SIVB Bank Failure

[Gregmal]

I’m a huge fan of Ackman the investor but following his investing involves subjecting yourself to Ackman the person. And Ackman the person is just a world class scumbag slimeball.
 

Just using the names mentioned here as a benchmark, Chanos is deceptive and all but just pushing his agenda/book…run of the mill Wall Street. Talib is obviously an insecure guy who needs attention and thrives off feeling superior and kicking people when they’re down. Then there’s Billy, who does both of those but then wraps it in a stench filled, totally insincere veil of benevolence and “I’m trying to help the world be a better place” mantra. Which makes me wanna vomit. 

Edited March 12, 2023 by Gregmal

[Xerxes]

Great read 

https://www.netinterest.co/p/the-demise-of-silicon-valley-bank?utm_campaign=post

 

 

Prof G makes a good case about Goldman being able to take over SVB and ramping its east coast exposure considerably. 
 

[changegonnacome]

 

“Enjoy the Academy awards”

 

Bill deserves an academy award for his performance as a concerned citizen over the last 48hrs!

[John Hjorth]

Thank you, @Xerxes,

 

Yeah, it may make sense for GS. I speculate we'll see before US market market opens tomorrow. Tomorrow morning I'll take a look at my Nordic/Scandinavian bank positions If there is something that may have skipped my attention about securities on the balance sheets.

Edited March 12, 2023 by John Hjorth

[Gregmal]

24 minutes ago, changegonnacome said:

 

“Enjoy the Academy awards”

 

Bill deserves an academy award for his performance as a concerned citizen over the last 48hrs!

This is the right move if true. Good on Janet and Jerry and Joe. 

Starting out my career at the tail end of GFC…I was a naive but loyal capitalist and die hard “they all should have known better and not been greedy with their mortgages” in response to the banks vs the people taking out mortgages argument. I’ve somewhat evolved over the past 10 years…and giving life the opportunity to present to me different viewpoints has also helped. At which point I think it’s easy to arrive at a conclusion that there are just certain limitations to the amount of due diligence or effort a normal person should be expected to endure. Going through a mortgage process…I’ve done it over a dozen times, is rigorous. Sure, we should all have $500 an hour lawyers to review the docs line by line. But it doesn’t work like that and a slick salesman or banker can easily dupe a normal, well intentioned person. Extending this to bank deposits, I think it’s even more true. How can you have a stable banking system, let alone one that isn’t a duopoly/oligopoly(more so than it already is) if average folks need to do hedge fund level due diligence to ensure the money they deposit or have direct deposited in the checking accounts is going to be available? It’s crazy and just not viable and should be guaranteed in far higher amounts than the F.D.I.C. limits. 
 

As for the bank itself, it should fail. Shareholders and bond holders should meet their fate. But that’s the difference, some parties entered this engagement with the expectation of something beneficial … others, just figured hey this is where people in my hood keep their cash. Big difference.

Edited March 12, 2023 by Gregmal

[Spekulatius]

This is not Joe Sixpacks bank. Joe is protected  anyways up to $250k and not many average people have more than that in a single bank account. These are corporation and VC firms who have CFO’s who made decisions. It was also Peter Thiel who literally cried fire and  instigated a bank run here. are is well known as a libertarian. So, I am not sure sob stories  “we couldn’t have known better “ are appropriate here. Feels a bit like trying to buy insurance after you had a car crash.

 

In any case, the depositors will probably lose 20% or thereabouts above 250k. Everything  below  250k is insured and can be paid out, so it’s not like Mondays payroll for a small form is in jeopardy here. Since liquid assets (even after haircuts ) are a bit more than 50% of the balance sheet, about 50% of deposits should be available very quickly (next week) with probably the other 30ish percent being paid out in weeks or so, all without rescue package. It’s not quite as catastrophic as it’s made out to be.

 

The FDIC is government sponsernd but works like a Mutual insurance cos that banks need to pay in. If coverage is increased, then the contributions need to increase too, there is no free lunch.

Edited March 12, 2023 by Spekulatius

[aws]

Fed is safeguarding depositors and Signature Bank has been closed by regulators:

 

https://www.wsj.com/articles/federal-reserve-rolls-out-emergency-measures-to-prevent-banking-crisis-ba4d7f98?mod=breakingnews

[ValueMaven]

Expect a big rally on this ... 

[Dalal.Holdings]

https://home.treasury.gov/news/press-releases/jy1337

 

Signature bank $SBNY also just went under. Deposits guaranteed and to be made whole tomorrow…somehow not “borne by taxpayer” yet “Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”

 

Don’t worry; I'm sure banks will pass the cost of the “special assessment” onto their customers (aka taxpayers). 

[whatstheofficerproblem]

5 hours ago, Gregmal said:

Ackman the person is just a world class scumbag slimeball.

 

*Jersey accent thickens*

"You know that little jewish kid that used to get bullied in school and think the whole world is against him."

[Viking]

16 minutes ago, aws said:

Fed is safeguarding depositors and Signature Bank has been closed by regulators:

 

https://www.wsj.com/articles/federal-reserve-rolls-out-emergency-measures-to-prevent-banking-crisis-ba4d7f98?mod=breakingnews

 

“No losses will be borne by taxpayers.” Does this not make a sale more difficult? Messy unwinding over months can hardly be a good thing for regulators.

1.) Silicon Valley Bank. 
2.) Signature Bank - i remember following years ago when Edi E had it on his buy list (it has been off for years). What a spectacular fall. Crypto… the gift that keeps on giving…

3.) next?
—————

“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole.  As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.”

