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….
I’m O’Peach!
10% for the Big Guy gets this mopped up by open of business Monday.
wouldn’t care if “…the tech sector…” went on vacation for a while, a long while. We have the tech tools and don’t know how to responsibly handle them. A hammer in the hands of a three year old can mean trouble.
Hey, they’ve got “FDIC” coverage per depositer up to $250k. Suck it up buttercup learn to live like real people. NO BAILOUTS.
Yeah, thank heavens for FDIC, huh?
Of course, a few people will be a bit out-of-pocket in excess of that $250k, I reckon
“Roku streaming services holds $487 million in cash reserves at SVB”
To quote Daniel Craig’s James Bond:
“Pity”
I heard today that the FDIC actually has less than 2% for those $250,000 pay-outs. Nobody will get paid.
(Imagine that! 🙄)
The bailout will depend on how much money they gave to who.
I say, NO BAILOUTS! and digital currencies.
“…let it fall down, let it fall down, let it all fall down.” H/T to James Taylor.
I see that Kristi Noem vetoed a bill in which there was a small section which redefined the word “currency”.
Say what you will about her, but as signing that bill would have been a first step enabling a digital currency, on this I will absolutely applaud her.
A few grains of sand in the monstrous gears of WEF complete domination.
Yes, I saw that segment on Tucker. Good for her!!
Somewhere I saw there were 20 states with similar bills, a redefinition embedded. No list of the states with these bills. I’d say most are Blue. But there are so many turncoat governors of Red states that I would not be comfortable placing any bets.
Mine included… looking at you, Abbott
And Stitt to the north!
Even those with DeSantis as governor often wonder, he gave us red flag laws and the legislature is holding up constitutional (open) carry.
too big to be managed responsibly.
Nothing quite like a diversity of competence to pave the way to a better future:
Diversity
Inclusion
Equity
DIE!
DIEversity.
The concept of a college education as the path to a future has produced thousands of pointless internet companies, manned by well-educated useless idiots.
Meanwhile, the Chinese produce the hard goods we actually need.
The great shakeout, so long overdue, will not eliminate people’s need to eat, or their need to have a pot to cook in.
But the internet (other than Sundance, of course) is populated by the stunningly worthless.
Liked by me!
What if the concept of the internet as the future is simply wrong?
I’ve never used Twitter or Facebook, and probably never will.
So many people in the 1950’s studied TV repair.
But TV got more reliable and less expensive, and anybody with a broken black and white TV upgraded to a color set. Goodbye, TV repair.
The internet will shake out to a very few. And the fascist intolerance of dissent will certainly not provide openings for apostates and polemicists etc. Ann Coulter is down to quibbling with Trump. Good luck with that.
She surely made herself a non-person with that quibbling.
Someone with innate intelligence, can do quite well, without an education, and often even better WITH an education, admittedly.
However, someone with -0- innate intelligence, despite many years of education, is still an over-educated idiot….however they can do a LOT more damage.
And that was true, long before “education” became woke, marxist indoctrination.
Skilled salesmen remain intensely valued by thousands of companies.
If you apply for a job as a salesman at a car dealership, they give you a standard test to evaluate your skill at sales.
Like a basketball player, salesmen are largely born not made.
Trump the salesman is mostly trapped by his strengths and weaknesses.
They’ll probably do a bail-out.
For Goldman Sachs.
A must-watch video if you want to understand the current debt-based monetary system, how banks collapse, and where they intend to use the coming ‘engineered’ banking crisis of 2023 to move us towards Central Bank Digital Currency.
How the current debt-based banking system works is expanded upon in the link below as well.
All we need to do is eliminate capital gains tax on ‘Constitutional’ money.
The few small pieces of gold I got from my father from a collection, have done well, and will buy now what they would buy 40 years ago.
However, the nominal price at inheritance was about $300/oz, and now is around $19oo….And were I to sell it, I’d owe a flat 28% “collectibles tax”, on a paper gain.
Uh…NO.
Understand, but you hold Constitutional money.
Legal there should be no tax.
PDJT also mentioned that not indexing capital gains to inflation is a form of theft, which it is.
Just watched the first of these videos. Excellent. Thanks spaul.
(Interesting info about how the new digital currency will make it easy for the central planners to see what you buy and sell, make sure you don’t buy things you shouldn’t, like too much food that is over your carbon limit.)
This is the ultimate form of control.
This objective is key.
