leh-nerd skin-erd Posted March 15, 2023 Posted March 15, 2023 10 hours ago, ChiGoose said: Financial reporters: SVB’s collapse was due to poor risk management in the face of raising rates. The dumbest people in the world: SVB had DEI, therefore, it’s failure was due to DEI even though literally every bank does DEI and they didn’t have these problems. Correlation isn’t causation, people. The recap you mentioned above makes sense to me at face value. I think a full forensic accounting of the demise of SVB is in order, and we’re at day 5, day 3 in banker hours. I do think the dumbest people in the world mantle probably rests more with the people who f’d up playing with $151 billion in depositor money more so than with people critical of the decision making. You ladder that $151b in 4 or 5 CDs at your local credit union and boom, you’re done.
BillsFanNC Posted March 15, 2023 Posted March 15, 2023 The dumbest people in the world: J6 can't have a handful of extremists who were violent and destroyed property at the same time as having the vast majority that day being peaceful trespassers or peaceful sightseers who were let in by law enforcement. SVB can't be a bank that supported woke causes at the same time as having its collapse caused by non existent risk management during rising interest rates. 1
SoCal Deek Posted March 15, 2023 Posted March 15, 2023 Not sure why this is a shock to anyone. A bank is a business. This one was very poorly run and when the music stopped they were left without a chair. The question is whether there are or should be safeguards in place to keep this from happening. THAT is the real debate. 1
All_Pro_Bills Posted March 15, 2023 Posted March 15, 2023 1 hour ago, leh-nerd skin-erd said: The recap you mentioned above makes sense to me at face value. I think a full forensic accounting of the demise of SVB is in order, and we’re at day 5, day 3 in banker hours. I do think the dumbest people in the world mantle probably rests more with the people who f’d up playing with $151 billion in depositor money more so than with people critical of the decision making. You ladder that $151b in 4 or 5 CDs at your local credit union and boom, you’re done. I believe the ultimate problem is the financial system in its current form is addicted to low to zero interest rates. All kinds of cheap loans for things like homes, business investment, cars, and other items. And when money is "free" lots of investments and projects that are economical at zero are not economical or justified at 5%. When rates go up, asset prices dependent on credit financing go down. This is a problem brought about by politics invading the world of economics and finance but it is by no means a liberal or conservative, left or right induced situation. Its been a series of decisions by Treasury department officials and Federal Reserve officials. Something most people fail to realize is the Fed is not a government agency. One check of their website provides a clue, its a .org. The Fed exists to serve the needs of its member banks. For that it has done well enriching the financial class at the expense of almost everyone else. The fact President Biden's Treasury head is Janet Yellen, a former Fed chairman is a clue to how this system functions. Its a deal with the Devil where the government gets a system rigged to provide it with lots of cheap financing in exchange for surrendering control of the value of the money it sponsors. Like an addict that has their fix taken away there are going to be withdrawal symptoms, failures, defaults, bankruptcies, and painful adjustments for higher rates. I think we're at the beginning of that process. My expectation was the Fed will keep raising rates until they break something. Well, something broke. I've been slowly accumulating investments in hard assets like gold, oil, other natural resources that have tangible value and dumping high multiple stocks and investments that I'd label as discretionary. Tech stuff mostly. I recite one of Warren Buffet's famous quotes for this time which is "when the tide goes out we get to see who's swimming naked". I think that's what we're going to find out soon enough in the markets. 3
SoCal Deek Posted March 15, 2023 Posted March 15, 2023 17 minutes ago, All_Pro_Bills said: I believe the ultimate problem is the financial system in its current form is addicted to low to zero interest rates. All kinds of cheap loans for things like homes, business investment, cars, and other items. And when money is "free" lots of investments and projects that are economical at zero are not economical or justified at 5%. When rates go up, asset prices dependent on credit financing go down. This is a problem brought about by politics invading the world of economics and finance but it is by no means a liberal or conservative, left or right induced situation. Its been a series of decisions by Treasury department officials and Federal Reserve officials. Something most people fail to realize is the Fed is not a government agency. One check of their website provides a clue, its a .org. The Fed exists to serve the needs of its member banks. For that it has done well enriching the financial class at the