Quote (ofthevoid @ Mar 12 2023 05:21pm)

What's happening with SVB is a function of primarily two things, none of them having much to do with anything international. Higher rates in 2022 has pushed fixed income securities prices down, with pretty much all western banks carrying hundreds of billions in unrealized losses, so when they have deposit outflows they have to realize those losses and have to raise capital to match their asset side of the balance sheet. When they tried doing that, the panic turned into every depositor trying to pull out their money causing a bank run. Deposit outflows currently are impacting the whole banking industry tbh, it's not unique to SVB, most regional banks are having this issue to an extent or another. SVB was particularly vulnerable to deposit outflows because they cater to venture capital and companies that have a very high cash burn rate.

Don't feel like going into the details of it, but it's actually a really big deal what's happening with SVB. It's a 200 billion dollar in asset bank and the government has to 100% step in to insure those deposits are returned to those clients. We have about ~200 million in credit lines extended to SVB but only like ~34 million of those are utilized, not 100% sure we fully recover that 34mm.

But the bigger picture here is this administration is really asleep at the wheel. Yellen and Biden have their priorities completely inverted. Too focused on Ukraine while we have massive issues cropping up here in the US. East Palestine and now this make it abundantly evident.

Quote (dro94 @ Mar 12 2023 06:51pm)

Good explanation. A few extra points to note, too:
1) The proportion of corporate to retail customers was extremely high, and corporate customers are more susceptible to flight
2) They had a lot of loans relative to deposits
3) High proportion of long duration bonds to short, exacerbating their losses
4) Low provision for losses

The more I read about it, the more it seems to have been a perfect storm of events.

Quote (dro94 @ Mar 13 2023 11:16am)

Covered it very briefly in the Ukraine thread with void. Scary though it may be, it's unlikely to be catastrophic:

Quote (NetflixAdaptationWidow @ Mar 13 2023 11:29am)

Let it all burn. Build a better system from the ashes

Quote (thesnipa @ Mar 13 2023 12:31pm)

the problem is they make bricks from the ashes, and the banks and large corporations get 90% of the bricks that are made. there is no world in which a collapse, even one greater than 2008 by an order of magnitude, results in any real regulation to break the strangle hold they have on institutions.

Quote (thesnipa @ Mar 13 2023 05:23pm)

the issue with a bank run is never in how much money consumers actually hold vs businesses. it's panic. if this causes enough panic, whether the consumer money held there is safe or not, it will be nasty. let's hope consumers keep a cool head, because if they dont its going to get rough quick.

SVB telling customers not to withdraw money, after the management sold options and withdrew money, should result in heads on spikes. any bailouts should come with the requirement of jail time for management or at the least heavy fines. lets these CEOs understand their board will literally toss them in prison if they mismanage risk. because that's the issue, RISK. it's all over leveraged. we're still chopping up and repackaging loans of all kinds as stable bonds. 99% of wallstreet thought that housing bonds were as safe of a load yield commodity as you could find even a week out from the collapse. they wont see what they dont want to see.

Fed behavior of increased loan %'s is great, but it was too slow and doesn't really do much to mitigate 5 or so years of absolutely mismanaged risks. we learned nothing in 2008 and now it's knocking at the door again. this is the first bell at midnight on the clocktower, imo. i'd love to be wrong, millions of families will lose homes, cars, jobs, savings, etc. But i think it's come time to pay the piper.

Quote (NetflixAdaptationWidow @ Mar 13 2023 11:37am)

So let's go three orders of magnitude for good measure

Quote (dro94 @ Mar 13 2023 11:41am)

The government stepping in to guarantee customer deposits should allay panic.

It's not 'all over leveraged', either. Banks have huge reserves, especially the big ones. SVB collapsing isn't very complex, it's not about derivatives, it's a classic case of borrowing too short and lending too long with the backdrop of rising rates. It's stuff that most management teams can navigate without major problems.

Banks are also raking it in from high net interest margins so cash inflows are really strong...SVB didn't have much of a loan book.

Not a bad time to buy IMO.

Quote (thesnipa @ Mar 13 2023 05:45pm)

= U DIE. unless ur garden has progressed a LOT since we last talked.



this is mostly me pulling numbers from my ass, but among my peers i see about 50% of people buying a house and/or new car that they shouldnt be approved for, and buying a house and/or car that's sold for about 150-200% of what it's worth.

those are some daunting numbers to tackle to come up with the opinion we're not over leveraged. dont even need to make an argument for student loans, we all know that's tipping on crisis mode thanks to pottery majors.