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Silicon Valley Bank has collapsed. Here’s what we know.
Wash.Post/MSN ^ | 3-10-23

Posted on 03/10/2023 12:21:07 PM PST by nuconvert

Regulators closed down one of Silicon Valley’s most important banks on Friday, marking the largest bank failure since the Great Recession and the second-biggest in U.S. history.

Earlier in the day, Silicon Valley Bank suspended trading of its plummeting shares and depositors rushed to withdraw their money. As one of the main institutions where start-ups deposited their venture-backed investments, SVB’s failure sent shock waves through the industry. The turmoil comes as the tech companies retrench and shed workers, while rising interest rates spark signs of broader financial distress.

(Excerpt) Read more at msn.com ...


TOPICS: Business/Economy; Extended News; News/Current Events
KEYWORDS: bank; bankcollapse; finance; siliconvalleybank; svb
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To: nuconvert

All the old tunes are new again...

Been a while since we had a good old fashioned bank run.


41 posted on 03/10/2023 1:39:19 PM PST by redgolum (If this is civilization, I will be the barbarian. )
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To: cuz1961

The Big Short is a very entertaining and very educational movie! I was surprised at how much I liked it.

This story literally hits home for us.

Our house was built in 2005 by someone who overextended on it and lost everything in 2008. The bank foreclosed and we bought it in 2010 for about 20% of what had been owed on it. There si no way we would have been able to afford the place otherwise. For us it was answered prayer.


42 posted on 03/10/2023 1:41:56 PM PST by MeganC (There is nothing feminine about feminism. )
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To: Alberta's Child
But they were FORCED to sell them to raise the cash they needed when their customers all started withdrawing their money from the bank in the last few days/weeks.

Exactly. If they held the bonds to maturity there would have been no losses, but bank runs can upset the best laid plans.

43 posted on 03/10/2023 1:41:59 PM PST by semimojo
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To: Alberta's Child

Thank you! I way over-simplified it, and it looks like the bulk of their securities are mortgage-backed bonds.


44 posted on 03/10/2023 1:42:33 PM PST by Penelope Dreadful (And there is Pansies, that's for Thoughts. +Sodomy & Abortion are NOT cornerstones of Civilization! )
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To: HYPOCRACY

“The entire US banking system was federalized in 2008”

What is that supposed to mean?


45 posted on 03/10/2023 1:44:35 PM PST by Pelham
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To: cgbg

No. Mortgages are bundled and sold on Wall Street.


46 posted on 03/10/2023 1:50:06 PM PST by DownInFlames (P)
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To: blackdog; cgbg

Banks loaded up on mortgage paper during the bubble. A huge amount of that defaulted and left commercial banks technically bankrupt. TARP was a Treasury program that took a lot of that paper from banks.


47 posted on 03/10/2023 1:52:11 PM PST by Pelham
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To: cuz1961

The Big Short was very good but it did not point out the biggest culprit of all: Congress forcing banks to loan money to fraudulent borrowers who could never pay back the loans.


48 posted on 03/10/2023 1:55:55 PM PST by Theophilus (It's fake and defective)
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To: nuconvert
The Banking Queen!
49 posted on 03/10/2023 1:58:56 PM PST by Theophilus (It's fake and defective)
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To: Dilbert San Diego
It was badly managed because they had most of their reserves in long-term bonds that pay very low interest rates. When the customers all came to withdraw their funds, the bank was forced to sell those bonds just to raise cash to pay out to their customers who were withdrawing money.

Because interest rates are much higher today than they were when the bank bought the bonds, they had to sell the low-yield bonds at a steep discount.

50 posted on 03/10/2023 2:04:29 PM PST by Alberta's Child
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To: Bonemaker

Indeed back to the Mason jars in a ceramic container.


51 posted on 03/10/2023 2:13:53 PM PST by Vaduz (LAWYERS )
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To: Pelham

It means the zombie banks were all bailed out by the taxpayers and now basically are government run entities.


52 posted on 03/10/2023 2:28:27 PM PST by HYPOCRACY (This is the dystopian future we've been waiting for!)
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To: cuz1961

Definitely one of the better movies regarding what happened. If not the best. Entertaining and informative.


53 posted on 03/10/2023 2:31:49 PM PST by HYPOCRACY (This is the dystopian future we've been waiting for!)
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To: Pelham

Welcome toxic paper, cause those securities are going to be at 50% par real soon.


54 posted on 03/10/2023 2:40:28 PM PST by blackdog ((Z28.310) Forget "Global Warming", new grants are for "Galaxy Dimming")
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To: Theophilus
Congress forcing banks to loan money to fraudulent borrowers who could never pay back the loans.

I’ll bet this had almost nothing to do with the 2008-2010 mortgage meltdown.

In all my reading on the subject, I got the impression that the banks would have extended those loans even if the U.S. government never said anything about it. They had irresponsible lending standards because they weren’t taking any risk themselves … they were just packaging the loans into bonds and selling them off.

55 posted on 03/10/2023 3:01:01 PM PST by Alberta's Child
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To: blackdog

“…and the average amount leveraged in 1.5% money facing a 300% increase,…”

Damn! That doesn’t seem workable…


56 posted on 03/10/2023 3:20:01 PM PST by TalBlack (We have a Christian duty and a patriotic duty. God help us.)
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To: HYPOCRACY

“It means the zombie banks were all bailed out by the taxpayers and now basically are government run entities.”

Half of that is correct. They were bailed out. Other than than that nothing changed.


57 posted on 03/10/2023 4:29:07 PM PST by Pelham
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To: Theophilus

“Congress forcing banks to loan money to fraudulent borrowers who could never pay back the loans.”

That didn’t happen no matter how often that canard gets repeated.

The Community Reinvestment Act only applied to deposit taking financial firms. It didn’t compel them to lower loan quality. And the loans didn’t have to be mortgages.

The vast majority of toxic lending during the bubble was made by shadow banks that weren’t subject to the CRA or any other banking regulation. They got into subprime and other non-conforming loans because it created high yield paper and made them a ton of money.


58 posted on 03/10/2023 4:38:13 PM PST by Pelham
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To: Sarah Barracuda

She should open an account in another bank or credit union and keep both accounts below the $250,000 FDIC insured limit.


59 posted on 03/10/2023 4:41:29 PM PST by Pelham
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To: CFW

There was one analyst at Morgan Stanley who had a Sell rating. They rest were all buy.


60 posted on 03/10/2023 4:55:35 PM PST by RinaseaofDs
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