Everything else is a distraction.
Your first video has the potential to awaken a very large percentage of “ostriches!”
after watching the video, Of course, I have slept
the story yet to be told is why places like Roku parked their cash in a bank acct vs in a money market fund at the bank which would be a separate acct and not subject to loss.
TPTB changed all those rules on MM Funds about 10 years ago, too. You are no longer guaranteed 1) a stable $1/share redemption price, nor 2) being able to redeem ALL YOUR SHARES at one time.
Both those conditions deny you access to your money at times when you would need it. And … They don’t change these rules haphazardly, believe me.
It’s called gating, they prevent depositors from exiting the institution all at the same time. They will let a few at a time pull funds to prevent collapse of the fund.
It’s their problem, not mine.
Let them figure it out on their own dime.
Crash the banks and come to the rescue with digital dollar?
They have a path they are leading us on. They create a crisis and offer that path as the solution.
The digital dollar is the end game. The hill to die on .
“Crash the banks and come to the rescue with digital dollar?”
The press and the politicians will be like Jack, when he sold the cow for a handful of magic beans.
we’d best draw a line around the foot of that hill; preferably the perimeter should be at least 100 yards out with a NML extending a mile further;
and I wouldn’t trust the bastards even that close.
You’re doing a heck of a job, Powell-ie!
“That’s the plan, Stan!”
Reality
https://demonocracy.info/infographics/usa/fdic/fdic.html
All the crapola happening now keeps reminding me how critical two things are:
First, a press that is skeptical of tptb.
Second, a political party that supports the middle class.
I used to think we had them. Then I thought we’d lost them.
Now I wonder whether we ever really had either..
Exactly.
Taxpayer intervention!!?? Bailout for them not the poor!
Without a doubt – NO BAILOUTS!
Via Vox Day:
ITEM: BREAKING: HARRY AND MEGHAN STAND TO LOSE MILLIONS IN COLLAPSE OF SVB BANK. Sources tell iSN the couple set up accounts following the advice of friends in Silicon Valley. “This is a major blow,” said our source, “They had all of Harry’s money there.”
ITEM: OPRAH LOSES MILLIONS IN SVB COLLAPSE. iSN has learned Oprah kept millions at the failed bank. “Like other celebs she went all in and now may have lost serious money,” said a person familiar with the situation.
VD: “That’s just too good to be true, isn’t it? Is there really that much justice to be found in a fallen word?”
And that means they will get bailed out
Can’t let card carrying members like Oprah and Harry take a loss!
Love it! May they lose it all. I have a regime (federal and NYS) that is trying to get rid of natural gas. Who is bailing me out?
F them
The wages of sin.
“Thou halt honour they father and thy mother”
Did you read how Oprah got all angry and hysterical and had to be sedated? Where is all her so-called spirituality and goodness now?
This is something to keep a eye on
All it takes is nothing but panic to trigger a collapse
And many banks only have access to 1% of thier holdings on hand
A few good rumors could start a down hill snowball
People on twitter reporting lines at a bank in LA.
Maxine waters.
‘Nuff said.
Nothing says ignorance quite like Maxine Waters. If she’s anywhere involved with the chance to steal taxpayer money, her and her ridiculous wig are all in. The only question will be how to bailout this tech bank, whick should by all rights be allowed to go under, and still build in enough kickback cash for Maxine.
Pride always comes before the fall. I agree, someone should be defining the currency traded in, and did not find the need to ‘secure’ it. And now the potential for a ‘real money’ bailout with no questions asked is an impossibility from this Taxpayers perspective. Another con from the Left, trading in their Monopoly money is not my problem. This will break out who runs these big online companies too, as in Etsy, Roku, plus who else.
I am no fan of “the Left.” But I think you are pinning this on the wrong people.
Did you watch Tucker yesterday? Scroll down to Sundance’s post on it.
Silicon Valley Bank was all in on DEI, and every other performative woke trope. They failed because their primary mission became everything except actually running a successful bank.
As always, when your company makes widgets, and you decide to make (diversity, the environment, politics, whatever) your #1 priority — you will fail at making widgets. It’s a natural, logical, and proven — many times over — way to destroy your company.
It’s like our military. What’s the purpose? To win wars. Priority? Diversity, Equity, Inclusion.
Guess what it won’t do, now?
Good point. But I think that behind all the woke destruction, there are some very rich people who are getting richer through what is happening. I don’t know that I’d necessarily call them The Left. Uniparty or oligarchy comes closer.
