The 44-hour collapse of Silicon Valley Bank (SVB) is having some reverberations amid the tech sector as companies who carried unsecured deposits with the bank are facing an uncertain future.
Tech company Roku streaming services holds $487 million in cash reserves at SVB representing 26% of their liquid holdings. Those unsecured funds are now tenuous, depending on what steps are taken next. Additionally, Etsy an online brokering retailer for mostly independent sellers, has also run into a snag with processing disbursement payments to those same sellers. Etsy used SVB as a depository and payment transfer provider to the merchant accounts.
According to Axios, “Circle’s usd coin (USDC), the second largest stablecoin in the world” is also in a tough position “because a portion of its cash reserves were held at SVB, which the U.S. government took control of on Friday.” These and other ancillary issues are now part of a larger conversation about whether SVB is representative of a weakness that may impact other banks. However, current consensus is that a contagion effect is not expected.
SVB was exclusively a tech sector bank. Small to mid-size tech companies who relied on SVB may have some immediate issues; but the larger banking sector seems much more solid and less exposed to the long-term treasuries that SVB was holding. “People are used to having zero interest rates and easy money, and it’s gone. And there are people who will manage that well and people who will not,” former Congressional Budget Office Director Doug Holtz-Eakin said during an interview on “Cavuto Coast-to-Coast” Friday. {link}
Meanwhile, congress is meeting with treasury and FDIC officials to discuss if taxpayer intervention is needed. {insert eyeroll here}:
March 11 (Reuters) – U.S. lawmakers met with the Federal Reserve and Federal Deposit Insurance Corporation on Friday to discuss the collapse of SVB Financial Group (SIVB.O), Coindesk reported on Saturday citing a source.
Democratic U.S. Representative Maxine Waters held briefings with officials from the two regulators and the Treasury Department, hours after the startup-focused SVB’s collapse, the report said.
[…] Separately, Representative Ro Khanna said in a tweet on Friday that he reached out to both the White House and the Treasury Department to discuss the situation with the bank.
U.S. Treasury Secretary Janet Yellen on Friday met with banking regulators on the collapse of SVB, as she and the White House expressed confidence in their abilities to respond to the bank failure. (more)
Nothing makes the Nope Meter peg with greater emphasis than hearing the name Maxine Waters and bank bailout in the same sentence.
I already made my position pretty clear yesterday. NO BAILOUTS!
The tech sector has a tremendous amount of capital at hand. Let the tech companies who used SVB as a launch vehicle sell some of their own stock holdings and backstop the bank as an investment mechanism. There is no need for the U.S. taxpayer to get involved.
I am more concerned about this failure being used as a tool to initiate a conversation about digital currencies. The ‘never let a crisis go to waste‘ team, are likely chomping at the proverbial bit….
Maxine Waters!! NFW !!!
The Silicon Valley Bank fiasco can be traced back to the Obama administration and the Democrats. The Dodd-Frank Bill that passed after financial meltdown did little to rein in big banks. Dodd-Frank also left the US taxpayers on the hook for another bail out should one of the to-big-to-fail banks actually fail. Not only that but no one was prosecuted over the financial meltdown. This left banks with little incentive not to engage in risky investments.
57% of Silicon Valley Bank’s treasury Bonds are hold-to-maturity bonds. This is a high percentage to hold in a increasing interest rate environment. When interest rates rise the cost of bonds goes down. This resulted in a paper loss to SVB of 17 billion dollars. This was very risky and we can see what happened. Major banks to a lesser degree are also holding these treasuries as well, but are also holding a lot of capital for the Federal Reserve. If the banks wanted to have zero interest rates for a longer period of time they shouldn’t have supported Biden.
The SV Bank although insolvent still holds tens of billions of dollars of assets. When these assets are sold some of the people will get part of their money back. Who should get the biggest hair cut? I think it should be the share and bond holders of the bank. They’re the people that are paid to make sure management is running the operation in good order.
The taxpayers should not be involved in this mess, but we’ll see what happens. We’ve got to get this lunatic out of the White House before the whole country becomes insolvent.
FDIC Insurance is a taxpayer funded bailout. Do you think these diddly premiums banks’ pay is going to cover this?
The FDIC receives no Congressional appropriations – it is funded by premiums that banks and savings associations pay for deposit insurance coverage.
Idiots in Congress meeting with Treasury’s idiot, Janet Yellen, is like giving a flamethrower to an inebriated pyromaniac.
right on Sundance!! I did roll my eyes immediately before your {insert eyeroll here} warning, and hole heartedly agree with your nope meter
Investing in Treasury bonds is lending ‘long term’ and paying interest on deposits is ‘short term’. Interest rates go up and the long-term bond prices go down, and interest paid on deposits goes up in order to retain those deposits. Now if people need their deposits or just want out of the bank, the bank has to sell the long-term bonds at a loss.
