Bank Run Watch 2023 after Silicon Valley Bank shutdown - Over 97% of SVB's assets were not FDIC insured

Thiletonomics said:
Is there a chance that this fiasco will end reaching Evergrande-levels of fail? And I think the CCP didn't bail them out at the time, or did they?
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Evergrande was different in that it was propping up the entire country. SVB isn’t - so it’s a question of collateral damage now. The obvious collateral damage is the whole payroll and cash flow thing that’s already been discussed. The other one that is slightly less obvious (but becoming more in focus) is if this causes runs on other banks. If that happens we are in for a shitshow.

Bill The Fucker said:
The fed backstopping deposits just means that there's not a liquidity crunch. The main goal is still to sell to another bank, who are going to lowball the shit out of it since the FDIC doesn't really have any incentive to do anything other than covering depositors.
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I agree completely - what I was saying is that shareholders aren’t at zero value. They don’t have the same value they had, say, a month ago but they have more than zero.
 
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Bog-standard Poster said:
what do major train derailments and bank closures have in common?

They happen all the time and they're never reported on.
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Minor caveat... they're never reported on until they get bad enough... like say a train carrying enough vinyl chloride to kill animals miles away from the derailment site, or a bank closing that is highly tied up together with the already flagging NASDAQ...
 
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The Punished Mitch said:
Old but gold.
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That man has crazy eyes, I don't trust him.
that man has crazy eyes.jpg

Scale Smerch said:
Depositor protection was expected at minimum, but it doesn't really do anything to assuage the market come tomorrow. The second bank failure tells the tale: there's going to be several more failures, and the only question is how long the Fed and Biden admin both can hold out before having to make the politically suicidal decision of direct bailout for the sake of stability and avoiding devastating employment figures. I give it a week.
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I think it will depend of the pace of the failures. The faster the failures, the more bank-runs will occur, causing panic to spread, leading to more bank failures. Even with FDIC insurance, the perception that your money is not safe will spread like wildfire.
 
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WelperHelper99 said:
Uh, that limit will be no issue. And it's Chase, so yes, I am insured. This is one of the few times being a scrub has advantages. At least I have no loans or investments.
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The thing I think is missed is that this event doesn't hit personal accounts; it's affecting corporate accounts. The crap getting startup founders and the usual venture capitalist sweating is that their case in SVG (or now the New York failure) is not insured and fucks with their payroll this week, so the avalanche of fear, insecurity, and uncertainty. Your private banking is fine and dandy, but any prior refusal to divest certain financial interests into separate accounts ensures your company is irrevocably fucked come trading tomorrow when investors realize you cannot meet payroll. This event is entirely investor & corporate driven and ensures far more people suffer than they should before the Fed acts.
 
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Super Nemesis 64 said:
I think it will depend of the pace of the failures. The faster the failures, the more bank-runs will occur, causing panic to spread, leading to more bank failures. Even with FDIC insurance, the perception that your money is not safe will spread like wildfire.
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My concern is that venture capital is already incredibly skittish. They don't mind betting millions of dollars on random shit, but they tend to spread their stuff around. If one of their investments goes to zero, hell, if even three go to zero, that's okay because the 4th one will moon and cover the losses of the other three plus more. The one thing they won't tolerate though is a risk of all their money going poof at once. They are the kind of people who will happily turn all their money into Gold and stick it on a shelf in their office.

This is a huge issue, especially for boutique banks like Signature and Silicon Valley. I expect Monday is going to be an absloute slaughter for these types of banking institutions. Because Venture Capitalists also are very individually minded. They know that if collectively they keep their cool things will simmer down. But they are in the prisoners dilemma, and they know the first one to betray the others will get away. End result is all of them will betray each other at the same time.

Grab the popcorn.
 
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mindlessobserver said:
Grab the popcorn.
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Since Friday Morning I have been Gourging it. I am able to fuel my Stove with ethenal farts. Shit is unreal.

You heard about the BTFP bail out, what are your thoughts? with the treasury the fed and the discount window guaranteeing every one, seems like contagion could be contained after all they run the printing press.
 
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A family member has a deposit there. No issue, but what is concerning is that investment in startups will be now be somewhat curtailed.
 
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Bill The Fucker said:
Important to note that this isn't a bailout, this only affects depositors. If you hold equity in either of these banks, you're fooked.
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Vanguard owns 11% of SVB stock. Every State and Federal Government Pension system is deeply invested in Vanguard.

Of course they're going to bail out the shareholders.
 
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mindlessobserver said:
So long as your account is below 250,000 dollars and your Bank is part of the FDIC,
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With what they are doing the FDIC is basically saying there is no more limit now as long as your connected enough in the donor class. They will bail out the millionaire VC's who got to enjoy the loose money from SVB all these years.

Somehow I don't think this unlimited trick will apply when PoDunk Town Bank in Flyover Town USA fails and some clueless retiree loses a big chunk of his 400k nest egg. Sorry can't you read? 250K limit!
 
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WelperHelper99 said:
Well I'm somewhat relieved, I know chase can be fucky but they're also huge; hopefully they can survive this and I chose a battleship instead of a raft. Also Glass-Steagall?
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Glass-Stegal was a law created created after the Great Depression that separated retail banking from investment banking. Used to be that you could be one or the other, but not both. The idea was that investment banks wouldn't be allowed to gamble with Federally insured money, putting taxpayers on the hook for their bad bets. It got repealed in the late 90s because banks couldn't stand not being allowed to gamble with other people's money.

It's debatable whether the repeal is the direct CAUSE of situations like the current one, but it makes the pain much worse than it would be otherwise.
 
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