https://www.cnbc.com/2023/03/1...nsured-deposits.html

Financial regulators have closed Silicon Valley Bank
and taken control of its deposits, the Federal Deposit Insurance Corp. announced Friday, in what is the largest U.S. bank failure since the global financial crisis more than a decade ago.

The collapse of SVB, a key player in the tech and venture capital community, leaves companies and wealthy individuals largely unsure of what will happen to their money.

According to press releases from regulators, the California Department of Financial Protection and Innovation closed SVB and named the FDIC as the receiver. The FDIC in turn has created the Deposit Insurance National Bank of Santa Clara, which now holds the insured deposits from SVB.

The FDIC said in the announcement that insured depositors will have access to their deposits no later than Monday morning. SVB’s branch offices will also reopen at that time, under the control of the regulator.

The FDIC’s standard insurance covers up to $250,000 per depositor, per bank, for each account ownership category. The FDIC said uninsured depositors will get receivership certificates for their balances. The regulator said it will pay uninsured depositors an advanced dividend within the next week, with potential additional dividend payments as the regulator sells SVB’s assets.

Whether depositors with more than $250,000 ultimately get all their money back will be determined by the amount of money the regulator gets as it sells Silicon Valley assets or if another bank takes ownership of the remaining assets. There were concerns in the tech community that until that process unfolds, some companies may have issues making payroll.

As of the end of December, SVB had roughly $209 billion in total assets and $175.4 billion in total deposits, according to the press release. The FDIC said it was unclear what portion of those deposits were above the insurance limit.

The last U.S. bank failure of this size was Washington Mutual in 2008, which had $307 billion in assets.

It has been discussed extensively in the "Market situation" thread. But it's own thread seem's prudent.

Being discussed on page 3 and 4 here:
https://sigforum.com/eve/forum...935/m/4410068494/p/3

Building Back Better, great job Joe.

The tech industry has been a major driver of our economy for a long time. This is not good for the overall economy.

Will be interesting to see how much contagion exists in the banking system as it relates to SVB. First Republic, the 14th largest bank by deposits, doesn't appear to be in good health either.

Systemic risk may be a result of select banks' poor operational/risk management behavior (i.e. inverted bond values vs interest rates, resulting in a steep decline of assets) as it relates to the latest news and not the mortgage investment/leverage cross-contamination that occurred in 2008.

"The way to success is a commitment to increasing racial, ethnic, and gender representation."

-Silicon Valley Bank CEO

Hmm.....The CEO of SVB sold $3.57M in stock in a pre-planned sell off two weeks before the collapse and the CFO sold $575,000 the same day.

CNBC’s Jim Cramer urged viewers to buy Silicon Valley Bank stock last month

CNBC analyst Jim Cramer is once again being pilloried on social media after a clip resurfaced showing the “Mad Money” host recommending viewers buy shares of Silicon Valley Bank’s parent company, which owns the tech-driven commercial lender that swiftly collapsed on Friday.

“The ninth-best performer to date has been SVB Financial (the bank’s parent company). Don’t yawn,” Cramer told viewers during a Feb. 8 episode of “Mad Money.”

Cramer listed SVB Financial among his “biggest winners of 2023 … so far” alongside blue-chip stocks such as Meta, Tesla, Warner Bros. Discovery, and Norwegian Cruise Line.

“This company is a merchant bank with a deposit base that Wall Street has mistakenly been concerned by,” Cramer said in the clip.

Cramer touted the fact that the bank was “less dependent upon private equity and venture capital offerings.”

He said the stock was the “fourth-worst performer of 2022” though it was worth buying because “being a banker to these immense pools of capital has always been a very good business.”



“The stock is still cheap,” Cramer said. At the time, SVB Financial was trading at $320.40 a share.

The Post has sought comment from CNBC.

On social media, critics of Cramer made sure to remind others of the now-ill-fated stock tip.

“One month ago, Jim Cramer urged investors to buy Silicon Valley Bank stock,” one Twitter user observed, adding: “Today, the bank was closed by California regulators, making it the 2nd largest banking failure in US history.”

Another Twitter user wrote: “At first it was funny that Jim Cramer was always wrong.”

