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Ugh banks

Glycomann

Glycomann

VIP Member
Jan 19, 2011
1,180
1,175
Silicon Valley bank, Silver Gate and now Signature banks closed, done moneys gone. Should be intersting what the tresury and central banks pull this week. Bail outs? bail-ins? Where's your moniez? run on banks soon? Me's taking cash outz on a schedule nowz. What you think peeps? Nothing to see here? The great unveiling?
 
I

Iron1

VIP Member
Jul 7, 2021
166
274
All 3 of those banks were heavily invested into the crypto market. I wish I could say I am surprised that banks heavily invested into an unregulated market were hit by the very same problems banking regulations sought to prevent.

Their business practices ran them into the ground and that's for them to figure out, leave my taxes out of it. I do not support privatized profits and socialized losses.

I'll never have enough money in any institution to worry about what happens to money in excess of the FDIC limit but I do worry about the future. The financial systems we rely on are showing signs of cracking and I'm not hearing enough about what's going to be done to fix it.

I'm sure another tax cut for the American Oligarchs will fix it all up...
 
M

Massive G

VIP Member
Apr 10, 2020
1,120
1,284
The government said no one will lose a dime without a taxpayer bail out. How? Billions are gone. Wasn't some of the huge losses tied to zero % bonds? IMO government is sabatoging crypto to take it over and manage it on their own to eventually control everyone.
We are headed towards a 1929 event and they are banking on it to make us all suffer more for them to control all of us.
 
Glycomann

Glycomann

VIP Member
Jan 19, 2011
1,180
1,175
The government said no one will lose a dime without a taxpayer bail out. How? Billions are gone. Wasn't some of the huge losses tied to zero % bonds? IMO government is sabatoging crypto to take it over and manage it on their own to eventually control everyone.
We are headed towards a 1929 event and they are banking on it to make us all suffer more for them to control all of us.
That's how I'm reading this. Let's see what the fed does. They are in a catch 22. Continue to raise rates adfurther crush the ecomony. Lower the rate and debt outpaces the nation's ability to pay the interest. I see CBDCs coming sooner rather than later and probably a bank run or 10.
 
C

ceo

VIP Member
Oct 12, 2010
1,148
908
The government said no one will lose a dime without a taxpayer bail out. How? Billions are gone. Wasn't some of the huge losses tied to zero % bonds? IMO government is sabatoging crypto to take it over and manage it on their own to eventually control everyone.
We are headed towards a 1929 event and they are banking on it to make us all suffer more for them to control all of us.
Seems like the cabal is for sure trying to at least de-legitamize cryptos. They were becoming too accepted and mainstream with long-standing and reputable institutions like Fidelity et al. adapting to it.

The trading stops are concerning. Look for rates to start getting cut again. Same thing happened before a few times. Rates get raised, then cut, then the bottom hits within a couple years.

Sent from my SM-G781V using Tapatalk
 
Glycomann

Glycomann

VIP Member
Jan 19, 2011
1,180
1,175
Seems like the cabal is for sure trying to at least de-legitamize cryptos. They were becoming too accepted and mainstream with long-standing and reputable institutions like Fidelity et al. adapting to it.

The trading stops are concerning. Look for rates to start getting cut again. Same thing happened before a few times. Rates get raised, then cut, then the bottom hits within a couple years.

Sent from my SM-G781V using Tapatalk
At this point the interest on the debt is 10% of GDP. Cut the rate and Fed bonds don't make back enough to service the debt. Meanwhile the economy is contracting as 3 year pandemic demoralized the working class, insurance companies estimate excess 4 million left workforce through death or disability, wokeness policies slash carbon energy based supplies etc. I just don't see a biunxe back and hard to see a silver lining at this point. open to ideas.
 
C

ceo

VIP Member
Oct 12, 2010
1,148
908
JPow got too aggressive too fast on his rate hikes. This was waaay faster of a pace in hikes than was ever done by Volcker.

Fed raised rates, then strongly encouraged banks to buy bonds. Banks bought bonds, and then Fed raised rates again. Bonds became worth less then, and banks have unrealized losses. Raise rates again, bigger unrealized losses, repeat, repeat, repeat.

Banks are now sitting on billions of unrealized losses, and some can't meet obligations... now closures and takeovers.

Now we have FDIC, Fed, and Treasury saying all depositors will be made whole, including over $250k max limit. Stock holders, however, are SOL.

To think this is isolated to tech and crypto related banks is not realistic, IMO. To how large a degree remains to be seen.

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tommyguns2

tommyguns2

Senior Moderators
Staff Member
Dec 25, 2010
6,313
4,998
What happened to Silver Gate is completely different than what happened to SVB and Signature. So I'd separate the two problems. The first one was crypto, so I put Silver Gate into the same camp as FTX. You live by the sword, you die by the sword.

SVB and Signature were relatively well-run, well-capitalized banks that both made the same, significant mistake. So I don't want to minimize that, but it's not like 2007, where you had issues where banks had no idea what they were sitting on. In this case, you can readily see this problem on a balance sheet.

Both banks had a ton of cash deposits they were sitting on, and they bought bonds, in many instances, long term (10 year) gov't bonds at 1.5%. Nice and safe, right? Well.... yes, when interest rates are at 0.5%. But this is where the risk management people at these banks dropped the ball. In 2021, interest rates were still low, but with inflation rearing its ugly head, the Fed started raising interest rates, and relatively quickly. I don't blame the Fed too much (although they waited too long to start, but that's Monday morning QBing), but with inflation approaching 10%, they couldn't be too slow on the rate increases. If Fed interest rate is now at 4.5%, holding onto a 10 year treasury with a 1.5% coupon rate isn't all that great. So SVB's ability to sell those bonds to generate the cash for their depositors daily cash flow needs (payroll, etc) got expensive, because they could only sell 10 year treasuries on the market for about 91 cents on the dollar. So , a 20 billioni dollar sell of bonds was going to cause a loss of $2 billion.

This isn't good, but it does happen, and a bank will typically sell additional stock to raise the capital needed. But their messaging was poor, several big VCs got their panties in a bunch, and you had a good old-fashioned, "It's a Wonderful Life" run on the bank.

Why SVB couldn't find a buyer with cash is what's causing me to scratch my head. If I'm Buffet (Berkshire Hathaway), siting on top of $85 billion in cash, I stroll in, buy a significant piece of SVB for pennies on the dollar, and make an extremely tidy profit. Why he or someone else hasn't done that is what's making me concerned. What do they know that I don't know? (likely a lot)
 
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