Silicone Valley Bank

[Nemo]

collapse may lead to interest rate reductions, to keep other banks from failing.  Which will lead to higher inflation.  You know how the circle joins up.

Might think about some extra metals in the jar under the fencepost.

Nemo

https://finance.yahoo.com/news/silicon-valley-bank-crisis-force-161835121.html


https://finance.yahoo.com/news/silicon-valley-bank-imploded-single-100000239.html

[JohnyMac]

Interesting development.

I have been reading a lot of background on the SVB "bank holiday" this morning.

My only comment is, let's see how it is taken care of over the next 5-business days or so. Right now, this very morning, our government is working with the Fed to see how big of an issue it is. Is it 2008 Redux, or just a minor blip.

With that all written, I would STRONGLY suggest that you have a plan to extract any surplus cash out of your checking/saving's account. Remember, you can always put it back in BUT, when your bank decides to go on holiday, you can not get it out.

 

[pkveazey]

This bank thing is something that I've been watching for a while. I used to keep all my money in my local Credit Union but lately I've seen enough "In trouble" banks here and there to make me keep my deposits down to a level that would sting if I lost it but wouldn't break me. Black Rock and Blackstone have been trying to buy up all the real estate on the planet and as of this past week, they've had to default on a ton of loans. Oh, happy days. I love it when somebody tries to corner the market on something and it turns around and bites them in the ass.

[JohnyMac]

Here is a good article that is short and understandable. Make sure you click on the links to get a broader picture too.

https://insiderpaper.com/us-banks-under-pressure-after-trouble-at-svb-financial/

[grizz]

I've thought about spreading my money to a variety of banks just in case this happened. Now I'm concerned with driving all over the county to get my money out from multiple banks. AND if I can get it out (It isn't much by anyone's standards), what then?

[JohnyMac]

Just remember, that your holding in banks are guaranteed (FDIC) BUT, you are the last in line to get your money back. Add to that, where is the money going to come from to pay you back? Remember, our National Debt is north of $30T.

Mon O' man, it would be so easy to slide digital currency in and folks would welcome it. Nothing to worry about here folks, just one more nail driven into your freedoms.

 

[DMCakhunter]

Guarantee only applies to banks / accounts covered by the FDIC, up to $250,000 per name. Doesn?t matter if a name has multiple accounts. $250,000 max. If you have more than that, you will likely share in the loss.

[Nemo]

 

Is it the beginning of the end?  Andrew Yang says likely is.    I have little cash in a bank and working on metals primarily.  I am a bit skeptical of the proverbial serious collapse overall but this has me a bit concerned.

See article copied below.

There is another article with Mark Cuban (Dallas Mavericks Owner, Shark Tank Regular) who says the Fed should take all the responsibility, make all depositors whole and save everything.    He thinks all (as I understand his comments) any depostis in a bank should be fully insured.  Click next link.

https://www.foxbusiness.com/markets/silicon-valley-bank-collapse-mark-cuban-says-fed-immediately-take-action

Nemo

https://www.foxbusiness.com/economy/andrew-yang-warns-mass-layoffs-calls-government-intervention-silicon-valley-bank-collapse

Banking
Published March 11, 2023 4:23pm EST
Andrew Yang warns of 'mass layoffs,' calls for government intervention after Silicon Valley Bank collapse
By Sarah Rumpf FOXBusiness

Andrew Yang, the entrepreneur who grabbed national attention during his 2020 White House run and his 2021 New York City mayoral run, urged government intervention following the Silicon Valley Bank (SVB) collapse, warning of potential mass layoffs in the near future and a "financial contagion."

"In the absence of some kind of action you?ll see thousands of mass layoffs and defunct companies, a wiped out generation of start-ups." Yang warned.

In a series of Twitter posts, the businessman urged the California government or the U.S. Treasury Department to intervene to prevent a series of calamities that would likely affect thousands of companies and individuals, "through no fault of their own."