Or a church. Purpose? To win and save souls for Christ.
Priority? DEI.
Guess what it won’t do, now?
Not to worry, Maxine Waters is on the job (insert eye roll here).
If Old Yeller had just stayed in Ukraine, this would not have happened.
Perhaps we could send Yellen back? And the rest of the Ukranian cabal with her.
Everything App, coming soon?
Yes sir Reee
Since Big Tech bank rolls just about every politician in DC, the chances that a bailout proceeds are likely. Republican control of the House makes it less likely whereas if Democrats were still in charge the rubber stamp would be deployed by now or at least taken out of the desk.
Its NOT the “fact” that “Republicans” control the House, that is antiquated thinking.
The majority of Republicans in the house were first elected post 2016, and over 50 percent of the caucus are said to be MAGA or MAGA-leaning.
THAT is why McCarthy has changed his tune, and if not for that, the “Republican controlled House” would be just as worthless as a “Republican controlled Senate”.
Its NOT ABOUT R vs. D, its about MAGA vs Uniparty, Nationalist vs Globalist, and unless you truly embrace that, DC politics will be seen thru distorted eyes.
The force is strong with this one.
Well said Dutchman, thanks 👍
ChatGPT says it will be a $2.5B loan at 0% in perpetuity. Not a bailout….
Does this mean the demise of Blackrock?
from your mouth to G-d’s ear
A bank that was created to make risky loans goes bankrupt… the US taxpayer is not responsible for a stupid business plan. They built it, they own it, they broke it … it is not my problem and it never should be. PERIOD.
Couldn’t distress a nicer, that is more deserving group of people.
Tech sector AND HEALTHCARE related companies, were the main customers, along with vulture capitalists.
Screw em all! Big Tech and Big media ‘lost’ 1 Billion $, last year, and I don’t think they are doing any better, this year. GOOD!
Let those who lived by the bubble, die by the bubble.
THEY did NOTHING to actually change the fundamentals, after 2009, ….NOTHING to “prevent this from ever happening, again” despite lots if bloviating, that thats what they were doing.
Burn it all down.
So Maxine, Janet, and Ro are on it. How can that succeed unless they identify as non binary? Maybe move that Admiral in a dress over there.
Hear a rumor that the royals, Meghan and Harry, have most of their money in this “woke” bank that despises deplorables, MAGA and America First. Face it, Silicon Valley hates us!
He he Karma is a beech!
Harry is involved in Industrial Censorship
No 15 on the Twitter files release no #18 threadreaderapp which Taibbi released 2 days ago
Well, when their head of risk assessment is a raging, woke leftist….
Am I just naïve to think bank regulators sometimes examine banks health? Or does that just happen with Jimmy Stewart?
https://www.dailymail.co.uk/news/article-11848705/Woke-head-risk-assessment-Silicon-Valley-Bank-accused-prioritizing-diversity-issues.html
Republicanvet91: Yikes! Not too good at assessing risk.
Read her bio in the article, then realize they held a month long pride fest.
Top it off with bank management dumping millions in stock recently, and them paying out annual bonuses yesterday.
Bail out what? A bank that likely would have hated me?
Republicanvet91: Nothing says prudent financial management like lived queer experiences.
This is beyond parody. Much of corporate America, including the tech industry, has left reality for a safer space.
The frightening thing is that there are many companies infected with the DEI virus, and tout their ESG scores for investors.
Digital currencies are right on timing, yes, timing!
Everything we’re all seeing is perfectly orchestrated. The sociopaths are losing control.
Or they’re gaining control.
Trying too yes, but like any sociopath, eventually the gig is up and that’s when they become violent and extremely dangerous.
We are seeing it right now more than ever.
That last sentence puzzle me too.
The Federal Reserve is having a Sunday emergency meeting on 3/13 at 11:30 am. If the regulators screw up the response it will be ugly. Big Ugly.
Red Hatty: Screwing it up is the first item on the agenda.
Well, they’ve done such a fine job with the stock market, economy, housing market, etc.
Sunday is the 12th, not the 13th.
Beat me to it!
That dang Daylight Savings Time always screws everything up! <smiles>
So, what happens this next week? Are we about to re-enter 2008, when the whole economy was deliberated “collapsed” so that Songbird could take a fall and the One could be installed? And the giant bailout of the “few” could be implemented at the cost of the “many”?
