Silicon Valley Bank (SVB) Collapses

[Snagglefoot]

Europe’s Banking index dropped another 6% after dropping 3% on Friday.

 

[hrv]

Europe’s Banking index dropped another 6% after dropping 3% on Friday.

Might have to take my money out just to play it safe...

 

[Snagglefoot]

I miss the good ole days when shooting balloons down was the big news story.

 

[alarmguy]

There not bailing out the bank, bondholders, or shareholders. The bank will fold - or be transfered to a different bank, the shareholders will get zero, the bondholders will only get any money if there is money left after they make all depositors whole - which is unlikely.

The only ones getting any money are depositors in the bank. They did not invest in the banks business in any way - they were simply parking their money there. Since we work on a fractional reserve banking system using fiat money with nothing backing it - the only thing making the US dollar worth anything is the faith that the US government will maintain there full faith and credit. If large banks are allowed to fail and hence depositors loose their money, that faith fails.

So while I don't agree with the whole system, its the system we have. So unless all of us want our US dollars becoming worthless its likely the right move.

Yeah, that is what I mean't by not bailing out the bank. All deposits are whole, not just the insured and it's not costing the taxpayers anything except for the government wages paid for handling this. I agree with you but honestly as far as "the system" I see nothing extraordinary here. Meaning the investors lost their investment and the deposits were saving because the assets are there.
Much like HSBC took over SVB EU operations.

 

[alarmguy]

I miss the good ole days when shooting balloons down was the big news story.

Yes! The media has their extravaganza for the week. Wonder what is next.

 

[zzyzzx]

Short term stock buying opportunity, unless you think a lot of other banks and financial institutions loaded up on long term mortgage back securities with a ~1.5% return like SVB did.

 

[alarmguy]

The Stock Market will be celebrating soon based on the Fed will not be expected to raise rates as high as they indicated last week.

 

[zzyzzx]

The Stock Market will be celebrating soon based on the Fed will not be expected to raise rates as high as they indicated last week.

I am also expecting them to either not raise rates, delay raising rates, or not raise rates as much as they had previously planned to later this month.

 

[Pablo]

Nice timing. This must have gone out to all Paypal users, because no crypto in my life

 

[Pablo]

 

[wag123]

Another bank on the ropes. First Republic got help from JP Morgan and the Federal Reserve over the weekend.

It’s not over.

Edit to add: shares of First Republic are down 70% in early Monday trading.


https://www.cnbc.com/2023/03/13/first-republic-drops-bank-stocks-decline.html

In addition to Signature Bank in New York which was seized yesterday. I suspect that these are just a tip of the iceberg.

 

[alarmguy]

This is what I mean by media extravaganza. It's news to fit the market, not the market because of the news.
How laughable is this?
From CNBC =
"BREAKING NEWS"
"Dow falls more than 150 points Monday as pressure from bank shares mounts: Live updates"

Does the headline say DOW ONLY FALLS 150 points or less than 1% as pressure from bank shares mount? *LOL* 150 points is nothing but a trading range.

 

[Snagglefoot]

The Stock Market will be celebrating soon based on the Fed will not be expected to raise rates as high as they indicated last week.

You got that right. This came out this morning.

 

[Pablo]

You got that right. This came out this morning.

View attachment 144829

Real bonus for my munis, taxable accounts loving it.

 

[JohnnyG]

This also came out this morning 3/13/23:

https://www.aol.com/finance/u-government-guarantees-silicon-valley-223546095.html

 

[alarmguy]

You got that right. This came out this morning.

View attachment 144829

Interesting and fun to watch, not sure what will happen.
Honestly I dont think we are anywhere near anything that took place in 2008. Banks will fail in times like this, businesses will fail, people will lose jobs, that is how the Fed gets inflation under control.
I firmly without a doubt know the major banking industry as a whole in the USA is on a magnitude of 10 times better shape than that of 2008.
It certainly is going to affect banking stocks though. Might even be a buying opportunity for some of the big names.

Right now that puts the 2 year close to the start of just 6 weeks ago Feb 2023 which isnt mentioned in the headline.
(regarding all my comments in this post, I have no idea half of what I am thinking or talking about but I wonder about some like Citibank or other top banks will be looking attractive, Citi well off its highs)

Speculation from former Dallas Fed says they should not stop the rate increases.

 

[BMWTurboDzl]

Yep and one month ago a certain stock celebrity was pumping their stock telling viewers to buy buy buy.

He is quiet at the moment.

This isn't the first time for Cramer either.

 

[PimTac]

Western Alliance Banks shares down 70%


https://markets.businessinsider.com...bank-failure-fears-contagion-liquidity-2023-3

 

[BMWTurboDzl]

I take that as many of their accounts are much larger than $250k ($500k for joint account holders I believe). That makes sense if VC and startups were putting big sums of money in for short term places to stash cash. I am surprised banking regulations allowed them to make so many long term investments with their deposits.

When I was in retail banking coverage amounts were individually insured per an account type. In the example below each type would be insured up to $250k separately. This is excluding the joint accounts. I tried to explain this to a family member around 2007 and his FA told him I was wrong. By the time 2009 rolled around it cost my family member around $4.5M

Example: Couple named X and Y.

Individual X
Individual Y
Individual Y w/Beneficiary X
Individual X w/Beneficiary Y

 

[zzyzzx]

Any of you ever heard of Silicon Valley Bank before this? Because I haven't. Just curious.