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Pinterest Mom
Jun 9, 2009

bob dobbs is dead posted:

ah, matt levine



poor guy

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bob dobbs is dead
Oct 8, 2017

I love peeps
Nap Ghost
i enjoy him immensely but he inflicted his life on himself

Beeftweeter
Jun 28, 2005

a medium-format picture of beeftweeter staring silently at the camera, a quizzical expression on his face

lmao

someone should set up an ETF or something based off of matt levine's vacation schedule

bob dobbs is dead
Oct 8, 2017

I love peeps
Nap Ghost
banks: completely trustable in every way up to $250k, but that 250,001st dollar on you're hosed

refleks
Nov 21, 2006



they just wernt diversified and had poo poo ideas about what running a bank means...

crypto for silvergate, SV for SVB and the next one will be some random rear end podunk bank that has a customer base that is 90% farmers or GM as their only customer and then that industry shits the bed and kills the bank...

Pinterest Mom
Jun 9, 2009

https://mobile.twitter.com/DavidSacks/status/1634292056821764099

:getin:

bob dobbs is dead
Oct 8, 2017

I love peeps
Nap Ghost

refleks posted:

they just wernt diversified and had poo poo ideas about what running a bank means...

crypto for silvergate, SV for SVB and the next one will be some random rear end podunk bank that has a customer base that is 90% farmers or GM as their only customer and then that industry shits the bed and kills the bank...

diversification delays the steamroller but does not prevent it

it means the run takes 9 days like wamu instead of hours like svb

post hole digger
Mar 21, 2011

:yum:

Enderzero
Jun 19, 2001

The snowflake button makes it
cold cold cold
Set temperature makes it
hold hold hold

gubmint stay outta my business!!

wait wait not like that

post hole digger
Mar 21, 2011
a bank run absolutely involves moving fast and breaking things

pmchem
Jan 22, 2010


if we're gonna take bets on the next techbro bank to fall, my vote is on SBNY

not due to SVB contagion, but due to panic. it has a large fraction in crypto assets (15-20%?) and Marc Cohodes has been calling it out along with silvergate for a long time

Gaukler
Oct 9, 2012


I’m not sure if this is going to have farther-reaching effects or not but it’s making all the worst people real upset so that seems to be a positive.

post hole digger
Mar 21, 2011

rotor
Jun 11, 2001

classic case of pineapple derangement syndrome

there it is

Pinterest Mom
Jun 9, 2009

https://twitter.com/DavidSacks/status/1429811968911699976

Beeftweeter
Jun 28, 2005

a medium-format picture of beeftweeter staring silently at the camera, a quizzical expression on his face

rotor posted:

there it is

Chris Knight
Jun 5, 2002

me @ ur posts


Fun Shoe

post hole digger posted:

i'm just trying to make sure im understanding this right: the thing that hosed SVB was that they put $80 billion in mortgage backed securities yielding 1.5%, and got bit because rates went up, they were stuck with these lackluster assets, wanted to give themselves some breathing room so they sold them off at a loss, and selling them at a loss spooked investors which triggered the sell-off and subsequent bank run?

it was mortgage backed securities??
not the first time MBS has hosed with Silicon Valley

Powerful Two-Hander
Mar 10, 2004

Mods please change my name to "Tooter Skeleton" TIA.



absolutely incredible lmao

there's no broad scale contagion risk because nobody else was holding a portfolio of 100% correlated deposits this guy is trying to do the classic main street vs wall street but spinning it in his favour, because when you get bailed out it's government overreach, but when I go bankrupt it's systemically important

e: also on the MBS thing, that doesn't actually really mean anything inherently bad like the whole CDO "rate these turds as AAA" problem, low interest mbs held to maturity is just like a non government bond, with some risk variation, but the problem is that if you need to offload your bond inventory after the safe government rates have risen your bond price is gonna go down to reflect the priced in opportunity loss, so even though you might get your 100 cents on the dollar back at maturity, you're gonna have to sell it off at 75 cents and get hosed

Powerful Two-Hander fucked around with this message at 22:38 on Mar 10, 2023

post hole digger
Mar 21, 2011
yeah i know its just funny to see mortgage backed securities pop up again in this context.

bob dobbs is dead
Oct 8, 2017

I love peeps
Nap Ghost
lots of banks have huge amounts of corporate accounts way above the insurance limit tho. after this everyone - everyone - is gonna look at their accounts and figure out how to get things under the insured limit. they are gonna do that via withdrawals. and voila, contagion

mila kunis
Jun 10, 2011

i hate this guy

post hole digger
Mar 21, 2011
ro khanna sucks rear end.

shackleford
Sep 4, 2006

lmao

quote:

One obvious question is: If you are “another, healthy bank” working through this weekend to buy SVB and assume its deposits, how much would you pay for the assets, which were worth $212 billion in December? I am pretty sure the answer is higher than $8 billion, the amount of insured deposits: The FDIC will not be on the hook for the insured deposits. The $15 billion of FHLB advances are also quite senior and will presumably be no problem to pay back.

