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This bank (16th largest) out in the land of fruits and nuts is getting taken over by the FDIC. Evidently, the FED and Super Jerome have finally broken something.

When I heard the lady say "not necessarily systemic" I started having ptsd from 2008. Hope its "contained"......another PTSD triggering word.

https://finance.yahoo.com/news/fdic...ails-to-raise-new-capital-165322938.html

Yahoo is hard to believe. Assuming this bak was leveraged to the hilt in VC deals, a run on leveraged banks hurts.

Fdic protects individuals up to 250K. Not corporations.

And so it begins.......

Silicon Valley Bank opened in 1983 to service new startups in the tech industry. California's high taxation is causing new tech startups to locate in other areas.

Basically, Silicon Valley Bank lost its customer base.

It's California. The entire state is in decline. The California banks will fail along with everything else.

Jim Cramer killed SVB - called them a buy last month at 320.00

That is hilariously naive.

The management team was speculating, guessed wrong, and decided to exit scam. Their CEO sold $3.5MM of his stock in the company in the last 2 weeks.

On the 7th someone traded puts expiring 3/17 and exited the position at open yesterday. That trade would have returned ~30,000%, $4k to $1.2MM. 100% that was an insider.

Agreed.

Someone tweeted "this is what happens when you go balls deep on 10y treasuries at 1.87%"

How about 1980 ?? For those of us who were around, it was wholesale bank slaughter for the next 3 years.

kwg

yep

https://www.zerohedge.com/markets/silicon-valley-bank-crashes-65-halted-pending-news


*FDIC: SVB BANK CLOSED BY CALIFORNIA REGULATOR
*FDIC: SVB BANK IS FIRST INSURED INSTITUTION TO FAIL THIS YEAR
*FDIC CREATES A DEPOSIT INSURANCE NATIONAL BANK OF SANTA CLARA
*FDIC: NAMED FEDERAL DEPOSIT INSURANCE FDIC AS RECEIVER
*FDIC CREATES A DEPOSIT INSURANCE NATIONAL BANK OF SANTA CLARA
*SILICON VALLEY BANK INSURED DEPOSITORS TO HAVE ACCESS MONDAY

As we noted before, while the FDIC noted that SVIB had $175BN in deposits as of Dec 31, note that some $151.5BN of these are uninsured, which means they get exactly zero although a sizable number of them likely pulled their deposits in the past few days.

And just like that SVB is no more: a historic collapse which in many ways was faster than Lehman, and which has seen SIVB stock plunge from $763 to 0 in 16 months.

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Epic comment from ZH:

"The FDIC cannot, was never intended to, insure against a massive, FED engineered, fractional reserve banking, ponzi, free money, wealth through debt, "monetary policy".

Big auto financers next?

https://finance.yahoo.com/news/tip-negative-equity-iceberg-record-173000474.html

Speculating on what?

That’ll get a man’s ass put in prison, no?

How many here remember Penn Square Bank Okla City, Failure in 1982 which took down banks from the East Coast To the West Coast, that bankrupted Many large company's and shut down three states Oklahoma, Texas, Louisiana, and put thousands of people out of work??

This is just the beginning of a major melt down, want to know when TSHTF?? Not long now.

Boy Scout Motto--- Be Prepared. Rio7

The tech sector? Their FWP that set off their depositors to withdraw said they were selling long term bonds at a loss due to the losses they'd suffered in the tech sector. It'll turn out they were betting on a turnaround that didn't happen and it evaporated all their liquidity.

The put guy will definitely get a call from the SEC. The CEO might get a slap on the wrist.

Kids playing loose and free with other people's money. Not much different than Sam Bankman-Fried.

Be vigilant!

Sounds like Senators and Congressman returns. AOC, Pelosi, Crenshaw, Waserman-Schultz and likely the same amount of jail expectancy

I am expecting a new spike in the high tech start up and big tech world...

Some 37,4xx accounts of 143,8xx (business accounts?) Are over the FDIC limit on average by $4.25m each meaning of the 176 or so billion of deposits only 21 billion is FDIC insured. If those are business accounts then expect at least 15,000 or so companies to hit the rocks.

https://www.netinterest.co/p/the-demise-of-silicon-valley-bank

The tech bro boom is a house of cards, and the layoffs and bank failure are just a sign of what is to come. Hello crypto.

Now had those bankers listened to Paul Pelosi this would not have happened.

I worked at the FHLB of NY in the 80's. It's usually real estate. Unrestrained toxic home loans turned into AAA derivatives. How can this be, we gained 200 employees overnight when the S&L regulators were folded into the FHLB system.

After the bloodbath (liquidating the belly up S&L banks) the RTC was formed (huge money wash) we lost those 200 employees over night.

