Investors implore the government to step in after Silicon Valley Bank failure

CNBC ^ | 3/11/23

[EBH]

Voices from tech and finance are increasingly calling for the federal government to push another bank to take over the failed Silicon Valley Bank to protect uninsured deposits.

Some observers called out the irony of the venture capital community calling for government aid after many VCs spurred their portfolio companies to withdraw money after SVB released a surprise statement about its financial situation on Wednesday night.

But the vast majority of SVB’s customers were businesses that had more than that on deposit at the bank. As of December, more than 95% of the bank’s deposits were uninsured, according to regulatory filings. Many of these depositors are startups, and many are concerned that they will not be able to make payroll this month, which in turn could spark a wide wave of failures and layoffs in the tech industry.

Investors are concerned that these failures could reduce confidence in the banking sector, particularly mid-sized banks with under $250 billion in deposits. These banks are not deemed “too big to fail” and do not have to undergo regular stress tests or other safety valve measures passed in the wake of the 2008 financial crisis.

Venture capitalist and former tech CEO David Sacks called for the federal government to push another bank to buy SVB’s assets, writing on Twitter, “Where is Powell? Where is Yellen? Stop this crisis NOW. Announce that all depositors will be safe. Place SVB with a Top 4 bank. Do this before Monday open or there will be contagion and the crisis will spread.”

VC Mark Suster agreed, tweeting, “I suspect this is what they’re working on. I expect statements by Sunday. We’ll see. I sure hope so or Monday will be brutal.”

[EBH]

Investor Bill Ackman made a similar argument in a lengthy tweet, writing, “The gov’t has about 48 hours to fix a-soon-to-be-irreversible mistake. By allowing @SVB_Financial to fail without protecting all depositors, the world has woken up to what an uninsured deposit is — an unsecured illiquid claim on a failed bank. Absent @jpmorgan @citi or @BankofAmerica acquiring SVB before the open on Monday, a prospect I believe to be unlikely, or the gov’t guaranteeing all of SVB’s deposits, the giant sucking sound you will hear will be the withdrawal of substantially all uninsured deposits from all but the ‘systemically important banks’ (SIBs).”

[BenLurkin]

the world has woken up to what an uninsured deposit is

Does he really think that nobody knew the inherent risk in uninsured deposits?

[protoconservative]

Wake up to...Go Woke, Go Broke.

[escapefromboston]

Probably should have insured it.

[butlerweave]

Failure from complete incompetence

[BobL]

Where were these execs when Trump was on the ropes?

[Paladin2]

Those Investors shoulda bought the bank for the long term benefits instead of shorting the bank.

[SaveFerris]

Here we go.....

[EBH]

Scaramucci argued, “It isn’t a political decision to bailout SVB. Don’t make the Lehman mistake. It isn’t about rich or poor of who benefits, it’s about stopping contagion and protecting the system. Make depositors whole or expect lots of tragic unintended consequences.”

This is way bigger than your narrow vision is allowing you to see.

[DIRTYSECRET]

Good thing they’re not asking me for a bailout. Heh heh.

[EBH]

Yup. This wasn’t your average bank, it was a businesses bank. Honestly, where does a business hold more than $250,000 in loose change to make payroll, pay vendors, cover taxes, etc. Those would be some substantial businesses that are scrambling right now.

[sten]

no.

let it fail. it’ll go into bankruptcy and they’ll sell off the assets.

and a new bank will take it’s place with the new assets.

[dragnet2]

C’mon, everyone pony up and bail out the wealthy corrupt leftist in Silicon Valley, CA.

[MinorityRepublican]

This isn’t 2008. Some people will lose millions. This needs to happen. But no one will be broke. They will get at least $250,000 back.

[EBH]

You don’t get it. This isn’t just about the bank. It is about their customers, who just happen to be businesses that operate with more than $250,000 on a daily basis. 95% of this bank were those kind of businesses.

[C210N]

Place SVB with a Top 4 bank...

Top four, eh? Right, that'll do...

[Lurker]

No. You gambled and lost.

Suck it up.

L

[CFW]

Bend over taxpayers! Here it comes.

This bank has concentrated on ESG and DIE “principles” rather than their fiduciary duty. Now, tax-payers are going to have to bail them out. I suspect they will not be the first institution to fold due to such failures. And, we will be forced to pay for their foolish, leftist, deliberate failures. As usual.

[Saintgermain]

Woke head of ‘risk assessment’ at Silicon Valley Bank ‘prioritized’ LGBT initiatives - including organizing a month-long Pride campaign - before bank lost BILLIONS and collapsed

There is a good article at “Zero Hedge” about this bank.

[OHPatriot]

I know what kind of “bank” it was. Still, let it fail and sell off assets. Someone will pick up the assets. Bail them out and THEY LEARN NOTHING. The job of government isn’t to pick winners and losers. I’m sick and tired of my tax money being pissed away on “businesses” too stupid to protect themselves. Too many years of easy money and stock buybacks and here we are. In deep shit looking for taxpayers to pony up again. NO!