Silicon Valley Bank failure could spark run on regional banks: sources

NY Post ^

[TigerClaws]

The failure of Silicon Valley Bank could spark a run on other regional and mid-sized banks across the country, as wealthy individuals rush to pull their money out of accounts too large for FDIC coverage and flee to larger, more stable institutions amid fears the risk could be systemic, sources told The Post.

“Small regional banks are done,” one banking source said. “Everyone is going to want to put their money in JPMorgan or Bank of America.”

If a buyer steps in this weekend to scoop up SVB, which catered to start-ups in tech and other industries, it could avert a disaster.

But potential buyers are skittish about taking over the troubled bank without backing from the federal government.

There’s simply too much uncertainty and risk associated with a deal unless the Feds step in, people with knowledge of buyers’ thinking told The Post.

“My instinct is either someone buys the whole thing with concessions from government or it goes to receivership,” one banker close to the negotiations told The Post.

“No one wants to do the deal without a government backstop,” a private equity insider echoed. “The government needs to prepackage a deal, like they did with Lehman.”

Another banker pointed out the Lehman Brothers collapse is still being tied up nearly 15 years after its failure.

“No one wants to take on that kind of headache.” The collapse of Silicon Valley Bank could lead to a run on other regional banks across the country, sources told The Post.

One top investment bank sent a note to clients advising what could happen if no buyers steps in, according to a transcription reviewed by The Post.

[TigerClaws]

Adam Schiff @RepAdamSchiff Treasury Department needs to take all appropriate steps to protect ordinary workers and their paychecks, and to prevent a run on other banks.

Big investors, CEOs and bank executives are one thing — they can take a loss — but regular workers across California shouldn’t suffer. 4:34 PM · Mar 11, 2023

[janetjanet998]

VIDEO
People lining up outside First Republic Bank in Los Angeles after SVB failure
https://rumble.com/v2cqfg4-people-lining-up-outside-first-republic-bank-in-los-angeles-after-svb-failu.html

[Brian Griffin]

We at First Regional Bank would like to thank our employees, depositors and borrowers for their efforts.

Our master financial statement is available at ...

We are clearly sound and solvent. Our net capital has declined from $411 million to $376 million, but still exceeds all government requirements.

[Brian Griffin]

Hi, I’m Milt Argent, chief shareholder of First Regional. I’m somewhat unhappy about only having my shares of First Regional Bank only being worth $137 million today instead of the $155 million as of March 1st, but First Regional Bank still has more net capital than any year before 2019 and I’m grateful for every cent and every share I’m blessed to own.

[Brian Griffin]

Clear standardized financial statements are needed.

Copies and summaries online and in every branch would be helpful.

[Major Matt Mason]

[House Atreides]

“ Adam Schiff @RepAdamSchiff Treasury Department needs to take all appropriate steps to protect ordinary workers and their paychecks, and to prevent a run on other banks.
Big investors, CEOs and bank executives are one thing — they can take a loss — but regular workers across California shouldn’t suffer. 4:34 PM · Mar 11, 2023”
**************************************************************

Adam Schiff — SHILLING for the BIG DONORS. Bail them out with OTHER PEOPLE’S MONEY.

[SaveFerris]

Here we go.....

[SaveFerris]

Yeah

[cgbg]

Financial statements do not provide the information that investors really need and want—and that is the current liquidation value of assets.

That information is not provided because of the nature of accounting principles—which assume that any audited enterprise is a going concern not subject to immediate liquidation.

Standard accounting cannot fix this.

[Night Hides Not]

Hey people, relax! Apparently, everyone has forgotten about the insurance protections from the SIPC, at your friendly brokerage firm. They also insure up to $250K in cash. For the vast majority of us who don't have a million in liquid assets, a combination of FDIC, SIPC, treasury obligations and certificates of deposit should be more than enough. What am I forgetting?

As far as Harry and Meghan go, the schadenfreude is as thick as the worms raining down in China.

[GOPJ]

“Small regional banks are done,” one banking source said. “Everyone is going to want to put their money in JPMorgan or Bank of America.”

JBMorgan's gonna get a lot of new deposits.

[ConservativeInPA]

This article is absolute 💩. There’s not a single source. Reading between the lines it sounds like Big Bank propaganda to scare new depositors into doing business with those spewing the propaganda. I can think of two probable reasons. Big Banks want to steal depositors and profits from regional banks or Big Banks need depositors so they don’t go belly up.

Don’t put all your money in one place and certainly don’t put your money into a Big Woke Bank that will fail big. People need to diversify. Christ, I almost don’t want to use the word diversify because is sounds like the woke word diversity and shares the same root. Diversify into multiple asset classes.

[ConservativeInPA]

You sound like a bean counter. Does the following summarize the problem adequately? Rising interest rates cause declining asset values. Banks are holding assets that have decline in value and they have not diversified across asset classes to mitigate risks. If depositors want their funds or if banks have obligations come due, then they may be in a situation where the sale of assets cannot cover withdrawals.

[DoughtyOne]

I wish the media would act responsibly here. A lot of
damage can be done by them trying to play this off as
only a big story, and not trying to help folks
understands and act rationally.

There are times when I get the impression they’d love to
see a big crash, just so they could sell papers or air
time. To heck with folks livelihoods on the line.

[familyop]

Readers who follow the link will see that further down in the article, those who are asking the government to bail them out are also the ones predicting more bank runs. They’re trying to start another panic.

[familyop]

And no. No bailout.

[Irish Eyes]

Pretty sad.

[familyop]

You certainly chose the right character for the comment in #6. ;D

[pepsionice]

For a lot of people who misunderstood the financial collapse in 1929, there are elements to remember.

A lot of banks (maybe even the majority of them) had a crappy accounting system, and employees (from clerks to Presidents of the bank) were walking out the front door weekly with cash. The bank might claim customer’s money was there and safe, but the reality was that perhaps a quarter of the cash no longer existed.

The run business? It reached a point within days that virtually everyone in America wanted to take their money out. Trust was gone. Banks couldn’t survive that period.

Finally...the outstanding loans were attempted to be called in, and that had a ripple affect on society and across the globe. The marginally standing gov’t of Germany literally fell apart as the NY banks asked for some of the money back.