Clarice Feldman ping.
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Today’s woke bankers: “Hey we’ve got a lot of lgbtq ass to kiss, who’s got time to pay attention to interest rates!
Insane, corrupt lawyer/politicians have all the levers of power and are just openly looting America at this point.
In addition to robbing us for their 1.2 trillion enviro slush fund, they’ll rob us to bail their buddies out. Newsome’s wineries had big funds at SVB, so did the Chinese. I heard Oprah was there.
SVB was run by woke clowns funding enviro-trash startups. They didn’t have a risk manager for the last year of clownery.
Now we get to pay for it all - and more.
;)
People dismiss the value of mathematics are victims of this kind of shenanigans. And this level of understanding is something everyone should learn in high school.
(To the benefit of the DNC)
The bank also cheated its own balance sheet. For some loans it rquired collateral capital in case of default, but in some of those cases the collateral capital was placed on the books of the bank’s holding company, not the bank, thus reflecting less capital on the banks books than would otherwise have been the case. It also “bullied” depositors who had loans to NOT make any deposits in any other banks. Some of those folks may have been some of the first to pull their deposits from SVB.
The moral hazard of the joint Fed/FDIC “rescue” is that only 10% of the banks deposits were in insured accounts, 90% were not. That is NOT a good practice - making whole uninsured depositors. [Long ago a wealthy friend of mine who was big on cash and not much trusting of Wall Street investments, got around the “insured deposit” problem for cash above the FDIC insured level. She had mulitiple savings accounts in multiple banks.]
WSJ has a very good article this weekend.
It is very clear that SVB was very good at selling - selling itself, selling prospective startup investments to venture capitalists, selling both clients and new investors to each other. It was not terribly good at banking. That became clear when the facade of selling itself collapsed in the reality of its poor banking practices and very poor risk management. That was bound to happen whenever the facadde of Federal Reserve cheap money had to be pulled down - deflated, defalting the poor money practices of banks like SVB.
The innocent "others" will pay through our noses with massive inflation, huge FDIC fees on our deposits, and the wholesale destruction of our local banks.
Coming next: centralized digital currency, social scores to access our money, and destruction of our individual freedoms and liberty. Soon America will be like Communist China without the chopsticks.
p
“””The problem is liquidity:SVB held tens of billions of dollars in long-term government bonds.”””
Here is why SVB got in trouble.
Say in 2021 Joe Depositor put $500,000 in his account and SVB paid him a little more than zero interest.
SVB took the $500,000 and bought $500,000 of 30 year Treasury Bonds that yielded 2% interest.
Today those $500,000 Treasury bonds are now worth $300,000.
When Joe Depositor took the $500,000 from his account, SVB had to sell the Treasury bonds and SVB took a loss of $200,000.
There is a basic rule in banking. Do not borrow short term money and lend long term money.
When interest rates rise, bond prices go down. It has always been this way.
The discussion that's happening there is very enlightening.
Bottom line: if the deal for UBS' acquisition of Credit Suisse isn't done tonight, there's going to be a major black swan event in global markets tomorrow.
Yikes.