expense of almost everyone else. The fact President Biden's Treasury head is Janet Yellen, a former Fed chairman is a clue to how this system functions. Its a deal with the Devil where the government gets a system rigged to provide it with lots of cheap financing in exchange for surrendering control of the value of the money it sponsors. Like an addict that has their fix taken away there are going to be withdrawal symptoms, failures, defaults, bankruptcies, and painful adjustments for higher rates. I think we're at the beginning of that process. My expectation was the Fed will keep raising rates until they break something. Well, something broke. I've been slowly accumulating investments in hard assets like gold, oil, other natural resources that have tangible value and dumping high multiple stocks and investments that I'd label as discretionary. Tech stuff mostly. I recite one of Warren Buffet's famous quotes for this time which is "when the tide goes out we get to see who's swimming naked". I think that's what we're going to find out soon enough in the markets. Love the Buffet quote. Hilarious…and true. I take slight exception to the ‘addicted’ take. Most in this sector have never known anything but low interest rates. The real problem here is that people who claimed to be running this bank were supposed to know what to do when and if those rates increase. 1 1
Tommy Callahan Posted March 15, 2023 Posted March 15, 2023 (edited) 53 minutes ago, SoCal Deek said: Not sure why this is a shock to anyone. A bank is a business. This one was very poorly run and when the music stopped they were left without a chair. The question is whether there are or should be safeguards in place to keep this from happening. THAT is the real debate. like another glass-Steagle? outlawing banks from investing in stocks? cause that one separation could help. the leach-biley is often used as the reason for the 08 meltdown. and led to the Dodd Frank bill. that didnt do anything about separating separated investment banking from retail banking. eff, it was written by the industry, for the industry. if anything, we have more bubbles now. I got no faith in DC actually fixing this issue. Edited March 15, 2023 by Chris farley 2
leh-nerd skin-erd Posted March 15, 2023 Posted March 15, 2023 47 minutes ago, All_Pro_Bills said: I believe the ultimate problem is the financial system in its current form is addicted to low to zero interest rates. All kinds of cheap loans for things like homes, business investment, cars, and other items. And when money is "free" lots of investments and projects that are economical at zero are not economical or justified at 5%. When rates go up, asset prices dependent on credit financing go down. This is a problem brought about by politics invading the world of economics and finance but it is by no means a liberal or conservative, left or right induced situation. Its been a series of decisions by Treasury department officials and Federal Reserve officials. Something most people fail to realize is the Fed is not a government agency. One check of their website provides a clue, its a .org. The Fed exists to serve the needs of its member banks. For that it has done well enriching the financial class at the expense of almost everyone else. The fact President Biden's Treasury head is Janet Yellen, a former Fed chairman is a clue to how this system functions. Its a deal with the Devil where the government gets a system rigged to provide it with lots of cheap financing in exchange for surrendering control of the value of the money it sponsors. Like an addict that has their fix taken away there are going to be withdrawal symptoms, failures, defaults, bankruptcies, and painful adjustments for higher rates. I think we're at the beginning of that process. My expectation was the Fed will keep raising rates until they break something. Well, something broke. I've been slowly accumulating investments in hard assets like gold, oil, other natural resources that have tangible value and dumping high multiple stocks and investments that I'd label as discretionary. Tech stuff mostly. I recite one of Warren Buffet's famous quotes for this time which is "when the tide goes out we get to see who's swimming naked". I think that's what we're going to find out soon enough in the markets. No need for the Buffet dirty talk but the rest makes sense. 9 minutes ago, Chris farley said: like another glass-Steagle? outlawing banks from investing in stocks? cause that one separation could help. the leach-biley is often used as the reason for the 08 meltdown. and led to the Dodd Frank bill. that didnt do anything about separating separated investment banking from retail banking. eff, it was written by the industry, for the industry. if anything, we have more bubbles now. I got no faith in DC actually fixing this issue. I think if we start with the assumption that the plan is to fix anything, we might be giving Washington too much credit. Seems again and again the big dogs get paid before the lights shut off, and political campaigns/recipients long before that. 1
