Posted on 03/11/2023 1:14:12 PM PST by RomanSoldier19
SVB Financial Group faced a perfect storm, but there are plenty of other banks that would face big losses if they were forced to dump securities to raise cash
Silicon Valley Bank has failed following a run on deposits, after its parent company’s share price crashed a record 60% on Thursday.
Trading of SVB Financial Group’s SIVB stock was halted early Friday, after the shares plunged again in premarket trading. Treasury Secretary Janet Yellen said SVB was one of a few banks she was “monitoring very carefully.” Reaction poured in from several analysts who discussed the bank’s liquidity risk.
(Excerpt) Read more at marketwatch.com ...
They went negative a time or two during crises, but there was no impact on its ability to do business. In the 2008 crisis, they made solvent banks pay several years worth of advanced insurance premiums to get through because there were hard feelings between FDIC leadership and the politicians at Treasury and the FDIC didn't want to draw on the Treasury line of credit. ($100 Billion).
My recollection was that the RTC was always underwater.
FDIC is going to have to bailed out by Congress in the next couple of years—you can take that to the bank.
Congress will do it though—this is like the “do it or I will shoot this dog” scenario—if bank deposits of average folks are not protected the economy will go back into 1930s Depression mode.
No Congress-critter wants to be sitting in their chair when that happens.
Bank CD’s are pretty good right now. Just keep it under the FDIC insurance limits. I understand lots of big players need more than that to meet payrolls and/or cash flows, but, FCOL, get additional accounts at other banks.
487 banks failed in the 2008 recession so if only 10-20 go under this year its not the end of the world. Well unless you’re Harry and Meghan. 😏
My read is that we are due for 487 banks to tank this time as well.
This partee is just getting started...
https://www.youtube.com/watch?v=jrDVHStj1wY
(Beastie Boys—You Gotta Fight for Your Right To Party..)
That’s per individual. Double that for couples.
As long as all the major investors are not being panicked and emailing each other the bank is going to collapse, then you should be fine.
Nothing is perfect but if I have to choose, it’ll be a credit union over a bank to hold my money.
These banks are all holding tons of long-term low interest bonds, that are marked “hold to maturity”…. So the losses in value are not required to be counted. They are used, at full value, as “assets”… but in reality, they are worthless
“Stay the heck away from banks if you need something to hold YOUR money.” I agree. Hold spending money in banks and savings in non-banks.
+++++
I’ve had checking and savings accts with the same federal credit union since the late ‘80’s and have never had a situation where the credit union couldn’t do something that a bank could, including access to any of my accts at any time. Online, money transfers, whatever.
But keeping up with 80 different banks is a pain in the rear for me!
I think this situation is VERY wide-spread, and it’s 100% brought on by the Feds raising interest rates WAY too fast. Banks didn’t have time to diversify their asset base.
In my investment account, I have a number of short-term, commercial bonds... Most were written by companies like JP Morgan.... they’re 2-3 year maturity, with rates of 5-7%. They are ‘marked to market’... which means, right now, they show up on my account as “losses”... But, I know they are not losses because, I’m holding them to maturity. I don’t NEED that money. These bonds haven’t even lost that much value because they started with higher than normal interest rates.
ANYONE who was bought 30-year T-bills at 1% interest is now holding an asset that has dropped so low in value that it is practically worthless. Banks and insurance companies bought a lot of these. A LOT! By law, they DON’T have to put them on their books as losses, because they are claimed to be “held to maturity”.... just as I do my short-term bonds. But, they are NOT liquid assets anymore. If any bank has a LOT of them, and then has a run... they don’t have the liquid assets to satisfy customer demand. Actually, I wonder if ANY bank in this country could withstand a true rush of customers demanding return of their money??
I’m NOT a financial expert.... but, I know a few. This is a mess even I can understand. It’s now a matter of “faith”... and, we just took a major brick out of the wall. This could get really ugly, REALLY quickly. I pray we have someone in charge that has the balls to take bold steps.
The “Risk Manager” for SVB was a LGBTQ+ activist who was totally unqualified for her/they job. We have a lot of that in the current Admin too.
“Lol, they may be book smart, but they can’t manage a lemonade stand”
Yep, but I’m sure these malfeasance cretins have gotten a wink an a nod from lil’ Joey. He will bail them out regardless of the consequences to Joe six pack, just remember come the 2024 election.
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