and not paying attention to banking. Go woke you go broke! I think the fallout is going to be messy.

Think of money as hours of labor.
If you were working off a debt.

You borrow more money and write bigger numbers on your time card.
You borrowed more, "paid" it down.
But the guy you are scamming is gonna decide an hour of your work is worth less now. So you will end up having to give more hours to pay off the loan.

"When others are fearful, be bold."