SoCal Deek Posted March 15, 2023 Posted March 15, 2023 1 hour ago, Chris farley said: like another glass-Steagle? outlawing banks from investing in stocks? cause that one separation could help. the leach-biley is often used as the reason for the 08 meltdown. and led to the Dodd Frank bill. that didnt do anything about separating separated investment banking from retail banking. eff, it was written by the industry, for the industry. if anything, we have more bubbles now. I got no faith in DC actually fixing this issue. Note that I never said the government will fix it. The poignant debate is about whether they should have in this case, or should have a role in the future. 2
B-Man Posted March 15, 2023 Posted March 15, 2023 A TRILLION HERE AND A TRILLION THERE…: Silicon Valley Bank and Joe Biden’s $19 Trillion Monday. By Holman W. Jenkins, Jr. One bird has flown, and that’s moral hazard, or the idea that bailouts only encourage the behavior that makes bailouts necessary. Don’t buy the claim that bank shareholders and CEOs are being taught a lesson. By guaranteeing all deposits, government actually makes banks an even more attractive source of funding for swing-for-the-fences bets by politically adroit, high-rolling bank entrepreneurs and executives. This problem regulation will then try to solve by dictating which bets banks can make with customer deposits. Somehow the necessary clairvoyance is never found and bank failures keep happening. In a weekend, dispensed with has been a guardrail that served the economy well. As the title of a 1986 paper by the Chicago Federal Reserve Bank succinctly put it: “Uninsured deposits [are] a source of market discipline.” https://www.wsj.com/articles/joe-bidens-19-trillion-monday-svb-bailout-deposit-guarantee-fdic-fed-student-loan-too-big-to-fail-7e2de130 Market discipline provides too few opportunities for corruption and grift. 3 1
Irv Posted March 15, 2023 Posted March 15, 2023 (edited) 1 hour ago, B-Man said: A TRILLION HERE AND A TRILLION THERE…: Silicon Valley Bank and Joe Biden’s $19 Trillion Monday. By Holman W. Jenkins, Jr. One bird has flown, and that’s moral hazard, or the idea that bailouts only encourage the behavior that makes bailouts necessary. Don’t buy the claim that bank shareholders and CEOs are being taught a lesson. By guaranteeing all deposits, government actually makes banks an even more attractive source of funding for swing-for-the-fences bets by politically adroit, high-rolling bank entrepreneurs and executives. This problem regulation will then try to solve by dictating which bets banks can make with customer deposits. Somehow the necessary clairvoyance is never found and bank failures keep happening. In a weekend, dispensed with has been a guardrail that served the economy well. As the title of a 1986 paper by the Chicago Federal Reserve Bank succinctly put it: “Uninsured deposits [are] a source of market discipline.” https://www.wsj.com/articles/joe-bidens-19-trillion-monday-svb-bailout-deposit-guarantee-fdic-fed-student-loan-too-big-to-fail-7e2de130 Market discipline provides too few opportunities for corruption and grift. Demented Biden says that no taxpayer money will be spent on the bailouts? Who's paying then? The Easter Bunny? What a mess. Edited March 15, 2023 by Irv 1
All_Pro_Bills Posted March 15, 2023 Posted March 15, 2023 (edited) Anybody watching Credit Suisse? As it looks like they're about to go under. Also, "Auditing giant KPMG is standing by its audits of Silicon Valley Bank (SVB) and Signature Bank, which collapsed when customers rushed to withdraw their savings in panic-fueled bank runs. The two banks failed not long after their respective annual reports were certified by KPMG," More experts looking stupid or merely high paid experts at "rubber stamping" financial books. Edited March 15, 2023 by All_Pro_Bills 1
Tommy Callahan Posted March 15, 2023 Posted March 15, 2023 (edited) 2 hours ago, SoCal Deek said: Note that I never said the government will fix it. The poignant debate is about whether they should have in this case, or should have a role in the future. at this point it seems the Fixes, make the problems worse long run. probably has something to do with the fact they are just openly bought with insane money that comes mostly from one class. and in turn make sure that class is always protected. doesn't seem to work out so well for the rest of us, just going by the last few times they claimed to be fixing this problem. None of them would support separating investments from traditional banks. as that would blow up the current stock market bubble, and then.. Edited March 15, 2023 by Chris farley 1
ALF Posted March 15, 2023 Posted March 15, 2023 3 hours ago, Irv said: Demented Biden says that no taxpayer money will be spent on the bailouts? Who's paying then? The Easter Bunny? What a mess. The other banks via FDIC 1 1
Joe Ferguson forever Posted March 15, 2023 Posted March 15, 2023 8 hours ago, All_Pro_Bills said: I recite one of Warren Buffet's famous quotes for this time which is "when the tide goes out we get to see who's swimming naked". I think that's what we're going to find out soon enough in the markets. I like this one even better (when taken figuratively) "Buy when there's blood in the streets, even if the blood is your own."