I would also guess — not investing or banking advice! — that the answer will also turn out to be higher than $188 billion, which is the total amount of deposits plus FHLB advances. I say this not because I have done a detailed analysis of SVB’s assets but because it seems bad for the FDIC to wind up a big high-profile bank in a way that causes significant losses for depositors, including uninsured depositors. There was a run on SVB in part because there hasn’t been a big bank run in a while, and people — venture capitalists, startups — were naturally worried that they might lose their deposits if their bank failed. Then the bank failed.

If it turns out to be true that they lose their deposits, there could be more bank runs: Lots of businesses keep uninsured deposits at lots of banks, and if the moral of SVB is “your uninsured transaction-banking deposits can vanish overnight” then those businesses will do a lot more credit analysis, move their money out of weaker banks, and put it at, like, JPMorgan. This could be self-fulfillingly bad for a lot of weaker banks. My assumption is that the FDIC, the Federal Reserve, and the banks who are looking at buying SVB all really don’t want that. If you are a bank looking at buying SVB, and you do a detailed analysis of its assets and conclude that they are worth $180 billion, and you come to the FDIC and say “I will take over this bank and pay the uninsured depositors 95 cents on the dollar,” the FDIC is going to look at you and say “don’t you mean 100 cents on the dollar,” and you are going to say “oh right yes of course, silly me, 100 cents on the dollar.”

Maybe I’m wrong about that, but if I am it’ll be bad!

Powerful Two-Hander
Mar 10, 2004

Mods please change my name to "Tooter Skeleton" TIA.


bob dobbs is dead posted:

lots of banks have huge amounts of corporate accounts way above the insurance limit tho. after this everyone - everyone - is gonna look at their accounts and figure out how to get things under the insured limit. they are gonna do that via withdrawals. and voila, contagion

that's not even remotely how it works, are they gonna go put it under the mattress or what?

like yeah if *everyone* tries to take their money out in physical form (so not like, moving it to another bank) everything would be hosed but that's clearly highly unlikely (if not logistically impossible) as seen when countries that run into bank run disaster zones used to find out because everything else just implodes at the same time ( because of a loss of confidence in their central bank)

the FDIC insurance bit to 250k is one thing but that's primarily there for *retail* clients. If you're a corporate then what the FDIC is there for is to do an orderly unwind which involves selling the asset/loan book off to a bigger bank.

If the depositor was basically a wildcat bank that had put their money in crypto an exploded then those assets may be sold at pennies on the dollar and the response from the FDIC might be "lol,lmao", but if they're just holding longer term bonds and hosed themselves over through correlation risk then they'll just sell it to someone with higher liquidity and it'll get added to BofA (deez nuts) loan book

PIZZA.BAT
Nov 12, 2016


:cheers:


PIZZA.BAT posted:

lemme just add as someone who left their previous boring af megacorp job for a small startup that’s making real revenue but still isn’t profitable: 😬

hope we’re not banking with SVB!!

narrator voice: his company banked with svb

we were having a call with a vendor a few hours ago and i could tell my boss, who's normally very engaged, was 100% checked out. i asked him what was up after the call and he told me the bad news

the cfo hasn't announced anything yet so maybe we were lucky and managed to get our money out. i've been working all day so i haven't heard any news besides my one friend texting me to tell me they went bust. all i know is that our bank is was svb. no idea what happens now

Aino Minako
Dec 16, 2007

Perpetual rage elemental




https://twitter.com/88888saccount/status/1634028258500169731

Powerful Two-Hander
Mar 10, 2004

Mods please change my name to "Tooter Skeleton" TIA.


I just missed my train stop because I was posting that I hope you're all happy :mad:

bob dobbs is dead
Oct 8, 2017

I love peeps
Nap Ghost

Powerful Two-Hander posted:

that's not even remotely how it works, are they gonna go put it under the mattress or what?

like yeah if *everyone* tries to take their money out in physical form (so not like, moving it to another bank) everything would be hosed but that's clearly highly unlikely (if not logistically impossible) as seen when countries that run into bank run disaster zones used to find out because everything else just implodes at the same time ( because of a loss of confidence in their central bank)

the FDIC insurance bit to 250k is one thing but that's primarily there for *retail* clients. If you're a corporate then what the FDIC is there for is to do an orderly unwind which involves selling the asset/loan book off to a bigger bank.

If the depositor was basically a wildcat bank that had put their money in crypto an exploded then those assets may be sold at pennies on the dollar and the response from the FDIC might be "lol,lmao", but if they're just holding longer term bonds and hosed themselves over through correlation risk then they'll just sell it to someone with higher liquidity and it'll get added to BofA (deez nuts) loan book

the real question is if they take a haircut from the unwind, yeah, and if so how big that haircut will be. do they even want to ask that question?