Silicon Valley Bank (SVB) Fails, Now the Idiots Are Considering a Taxpayer Bailout

Now, as ridiculous as this sounds outside Silicon Valley, the powers that be are concerned about a ‘contagion‘ effect, and openly discussing the need for a taxpayer funded bailout. Blood-boiling doesn’t even begin to describe the sensation.

Let the Silicon Valley companies who started with the funds from the bank sell some of their capitalization on the market and finance the bailout themselves. After all, this is one interconnected system of lenders, borrowers and investors. This is not a crisis for the guy making their catered lunches, mowing their lawns, or washing their clothes.

https://theconservativetreehouse.co...iots-are-considering-a-taxpayer-bailout/

You are wrong about the kids part but right about at least one very important characteristic between SVB and FTX. Here is SVB's boomer CEO, any guesses as to what he and SBF have in common?

A little hint: 24 hours before SVB collapsed, after he had been selling off his shares in the bank for more than 2 weeks, he assured customers their funds were safe and there was no reason to pull them out.

Buy Treasury bonds....the country is only $31 trillion dollars in debt. Everything is smoke and mirrors.

Azzhole needs to hung by the neck till dead.

Back when Corp's issued stock certificates, you received some poor quality toilet paper for your money, now your buying air and a promise, keep shoveling money into the market and keep your head in the sand and go enjoying life. Rio7

Bank's plan: Hire minorities that will invest in long term gov bonds.

I haven't seen any suggestion of fraud up to this point. Just reserves held in low yielding marketable securities in the new era of a 5% yield resulting in liquidating at a loss. Add in a good old fashioned run on the bank and presto! Not sure ANY bank could stand a run on deposits if everyone wanted to exit at the same time.
School me if I'm wrong but the depositors shouldn't make out too bad, even if over 250K. Now the shareholders are a completely different story.

Seems that Uncle Sugar is going to make good the depositors in SVB. Market futures up, Bitcoin up.....for now.

https://www.foxbusiness.com/politic...ut-approach-silicon-valley-bank-collapse

I think you are correct, bc3. No fraud, just extremely poor bond portfolio risk management. Something they should be good at after 30 years (or more). Then there is the bad optics of the bonuses that went out Thursday.

wow this showed up fast!

No risk management officer since april 2022 and the chief administrative officers last employer...Lehman brothers.

I do not know if any one here will understand this , but I will throw it out here.

SVB took in a large amount of deposits, not out of the ordinary,as time went quickly by they could not loan enough to balance.

Someone , bank officers now gone, made the decision to buy long term bonds. As the fed RAPIDLY raised rates , to thwart inflation, the bonds value decreased.

SVB had to sell bonds at undrvalued prices to stay afloat.This quickly changed their bottom line to negative.

Also, ESG funds entered into the picture on a smaller scale . ESG Funds are money losers.

There are other factors . However, this is basically what happened. Had SVB been at 80% > 20 % ratio, in time their play on bonds would have played out but they were top

heavy to began with.

SVB's customer base was not necessarily all California. SVB had a great headquarters location to access tech VC and PE funds so there was (is) heavy deposit base from CA for that reason. They operate in many states (not just CA) and have possibly the best commercial treasury management system in the country and therefore attracted deposits from private equity and real estate funds from all over the nation because fund managers care about treasury management systems. If what has been reported is correct, around 90% of the deposits were over the FDIC $250K limit, likely because fund managers tend to keep pretty hefty deposits on hand.

My understanding is that multiple dominos fell to make this collapse happen: deposit base decreasing because of weakness in the tech sector and leadership not getting ahead of that phenomenon, making the "safe" decision to load up on Treasuries at 80 bps yield a few years ago, having to sell those treasuries at a discount recently because of increased yields in those markets, stock price plummeting as a result of these actions, VC / PE / CRE fund managers encouraging each other to pull deposits, etc.

Some of these issues originate with the Fed pushing interest rates to control inflation. I'm sure there are other banks that hold Treasuries that can't sell them without taking a loss as SVB was forced to do. Also, mortgages and home loans are a related category. I'm sure some banks are holding low-yielding "jumbo" mortgages on book that they can't exit without taking a loss. Other problems right now could include developers not being able to exit construction loans because they underwrote lower interest rates and a handful of issues in CRE markets with certain product types that may see assets end up in bank OREO departments.

Unless they pull a rabbit out of a hat, which they might, the Fed appears to me to be in a position where they can keep raising rates and risk additional bank failures or they can start dropping rates in which case they will have to deal with additional inflation. Somewhat of an intellectually interesting conundrum with major consequences whatever they decide. With that said, they have pulled a few rabbits out of hats over the years. Two I can think of off the top of my head were Operation Twist 50 or 60 years ago and how they used QE in 2008.

More old news, but interesting.


Israelis 2 largest banks were able to transfer 1 billon $ out of SVB between the time the bank failed and the Feds took over.

It pays to pay attention.