This is similar to the old savings and loan crisis, banks used short term deposit money and invested (lent) those funds in long term mortgages. Where did the managers, executives get their financial education, this is not a new phenomenon. This is banking 101.
This bank’s deposit money was unstable since it was from companies bleeding cash, so the deposit money was being withdrawn very rapidly, it was hot money. In any case a bank takes their balance sheet, liabilities (deposits) and assets (loans or bonds), and model innumerable scenarios to understand the risks. If bankers aren’t doing this, what are they being paid for. The managers of this bank are not innocent bystanders, they had to see this coming from a mile away.
The head of SVB came from Lehman Bros. – all you need to know.
“Nothing makes the Nope Meter peg with greater emphasis than hearing the name Maxine Waters and bank bailout in the same sentence.”
My Nope Meter pegs out, and explodes, just hearing the name Maxine Waters used in relation to anything!
Before the collapse of Silicon Valley Bank, $SIVB, the CEO sold $3.57 million of stock within the last two weeks.
Gregory Becker, CEO, sold 11% on Feb 27, 2023.
Michael Zucker, General Counsel, 19% on Feb 5.
Daniel Beck, CFO, sold 32% on Feb 27.
Michelle Draper, CMO, sold 25% on Feb 1.
https://hotair.com/tree-hugging-sister/2023/03/12/gird-your-loins-im-not-sure-bloodbath-will-be-descriptive-enough-for-silicon-valley-bank-failure
They saw this coming from a mile away. No BS excuses like, who could have known. They knew.
I’m very uneducated when it comes to banking of any kind—keeping y checkbook current is enough for me! I don’t invest in the stock market now or ever so please don’t annihilate me when I ask what will appear to those of you experienced in the stock market as really stupid. Question: since there is indisputable facts that the above “people” knew this was coming and sold percentages, why aren’t they forced to give it all back.
They should be. The Shareholders should sue and demand it but they will lose their investment none the less.
The bankruptcy court may allow claw back of some of these funds. It’s a highly technical and variable process depending on circumstance.
As insiders, they are required to file “Rule 10b5-1 Trading Plans” that describe when and how they intend to sell. They appear to have done this in January. For the CEO, Becker, SEC reports show he exercised options on 2/27 for about 12,000 shares of common at $105.18/sh. These options would expire in May. He sold about the same amount of common stock on the same day (2/27) at around $287/sh so about $182/sh profit. Whether he knew back in Jan things would go south I have no idea. I’m guessing it had more to do with SVIB’s plan to raise about $2 billion through a common stock offering, which obviously would have diluted the existing shares.
Thank you! Now I heard Yellan just authorized a 25b bailout to SVB!
The top executives sold their Silicon Valley Bank
stocks weeks before the crash and did not deposit
the money into their Bank accounts. They hid the
money in their homes.
Makes me wonder why the government doesn’t step in and demand the millions returned to the depositors and those responsible put prison.
I wonder if the liquidity collapse of SVB has a precipitating link from the fall of FTX and SBF?
as of noon today it is reported in various places: 1) Yellin said no to bailout this am 2) the stock sales were preprogrammed to avoid insider trading rules 3) SVB had no risk officer from spring 2022 to Jan 2023 – pity the poor new risk officer 4) SVB paid 2022 bonuses just b4 they went under
have a great day
“Everything woke turns to $hit.”
PDJT
I read that there are 10 other regional banks with contagion impact with the potential of 10 more. I read both lists, these are not familiar banks. I think it was on Tom Luongo’s site.
Plus, there is another form of contagion. Now, that depositors can get 5% from the treasury, some people are moving funds out of banks and into treasuries.
You can thank Wilson and Nixon for moving and then taking us off the gold and silver standard That our founding Fathers wrote into the Constitution of the U.S. Wilson made sure to empower the Fed and Central Banksters and Nixon cut the Gold ambilocal cord that held Banksters accountable for their actions by pegging the dollar (fiat currency) to Gold (real money with a store of value) We have been living in a slavery, monetary system set up by the globalist for over a hundred years.
Per Liz Hoffman w Semafor.com., the following banks hold a percent of deposits that are greater than the FDIC’s $250K insurance cap: Bank of New York 98%, Northern Trust 96%, Signature 94%, Citigroup 85%, JP Morgan 68%, PNC 56% …
Time to request a refund on the $$$120 billion sent to bioweapons centre ukraine
Looks like the Fed just bailed out SVB To the tune of 25B. Also heard signature bank and Third Bank has collapsed