“Now it’s extremely sad how many people and families he’s destroyed by always being wrong.”

“The guy needs to be taken off the air for good.”

Genevieve Roch-Decter wrote on Twitter: “Jim Cramer said a month ago Silicon Valley Bank was a buy.”

“He also said Bear Sterns (the investment firm that collapsed in the subprime mortgage crisis) was fine in 2008. This man deserves an Oscar.”

Cramer is a frequent target of scorn and ridicule on social media, where observers point out some of his market predictions that fail to materialize.

Investment gurus seeking to capitalize on Cramer’s poor forecasting track record introduced a pair of exchange traded funds which are predicated on a strategy that contradicts whatever the CNBC personality recommends.

“If he specifically says either buy, buy, buy a stock, then we’re gonna go short that stock at the next practical moment,” Matthew Tuttle, the CEO of Tuttle Capital Management, which launched the Inverse Cramer Tracker ETF, told Bloomberg News.

Last fall, Cramer appeared on CNBC’s airwaves and offered an emotional apology to viewers for touting Meta stock, the value of which plummeted by some 25% during a single trading session.

Since the apology aired, however, Meta shares have rebounded.

https://nypost.com/2023/03/10/...n-valley-bank-stock/

quote:

Originally posted by Balzé Halzé:
"The way to success is a commitment to increasing racial, ethnic, and gender representation."

-Silicon Valley Bank CEO

Needs a bump.

So my question is, how do you find out the health of a bank.
Are there any places to look on the internet that can tell a person if their bank is having problems?

Some of the main reasons the bank failed were "created" by the biden administration.

All the trillions pumped into the economy because of covid lockdowns
After biden triggered inflation, continued raising of interest rates to fight the inflation
and now democrats are saying the taxpayers have to bail out this bank

https://www.wsj.com/articles/s...k-investors-bc4ee834

In an economy that continues to perform well but that many investors assume is heading for a recession, the turmoil has brought up memories of the 2008 financial crisis, which began with financial distress at regional banks that later spread to Wall Street and the rest of the global financial system.

“ Silicon Valley Bank was considered a blue chip bank ,” said R.J. Grant, head of trading at Keefe, Bruyette & Woods in New York. “During the 2008-09 financial crisis, bad news from one bank portended bad news at others.”

Silvergate and Silicon Valley Bank shared two traits that have animated investors’ search for more potential problems at other banks. Each was a key banker for an industry whose fortunes surged during the Covid-19 pandemic, but that has faltered more recently because of the Federal Reserve’s rapid interest-rate increases.

In each bank’s case, that led clients—primarily the tech-startup scene for Silicon Valley Bank, and crypto firms for Silvergate—to withdraw deposits en masse, putting strains on the banks’ funding.

A second shared trait exacerbated that challenge: Both Silicon Valley Bank and Silvergate had invested in debt such as longer-term Treasurys and mortgage-backed securities while deposits rolled in during the pandemic. The Fed’s rapid interest-rate increases last year slashed the value of those investments, straining the banks’ ability to raise cash quickly when each needed funds to pay out depositors.

Even before Silicon Valley Bank’s and Silvergate’s problems grew acute, analysts were concerned about the mountain of unrealized losses building on banks’ securities portfolios. Traders swarmed in to place further bets against regional banks on Thursday, putting more wagers on further price declines than any time before.

The KBW Bank Index fell 3.9% on Friday, extending its losses on the week to 16%—the index’s worst weekly performance since March 2020.

Surging deposit growth backed by rapid growth in the tech industry helped many banks lend out heaps of cash, sending their valuations soaring. The share price of SVB Financial traded near 4.4 times its tangible book value in November 2021, a measure of the hard assets on its books. First Republic traded at a 3.6 times valuation at the same time, according to FactSet.

quote:

Originally posted by 71 TRUCK:
So my question is, how do you find out the health of a bank.

I would start by reading quotes from the CEO and find out his positions on DEI (Diversity, Equity, and Inclusion).

And shouldn't that really be Diversity, Inclusion, and Equity (DIE) considering the effects it has on a company's success?