Powerful Two-Hander
Mar 10, 2004

Mods please change my name to "Tooter Skeleton" TIA.


bob dobbs is dead posted:

the real question is if they take a haircut from the unwind, yeah, and if so how big that haircut will be. do they even want to ask that question?

if it's insolvency because of lack of liquidity then in theory there would be assets of value equal to the value of deposits just those assets might not be worth the full amount if you sold them right now.

if there's a delta (like idk I sold a bunch then went "uh oh") then shareholders would take a bath first, but this isn't like a bankruptcy because even though the money is "away from them" it's like, coming back in a few years

bob dobbs is dead
Oct 8, 2017

I love peeps
Nap Ghost
right. but do you wanna be in the position of asking that question

thats why banking is theater done for keeps

Powerful Two-Hander
Mar 10, 2004

Mods please change my name to "Tooter Skeleton" TIA.


bob dobbs is dead posted:

right. but do you wanna be in the position of asking that question

thats why banking is theater done for keeps

it basically works until it doesn't, but the "doesn't" is like, the federal reserve imploded and dirt is the new currency

bob dobbs is dead
Oct 8, 2017

I love peeps
Nap Ghost
the "does" still has a nonzero chance of you taking a haircut, is the problem. and it seems basically a guarantee of illiquidity

a big ol instance of "if treasuries are hosed everyone is hosed theyre safe" started this problem in the first place. at no point were treasuries hosed and yet the bank was hosed anyways

bob dobbs is dead fucked around with this message at 23:21 on Mar 10, 2023

PIZZA.BAT
Nov 12, 2016


:cheers:


ok time to catch up with the thread
cool

Shifty Pony posted:

"how big of a deal could it be, insurance covers $250k per account..."

https://twitter.com/fedguy12/status/1634038788468113408

"Oh."

cool

MononcQc posted:

well I guess it had been a while since I've been nervous around payroll time

it's 2008 all over again. at least this time i don't have an office to receive an email telling me to not even bother going to


cool

FMguru posted:

https://twitter.com/garrytan/status/1634286688922132481

all those fart-app-as-a-subscription-service startups...ruined...

:negative:

cool


lol

kdrudy
Sep 19, 2009

PIZZA.BAT posted:

narrator voice: his company banked with svb

we were having a call with a vendor a few hours ago and i could tell my boss, who's normally very engaged, was 100% checked out. i asked him what was up after the call and he told me the bad news

the cfo hasn't announced anything yet so maybe we were lucky and managed to get our money out. i've been working all day so i haven't heard any news besides my one friend texting me to tell me they went bust. all i know is that our bank is was svb. no idea what happens now

The startup I'm at also did, our president/COO told us this won't yet affect day to day or them making payroll. We'll see how this plays out.

AlbertFlasher
Feb 14, 2006

Hulk Hogan and the Wrestling Boot Band

post hole digger posted:

a bank run absolutely involves moving fast and breaking things

lol

MononcQc
May 29, 2007

about to find out where and how startups exactly store a runway

Powerful Two-Hander
Mar 10, 2004

Mods please change my name to "Tooter Skeleton" TIA.


bob dobbs is dead posted:

the "does" still has a nonzero chance of you taking a haircut, is the problem. and it seems basically a guarantee of illiquidity

a big ol instance of "if treasuries are hosed everyone is hosed theyre safe" started this problem in the first place. at no point were treasuries hosed and yet the bank was hosed anyways

no not quite. bond prices are weird in that the price is inverse to the rate they pay Vs uhhhhh the risk free return? I think? With that being "I put my money in the fed at the base interest rate" so you may have a load of nice us treasuries paying 1% that were super compared to your risk free rate of 0.1%, but now the risk free rate (or the rate on new us bonds) is 4% if you try to offload them they're going to be discounted to reflect the larger coupons you're passing up

it's been a very long time since I had to know th me actual detail of black scholes though and I've been drinking so maybe I'm way off though!

bob dobbs is dead
Oct 8, 2017

I love peeps
Nap Ghost
as i said. the fact that the treasuries have been continually and faithfully paid did not save them one whit

black scholes is options, no options involved. black scholes specifically also assumes constant interest rate lol

bob dobbs is dead fucked around with this message at 23:46 on Mar 10, 2023

Trimson Grondag 3
Jul 1, 2007

Clapping Larry
I know we are all reading the Matt Levine article but this is great:

quote:


But if some charismatic tech founder had come to you in 2021 and said “I am going to revolutionize the world via [artificial intelligence][robot taxis][flying taxis][space taxis][blockchain],” it might have felt unnatural to reply “nah but what if the Fed raises rates by 0.25%?” This was an industry with a radical vision for the future of humanity, not a bet on interest rates. Turns out it was a bet on interest rates though.

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FMguru
Sep 10, 2003

peed on;
sexually
https://twitter.com/bhargreaves/status/1634249550834679808

lol if true

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