Silicon Valley Bank Collapse: Not Every Bank Failure Necessarily Means Disaster

Trading Desk ^ | 03/10/2023 | Hillary Kramer

[9YearLurker]

Here’s an interesting angle for crypto stablecoins:

“Cryptocurrency firm Circle Internet Financial told the Globe that SVB was one of six banks it has used to hold the $11 billion of cash reserves for its USDC stablecoin, in addition to $32 billion kept in US Treasuries, according to its filing. Other companies, including Flywire and AirSculpt Technologies, filed disclosures indicating they have loans from the bank.”

https://www.bostonglobe.com/2023/03/10/business/troubles-silicon-valley-bank-ripple-across-boston-tech-scene/

[DoodleBob]

Bravo, for the most sober and accurate analysis I've read on FR of how SVB failed.

Here's a similar take; https://www.cnbc.com/2023/03/10/silicon-valley-bank-collapse-how-it-happened.html

[joe fonebone]

???????????????
Bush cranked up the printing presses to prevent depression.
fubo cranked them into overdrive
In 2010 the fed should have been raising interest rates, but nOOOOOO...
fubo kept it going.
Then came President Trump.
He could have slowed down the presses, but did he??
nOOOOOOO....
Now there is no choice but to slow it down, and we all pay the price.
We are paying the price for the bush/mccain depression level event of ‘06.

[Georgia Girl 2]

Keep your eye on Republic bank and Wells Fargo.

[mouse1]

Let Silicon Valley Bank fold and their employees and uninsured depositors learn to code....

But what about the domino effect when those companies wont be able to make payroll. It sounded like alot of business accounts were involved.

[mouse1]

yea sounds like no soft landing. Rock and hard place.

[Honest Nigerian]

But we need the FDIC to move fast here to liquidate its assets and make uninsured depositors whole.
**************************
I certainly hope this is not the plan. Of course ... I think that would be vewwy wayciss. And just bad policy too.

[cgbg]

“filed disclosures indicating they have loans from the bank.”

Yup—loans from failed banks are always fun.

The creditors of the bank want those loans paid back—immediately.

Lawyers have a field day with this stuff.

[cgbg]

Uninsured depositors get to wait and wait and wait—while the liquidation process moves forward.

Many of these depositors were high tech “flyers” who could barely make payroll.

By the time their cash is available its only use may be to pay their creditors in their bankruptcy proceedings.

That is what “financial contagion” is all about—businesses depend on cash flow—when they run out of cash they die—no matter who owes them money.

[aquila48]

Thanks.

Here’s a good article with more details.

https://www.cnbc.com/2023/03/10/silicon-valley-bank-collapse-how-it-happened.html

[Captain Peter Blood]

I understand. I am not saying I support bailing out the bank. All I was saying is that a lot of powerful people are going to use whatever influence they have to prevail upon the Fed and the FDIC to bail this bank out and will use whatever reasons they can come up with to justify it. So let’s see what happens Monday morning.

I will watching the futures market tomorrow night with great interest.

[oldplayer]

“But what about the domino effect when those companies wont be able to make payroll. It sounded like alot of business accounts were involved.“

Scr*w ‘em. Let the market work it through. These people think they are smarter than anyone else. They put their money in this bank knowing the risks. A big dose of reality served to these California genius’s, will be good for everyone.