On bank runs, mRNAs, and existential risk

It's not that we can't see the threats, it's that the people who should be worried are making too much money to care
Alex Berenson

On Thursday morning, Silicon Valley Bank was one of the 20 largest American banks, a solid, profitable financial institution with a market capitalization of over $15 billion.

A day later it was gone.

California and federal regulators closed Silicon Valley and seized its assets Friday morning, after a stunning bank run that threatens to spread. Not many people outside northern California have heard of the bank, but with $209 billion in assets, it is the second-largest bank in American history to fail, trailing only Washington Mutual during the 2008 financial crisis.

The reasons for Silicon Valley’s collapse are both complicated and simple.

But as we grapple with the fallout from the failure of the mRNA jabs and the rise of artificial intelligence, the bank’s overnight implosion proves - yet again - that we cannot always trust companies and their leaders to manage the risks they’re running.

Especially when they are making fortunes to take those risks. Silicon Valley’s chief executive officer, Greg Becker, made almost $30 million from 2020 to 2022, according to the company’s new proxy statement. Nice work if you can get it.

And doubly especially when someone else will pay the price if they lose.

https://alexberenson.substack....rue&utm_medium=email

https://finance.yahoo.com/news...ingle-100000239.html

The bank's collapse was a byproduct of the Federal Reserve's hiking of interest rates by 1,700% in less than a year. Once risk-free Treasurys started generating more attractive returns than what SVB was offering, people started withdrawing their money, and the bank needed a quick way to pay them. They were ultimately forced to sell their loan portfolio at a huge loss.

The chaotic episode showed that the Fed's aggressive interest rate hiking regime could upend institutions that were once thought to be relatively stable. It appears that any rate sensitivity is about to be laid bare, and past risk-taking behavior held accountable.

Back in 2020 and 2021, tech startups were buzzing with sky-high valuations, stock prices were soaring to record highs on an almost weekly basis, and everyone was flush with cash thanks to trillions of dollars of stimulus from the government.

In this environment, Silicon Valley Bank, which had became the go-to bank for start-ups, thrived. Its deposits more than tripled from $62 billion at the end of 2019 to $189 billion at the end of 2021. After receiving more than $120 billion in deposits in a relatively short period of time, SVB had to put that money to work, and it's loan book wasn't big enough to absorb the massive influx in cash.

So, SVB did a normal thing for a bank — just under terms that ended up working against it. It purchased US Treasury bonds and mortgage backed securities. Fast forward to March 16, 2022 when the Fed embarked on its first interest rate hike. Since then, interest rates have soared from 0.25% to 4.50% today.

Suddenly, SVB's portfolio of long-term bonds, which yielded an average of just 1.6%, were a lot less attractive than a 2-year US Treasury Note that offered nearly triple that yield. Bond prices plunged, creating billions of dollars in paper losses for SVB.

Ongoing pressure on tech valuations and a closed IPO market led to falling deposits at the bank. That spurred SVB to sell $21 billion of bonds at a loss of $1.8 billion, all in an effort to shore up its liquidity but which essentially led to a run on the bank.


everyone was flush with cash thanks to trillions of dollars of stimulus from the government.

^^^^^^^

Steve Cortes
@steve
·
1h
The Bond Market got clobbered in 2022, the worst year ever for Treasuries due to Biden's Inflation nightmare.

Now, Banks have to mark those losses, with historic hits to portfolio assets that were considered safe.

See this chart and buckle up...

The inverted bond yields/inflation are also the rationale for foreign governments to invest in currencies other than the U.S. dollar, which is why you hear of China's efforts in wanting the yuan to be the new standard more and more lately. The current illegitimate administration can't do anything right and every action they take appears to be motivated by their desire to weaken, if not destroy, the U.S.

What is up with the bank employee calling the cops on people trying to close their accounts? Seriously???

Our nation's financial state and deficit hasn't been like this since WWII, and the clown at the helm, be it the Kenyan or Brandon, couldn't get us out of a wet paper bag let alone this crisis. This is a warning of what is to come if we continue with our reckless spending in D.C.

https://www.nbcnews.com/news/amp/rcna74419

This is some excellent timing. Wells Fargo battling a glitch causing customers to be unable to see deposits.