There are way too many “chickens coming home to roost” in the past few weeks, from East Palestine to the J6Tapes to the Twitter hearings to the Nord Stream revelations. I am very concerned that the Swamp is getting desperate to change the conversation very quickly and very dramatically…and that never ends well for “We, the People” does it?
Not to mention Iran, KSA, China and Russia
Well at least this time there are far fewer deer in the headlights. Most, after Covid, can smell something fishy.
I hope and pray that you are correct but I remain horrified, and more than a little frustrated, at the number of people that I know who simply have ZERO interest in anything that does not directly affect them TODAY! They do not research anything – they do not follow ANY public events – they “don’t care” about politics (other than knowing they don’t like Donald Trump because he works for Russia!) and when something DOES come up they will simply parrot whatever they saw reported on their local news because they seem like “decent reporters”.
Viking, that is surely what we are up against. Ignorance, and/or indifference, sprinkled with a bit of cognitive dissonance means this could take a while yet. Thanks for your post!
Some say it’s the beginning of much bigger. Some say it’s a localized tech sector only issue. Some say it’s a banking push back against globalists. Some say it’s a slimy way for big banks to knock off competition and scoop up cheap assets. For me, it’s like watching high altitute dog fighting: there’s something going on because we can see and hear it and no doubt crap will fall down on us here below and we have no input or control over any of it. Screw these Interesting Times.
It’s bigger. Bannon said 16th largest bank in US. There will be contagion. There are big names involved. Read something that 10 other banks have contagion with potentially another 10. I read the lists, names are not familiar to me.
Plus, like in 2008, there are more banks pulling the same shenanigans this bank was pulling. They too will be caught. There are many banks relying on treasuries at zero percent who when customers come calling en masse will have to sell at a loss. So, it may not bring the banking system down, but there will be reverberations.
I agree 100% with Ed on this…
Probably many banks made this mistake.
The depositors took out or tried to take out (depending on where you read) 42 billion dollars on Thursday.
That had to be telephone banking. I expect customers being allowed to move money by telephone is going to get a hard look.
That’s what I was thinking earlier.
How many of those moving $42 billion out of a bank had a heads up as opposed to the poor schmuck standing in line outside the bank?
What company would hold a dime over the FDIC insurance level in a bank only operating in 2 states with 17 branches is beyond my comprehension, I guess that’s why I’m not a multimillionaire CEO 🤷♂️
Eric C.: Banking at SVB gave VC-backed (or originally VC-backed) companies a stamp of coolness and an aura of being well connected. It worked for two-plus decades, while money was cheap and bank executives did not have to think about hard things, such as interest rates.
I remember someone who thinks just like Maxine Waterhead once said ” America’s chickens have come home to roost” . Was he Wright? 🤔 😁….. Maybe the high and mighty chicken 💩, corrupt tech companies of Silicone Valley “chickens have come home to roost”. No taxpayer bailouts, let them chickens “roast” in their own stew they cooked up.
I wonder if they took too much financial and investment advice from Sam Brinkman-Fried and the chickens got fried. Nevertheless, I predict that we, the taxpayer, are the ones are are going to be “fried” again when the congressional grifters get done with us.
Nevertheless, I have a thought on a solution. Maybe George Washington Zelenskyy can bail them out with his 10% cut along with the “Big Guys” 10% and congressional critters % cut. Naw, not hardly.
America’s chickens have come home to roost
yeah, that was racist Reverend Wright, the church with Barky in the pews
Let them fail. I’d like nothing better then to see Pierre Olymydar lose billions of ETSY money… We all need to agree, whatever the pain, ESG acolyte SVB needs to go down… Any Republican who even hints of assistance needs to be impeached…
“..what started the run on SVB. There are basically three possibilities here:
a self-fulfilling prophecy,worries about the value of SVB’s assets, andwithdrawals due to a worsening VC investment situation.Looking at the middle one i.e., SVB assets
“There are a number of reasons why the value of SVB’s assets fell. One is that interest rates have gone up a lot in recent months. SVB invested in a lot of fixed-rate bonds and loans, and when interest rates rise, the price of fixed-rate bonds .. falls”
What this is saying is that the billions of dollars that had been given to the bank by its customers was invested in long term US Government bonds. That action was intended to earn bond interest and, so, profit the bank. However, besides interest, there is another side to bond earnings which is the daily market value i.,e. how much cash you can get for the bond at any given moment. Bond market value fluctuates based on what the Federal Reserve sets as an interest rate – the one you’ve been reading about they’ve been raising.
