News for hackers. Stuff that matters.
Re:FDIC Takes over Silicon Valley Bank by borski on Friday March 10, 2023 @01:05PM (#35098346)
No bank is healthy once all its depositors pull their cash out. What their balance sheet looked like before the panic is what I'm talking about. Every bank dies from a bank run, period.
Re:FDIC Takes over Silicon Valley Bank by dahdum on Friday March 10, 2023 @01:16PM (#35098537)
Wasn't their balance sheet before the panic what caused the panic? It wasn't some WSB meme that drove the bank run, they couldn't cover their normal day to day operations and started a bond fire sale and desperate equity raise.
Re:FDIC Takes over Silicon Valley Bank by shadowgovt on Friday March 10, 2023 @01:23PM (#35098649)
IIUC: they could definitely cover their normal day-to-day. The thing that broke down is they had to announce true things that made investors conclude that their money wouldn't grow as fast as investors expected, and investors (understandably / justifiably) wanted to pull it out to somewhere it would grow faster.

(The investors don't actually know the money won't grow as fast... the Fed could decide to drop interest rates tomorrow, or something else could intervene making it sensible to drop interest rates. But "not growing as fast" was the very likely scenario).

Once everyone decided to pull, they were tanked because no bank keeps 100% liquidity.

Re:FDIC Takes over Silicon Valley Bank by SilasX on Friday March 10, 2023 @02:22PM (#35099473)
No bank keeps 100% liquidity, but my understanding is that most banks are capable of getting liquidity -- at least from the lender of last resort (LoLR) -- for massive withdrawals based on the value of their loan portfolio, and SVB's portfolio had tanked too low to do this based on interest rates the LoLR would lend to them at.
Re:FDIC Takes over Silicon Valley Bank by twoodfin on Friday March 10, 2023 @02:25PM (#35099510)
Won't lots of investors (aka depositors) start making this same analysis? Whether you have $10K or $10M, right now you don't want your cash anywhere it's not earning 3%+. So it's back to whether they're unique in finding themselves uncompetitive as a place to park cash at a market rate.
Re:FDIC Takes over Silicon Valley Bank by dahdum on Friday March 10, 2023 @02:33PM (#35099634)
> The thing that broke down is they had to announce true things that made investors conclude that their money wouldn't grow as fast as investors expected, and investors (understandably / justifiably) wanted to pull it out to somewhere it would grow faster.

SVB disclosed they took massive losses from high risk, high duration assets and were desperate for cash. Investors took large (up to 60% over 24h!) losses, paper or otherwise, to get out of the stock. That can't be just concern over not growing as fast, that's concern about solvency. VC's and depositors saw the same writing on the wall, but it was SVB who wrote it there.

If they were able to cover their normal operations, they wouldn't have needed the emergency equity raise.

Re:FDIC Takes over Silicon Valley Bank by borski on Friday March 10, 2023 @08:54PM (#35104274)
High duration, yes, but actually extremely low risk.

The thing that killed SVB was the bank run. They would have been fine with the raise. Panic set in and killed them. FRB is not in a better position, but nobody is panicking, so they’ll survive.

Re:FDIC Takes over Silicon Valley Bank by dahdum on Friday March 10, 2023 @11:12PM (#35105233)
Didn’t SVB directly cause the bank run that killed them though? It wasn’t some externally driven event outside the scope of risk management. The assets were fine but the high duration was the risk. They took it purposely and lost billions when their risky bets turned against them. The emergency equity raise and sale attempts were desperation, and seen as such.

Doesn’t feel much different than a yield farming crypto bank going under when they are forced to fire-sale thinly traded sh*tcoins and take a beating.

Re:FDIC Takes over Silicon Valley Bank by borski on Friday March 10, 2023 @11:28PM (#35105336)
Plenty of banks sell equity. General Atlantic had already agreed to purchase 500M of it, and it was the largest investor in First Republic as well.
Re:FDIC Takes over Silicon Valley Bank by kgwgk on Friday March 10, 2023 @01:07PM (#35098390)
And how many banks are acquired after that happens because of how healthy their balance sheet used to look?
Re:FDIC Takes over Silicon Valley Bank by charrondev on Friday March 10, 2023 @01:16PM (#35098541)
You can see a list of failed banks and who acquired them here. https://www.fdic.gov/bank/historical/bank/

Every one in the past few years looks like it was acquired.

Re:FDIC Takes over Silicon Valley Bank by nostrebored on Friday March 10, 2023 @01:58PM (#35099217)
The cost of money is very different now though.
Re:FDIC Takes over Silicon Valley Bank by kgwgk on Friday March 10, 2023 @02:28PM (#35099549)
This one is largest than the 100 previous ones combined.

And the point is that there may be many reasons why a bank may want to acquire a smaller failed one to integrate it in its operations but "the previous owners used to have a well-capitalized until they somehow lost it all" is not a strong reason on its own.

Re:FDIC Takes over Silicon Valley Bank by slowmovintarget on Friday March 10, 2023 @01:11PM (#35098452)
Unless they get bailed out by taxpayers because "they're too big."