Silicon Valley Bank HALTS trading as shares crash 64% today amid talks to sell troubled lender: Panic caused by tech industry slowdown spreads to Wall Street

- as Peter Thiel's venture capital fund warns startups to PULL money out of SVB Shares of SVB were down 44% in the premarket, after slumping 60% Thursday Bank announced a massive equity raise to cover a $1.8B loss on sale of bonds Peter Thiel's venture fund advised startups to pull their money from the bank

Silicon Valley Bank suspended trading of its shares in the premarket on Friday pending an announcement, as the bank appeared to teeter on the brink of ruin.

Shares of SVB dropped 44% in premarket trading after slumping about 60% in the previous session, when it disclosed plans to raise over $2 billion from investors to counter $1.8 billion in losses from the sale of bonds.

According to a report from CNBC citing sources, the bank on Friday morning was preparing to announce that it was in discussions for a sale after canceling the plans to seek cash from investors.

The bank based in Santa Clara, California is the 18th largest bank in the US with assets of $212 billion as of September, and primarily caters to the tech startups and venture funds of Silicon Valley.

On Thursday night, Founders Fund, the venture capital fund co-founded by Peter Thiel, advised startups to pull their money from Silicon Valley Bank amid concerns about its financial stability, according to Bloomberg.

Theil's warning, and a similar alert from startup incubator Y Combinator, increased fears that a run on SVB deposits could push the bank into insolvency, if it were unable to meet the demand for customer withdrawals.

Our nation has paid a huge price for “bubbles”. Wall Street has made a lot of money on bubbles as have politicians and government.

When it pops the politicians get to spend (borrow) more to save us, the bubble executives still get huge bonuses, and the banksters get bailed out.

Rinse and repeat.

The little guy pays for all of it and the beat goes on. Nobody ever goes to jail for fraud now. Never.

For those of you who are old enough do you think we are about to see the S&L crisis again? Think about it - here is a link with a quick read to compare then to today:

“”In the 1980s, the financial sector suffered through a period of distress that was focused on the nation’s savings and loan (S&L) industry. Inflation rates and interest rates both rose dramatically in the late 1970s and early 1980s.

This produced two problems for S&Ls. First, the interest rates that they could pay on deposits were set by the federal government and were substantially below what could be earned elsewhere, leading savers to withdraw their funds. Second, S&Ls primarily made long-term fixed-rate mortgages. When interest rates rose, these mortgages lost a considerable amount of value, which essentially wiped out the S&L industry’s net worth.

Policymakers responded by passing the Depository Institutions Deregulation and Monetary Control Act of 1980. But federal regulators lacked sufficient resources to deal with losses that S&Ls were suffering. So instead they took steps to deregulate the industry in the hope that it could grow out of its problems. The industry’s problems, though, grew even more severe.

Ultimately, taxpayers were called upon to provide a bailout, and Congress was forced to act with significant reform legislation as the 1980s came to a close.

- Kenneth J. Robinson, Federal Reserve Bank of Dallas

https://www.federalreservehistory.org/essays/savings-and-loan-crisis

The era of “free money” is over and it’s time to pay?

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