Here’s the kicker: When the fed raises interest rates bond market value goes down.
The customers of the bank know the cash they have given the bank is in US bonds and are watching the value of their cash in the bank head for zero. So they run to the bank asking to pull their billions of dollars in cash out. The bank, having lost bond value cannot raise enough cash to hand the customer. Game over.
I like to focus on bonds for two reasons.
First, government bonds were behind the recent banking crash in England, meaning, increased interest rates there also tanked their banks.
Second, Bonds are backed by the full faith and credit of the government. That’s why people invest in bonds – they are believed to be the safest place you can stash your cash.
But, what happens if people gradually learn that the “Full faith and credit..” thing isn’t worth crap? A minor “run” turns into much bigger run. Catastrophe.
“The government” cannot let that happen. Which is why all the government types are huddling around right now.
But how is the government going to give SVB customers back the cash which they lost in the bond market?
They’ll tell the government printing office to print it.
https://noahpinion.substack.com/p/why-was-there-a-run-on-silicon-valley?utm_source=substack&utm_campaign=post_embed&utm_medium=web
Notice too the speed at which this bank went belly up. On Wednesday last week the bank was a successful business. Two days later it was gone.
I think this is mostly correct, I don’t think that the full faith and credit is an issue here. As you say, low interest bonds have a reduced value in a higher interest environment. That means that if you are forced to sell them to cover deposits you lose a lot of money. I respectfully disagree with Sundance as well on the issue of systemic risk (contagion). In my opinion ALL of the banks have been doing this. They are all at risk. The moment they have to sell treasuries to cover deposits is the moment they lose a ton of money.
I totally agree Demon. SVB was having problems. One of their customers with a public audience said Sell. The bank run began forcing selling of US treasuries at a loss resulting in insolvency. All banks have been doing this.
There is contagion of at least 10 banks to SVB and potentially 10 more.
As long as a given bank that has been buying treasuries this way does not need to sell, all is good. But if they need to sell before waiting until maturity, they can become insolvent. Big banks can probably weather the exposure until the treasuries mature (no loss). Smaller banks may be forced to sell prematurely (loss). It will vary a lot from bank to bank.
Q: Does Elon Musk bank with these guys? Just asking.
“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….”
THIS is the quiet part that they let slip out loud during the Obammy years! Every crisis from that day forward should be prefaced with that quote!
Go woke, go broke
Woke head of ‘risk assessment’ at Silicon Valley Bank ‘prioritized’ LGBT initiatives – including organizing a month-long Pride campaign – before bank lost BILLIONS and collapsed
https://www.dailymail.co.uk/news/article-11848705/Woke-head-risk-assessment-Silicon-Valley-Bank-accused-prioritizing-diversity-issues.html
J Powell & Co mentioned recently that aggressive rate hikes were in the cards. An obvious sign that inflation is NOT in our rearview mirror (DUH). As far as I can tell they only have 2 options. We should all be quite familiar with them by now.
#1 Bailout (increase money supply) and #2 slash rates. At least they have some room now but I suspect if this contagion spreads this will be the final straw. We have already shot our wad so to speak. Rates will need to be cut and drastically I assume and hello Weimar Republic.
Saw Bannon with Tim Poole from yesterday I think. He said what I think is happening too “The Neocon/Neolib Order is going down.” He also mentioned that it might not be pretty (Yes lol).
These next couple weeks should be interesting. All we can do is watch and see if this metastases. If it does they are out of tricks.
I have overlooked Bitcoin as a safe haven. It is truly impossible to inflate it. And the countries best suited to weather the storm like Russia and China will most likely continue its use. I have a small bit of ETH. I should probably exchange that for BTC and immediately get it off Coinbase and move to a DAP Wallet. No I have no clue how to do that but should be plenty of videos I guess. If you do not take it off the exchange I would not even bother with it because if they go down you lose.
Should BTC make it thru a SHTF scenario the advantages over Metals are vast. Number one is that is so much easier to conceal should you acquire refugee status. Also its harder to steal and even if someone wants your stash killing you is the last thing they will want to do for it. Its not much good if the man with the 16 digit encryption key in his head bites the dust. Never really given this much thought until yesterday. Might be worth a shot. Regardless will be better than holding on to German Papiermarks 😉