Edited March 12, 2023 by Viking

[whatstheofficerproblem]

8 minutes ago, Dalal.Holdings said:

Don’t worry; I'm sure banks will pass the cost of the “special assessment” onto their customers (aka taxpayers). 

 

Lmao.. how people miss this simple logic is beyond me.

[Castanza]

7 minutes ago, ValueMaven said:

Expect a big rally on this ... 

Opportunity might be gone pre-market 

[Valuebo]

I loaded up on shorter dated calls all Friday, when fear was clearly palpable already, so I can live with that. 

[aws]

16 minutes ago, whatstheofficerproblem said:

 

Lmao.. how people miss this simple logic is beyond me.

 

It's not a trivial distinction. If all losses are funded by industry, then the industry would actually have an incentive to lobby for tighter regulations to protect against higher FDIC levies to cover bad actors.

[Dalal.Holdings]

I still need help understanding...why did Roku have half a billy in the bank and not in T-bills/some kind of sweep ? Especially with short term rates so high? 

[Spekulatius]

I am a bit surprised that Signature bank is shut down. They clearly were on the ropes, but that was awfully quick.

 

Maybe we should tax crypto to pay for this mess.

[Dalal.Holdings]

16 minutes ago, Spekulatius said:

I am a bit surprised that Signature bank is shut down. They clearly were on the ropes, but that was awfully quick.

 

Maybe we should tax crypto to pay for this mess.

 

Crypto is bearing the brunt of Fed's fight with inflation--as is tech.

 

Guaranteeing SVB's deposits helped save many startups...for the time being, but their fate will be determined by rates and it's not likely to be pretty for the startup ecosystem

[changegonnacome]

26 minutes ago, Dalal.Holdings said:

I still need help understanding...why did Roku have half a billy in the bank and not in T-bills/some kind of sweep ? Especially with short term rates so high? 

 

Most likely & most virtuous explanation.......is that Roku had some corporate lines of credit/revolvers with SVIB that REQUIRED them to maintain corporate cash balances in SVIB accounts & not sweep as part of the covenants on the loans etc..

 

If not.......its just incompetence or else skullduggery......the least flattering reason would be a scenario where the CFO/Treasury functions in these institutions effectively got kickbacks on their personal banking relationships with SVIB (mortgages, POC's etc.).....money is fungible......and so to can be 'rewards' for clients/customers

[changegonnacome]

23 minutes ago, Spekulatius said:

Maybe we should tax crypto to pay for this mess.

 

Or at least the taxpayers should get 'dealt in' on all various initial coin offerings moving forward.....seems fair......we clean up the shit in exchange for shit coins

[dealraker]

7 hours ago, Gregmal said:

I’m a huge fan of Ackman the investor but following his investing involves subjecting yourself to Ackman the person. And Ackman the person is just a world class scumbag slimeball.
 

Just using the names mentioned here as a benchmark, Chanos is deceptive and all but just pushing his agenda/book…run of the mill Wall Street. Talib is obviously an insecure guy who needs attention and thrives off feeling superior and kicking people when they’re down. Then there’s Billy, who does both of those but then wraps it in a stench filled, totally insincere veil of benevolence and “I’m trying to help the world be a better place” mantra. Which makes me wanna vomit. 

Yes, simply yes.  

[LearningMachine]

2 hours ago, ValueMaven said:

Expect a big rally on this ... 

 

1 hour ago, Castanza said:

Opportunity might be gone pre-market 

 

FDIC didn’t commit to saving all depositors over FDIC limit in all banks yet.

 

I wonder if some depositors in other niche banks will still try to get their deposits out before others based on the rationale that FDIC might not be able to save all depositors over FDIC limit in all banks.

Edited March 13, 2023 by LearningMachine

[changegonnacome]

7 minutes ago, LearningMachine said:

I wonder if some depositors in other niche banks will still try to get their deposits out before others based on the rationale that FDIC might not be able to save all depositors over FDIC limit in all banks.

 

The precautionary principal would suggest that anybody with a brain would not keep a penny in these banks over the $250k limit......end of story......so I expect the banks with question marks over them to see significant deposit flight.....they wont fail now like SVIB/SBNY with the additional lending facilties backstopping asset/liability mismatches on MBS portfolios  .......but whatever profit expectations existed for them last week is out the window now......their funding costs are going to go through the roof and RoA/RoE will plummet

[Viking]

So stockholders get wiped out. Bondholders likely get wiped out.   Both Silicon Valley and SignatureBank.
 

The new news is uninsured depositors get bailed out. Does this mean deposit insurance in US just got extended to everybody and is now unlimited? 
 

Looking ahead, what is the next band-aid that gets ripped off for banks? Do the commercial real estate vultures start circling? How would that layer onto the current issues?

 

What happens if we get a recession later this year? If banks balance sheets are messed up right now, what happens when a recession hits? And things actually get bad? interesting times…

Edited March 13, 2023 by Viking

[aws]

6 minutes ago, Viking said:

So stockholders get wiped out. Bondholders likely get wiped out.   Both Silicon Valley and SignatureBank.
 

The new news is uninsured depositors get bailed out. Does this mean deposit insurance in US just got extended to everybody and is now unlimited? 
 

 

When is the last time a depositor actually lost money from a failed bank from a deposit over 250k? I thought I saw some talking head at Bloomberg said it hasn't happened in 40 years (although now that I am looking for the stat again I can't find it). It seems like in practice that limit on insured deposits was basically irrelevant anyway, whether it be from a bank takeover or some other type of special assessment.