ChiGoose Posted March 15, 2023 Posted March 15, 2023 4 hours ago, Irv said: Demented Biden says that no taxpayer money will be spent on the bailouts? Who's paying then? The Easter Bunny? What a mess. The FDIC will sell the assets of the banks and use that to cover the depositors. If the sale does not cover the costs, the FDIC has a fund that all the partner banks pay into, which can be used to make depositors whole. If all of that fails to cover the costs (which doesn’t seem to be the case if the damage can be limited to the two banks), the FDIC has a $100 billion line of credit with the treasury. If it uses that, then taxpayers actually probably make money on the deal. Failing all of that, you would likely need an act of Congress to tap taxpayer funds. 1
SoCal Deek Posted March 15, 2023 Posted March 15, 2023 4 hours ago, Chris farley said: at this point it seems the Fixes, make the problems worse long run. probably has something to do with the fact they are just openly bought with insane money that comes mostly from one class. and in turn make sure that class is always protected. doesn't seem to work out so well for the rest of us, just going by the last few times they claimed to be fixing this problem. None of them would support separating investments from traditional banks. as that would blow up the current stock market bubble, and then.. Is that the same administration that just proposed forgiving debts from millions of students? Are they also on that list? I submit the more overarching theme here is that nobody, regardless of class or influence, is ever held accountable for their poor financial decisions or risks. 1 2
Joe Ferguson forever Posted March 15, 2023 Posted March 15, 2023 From CNN biz Lloyd Blankfein: “Banks publish the unrealized losses that are embedded in their portfolios,” he said. “It was there to be seen… It wasn’t seen to be that dangerous given that the bank didn’t have to sell any of those securities. But they certainly did once withdrawals started to be made. And so, in hindsight, it will have appeared to have been in plain sight, and the signals will have been missed. But it became critical only when deposits were withdrawn and the banks needed to sell those out-of the-money securities in order to raise funds.” When Burnett asked again if the bank collapsed because it was focused on placing a black person or a gay person on its board, Blankfein responded: “I’m not an expert in mass psychology, but I think that’s very unlikely and I think frankly it’s a bit laughable.”
SoCal Deek Posted March 15, 2023 Posted March 15, 2023 1 minute ago, redtail hawk said: From CNN biz Lloyd Blankfein: “Banks publish the unrealized losses that are embedded in their portfolios,” he said. “It was there to be seen… It wasn’t seen to be that dangerous given that the bank didn’t have to sell any of those securities. But they certainly did once withdrawals started to be made. And so, in hindsight, it will have appeared to have been in plain sight, and the signals will have been missed. But it became critical only when deposits were withdrawn and the banks needed to sell those out-of the-money securities in order to raise funds.” When Burnett asked again if the bank collapsed because it was focused on placing a black person or a gay person on its board, Blankfein responded: “I’m not an expert in mass psychology, but I think that’s very unlikely and I think frankly it’s a bit laughable.” Good ‘ol CNN. Now there’s a reliable source! 1 1
Joe Ferguson forever Posted March 16, 2023 Posted March 16, 2023 (edited) 1 hour ago, SoCal Deek said: Good ‘ol CNN. Now there’s a reliable source! Blankfein was CEO of Goldman sachs Edited March 16, 2023 by redtail hawk
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