"I think either California or the Treasury Department should backstop Silicon Valley Bank - thousands of companies will fold or lay people off next week because of lack of access to accounts through no fault of their own," Yang wrote.

Yang argued that the collapse was not SVB clients' fault, but the managers of the previously esteemed bank.

"Take the equity and fire the managers." Yang stated. "There's a big difference between irresponsible bank managers and the thousands of customers and entrepreneurs and employees who chose to use a bank that was one of the biggest banks in the country."

"Punish one, but the other is blameless except they didn?t choose the right bank." Yang added.

Yang prophesied that layoffs would especially spread a "financial contagion" in California, where many tech startups are located and used SVB.

"[A] huge problems in CA in particular and a spreading financial contagion that will infect a host of regional banks at a minimum," Yang shared.

Yang argued that federal officials will need to be SVB's "white knight" to save the bank, since the massive bank has a "limited number of potential saviors"

"The natural white knights who could save SVB are unlikely to do so unless they get induced or a great deal. It?s a big bank with a limited number of potential saviors. Again why you probably need active leadership from officials to backstop," Yang added.

The Federal Deposit Insurance Corporation (FDIC) announced Friday that it would close Silicon Valley Bank, until then the 16th-largest bank in the U.S., marking the worst U.S. financial institution failure since the Great Recession.

The bank held a reputation as a go-to for a number of Silicon Valley industries and startups. Y Combinator, an incubator startup that launched Airbnb, DoorDash and DropBox, regularly referred entrepreneurs to them.
Silicon Valley Bank customers were seen outside a Menlo Park, California location, Friday, after the Federal Deposit Insurance Corporation seized its assets. (Cointelegraph) video
Silicon Valley Bank customers line up outside California location

Silicon Valley Bank customers were seen outside a Menlo Park, California location, Friday, after the Federal Deposit Insurance Corporation seized its assets. (Cointelegraph)

SVB's collapse was so quick that, hours before its closure, some industry analysts were hopeful that the bank was still a good investment. The bank?s shares had fallen by 60% on Friday morning after a similar drop the day before.

Anxious depositors rushed to withdraw their money over concern for the bank?s health, causing its collapse, which may serve as "an extinction-level event for startups," according to Y Combinator CEO Garry Tan.

The closure of SVB has spilled over into other banks, both in the U.S. and abroad, with $100 billion lost in stock revenue domestically and $50 billion in value shed by European banks over the past two days, according to a Reuters calculation.

[Nemo]

Home Depot Co-Founder has thoughts on it also.  Click link below if the headline interests you.

Nemo

https://www.foxnews.com/media/home-depot-co-founder-torches-woke-silicon-valley-bank-collapse-warns-recession-here-already

Banking
Published March 11, 2023 2:56pm EST
Home Depot co-founder torches ?woke? Silicon Valley Bank collapse, warns recession may be here already
Banks are more concerned with 'global warming' than shareholder returns, Bernie Marcus argued

[Sir John Honeybucket]

I should use this as an excuse reason  to invest heavily in tangible assets: Scotch & cigars.

Sir John Honeybucket

[grizz]

I should use this as an excuse reason  to invest heavily in tangible assets: Scotch & cigars.

Sir John Honeybucket

I'd suggest lead and more lead

[Nemo]

And bank number 2.

Nemo

https://www.cnn.com/2023/03/12/investing/svb-customer-bailout/index.html

US regulators say SVB customers will be made whole as second bank fails
By David Goldman, CNN
Updated 7:44 PM EDT, Sun March 12, 2023


New York CNN  ?

In an extraordinary action to restore confidence in America?s banking system, the Biden administration on Sunday guaranteed that customers of the failed Silicon Valley Bank will have access to all their money starting Monday.

In a related action, the government shut down Signature Bank, an SVB rival that was teetering on the brink of collapse in recent days. Signature?s customers will receive a similar deal, ensuring that even uninsured deposits will be returned to them Monday.

In a joint statement Sunday, Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and Federal Deposit Insurance Corporation Chairman Martin J. Gruenberg said the FDIC will make SVB and Signature?s customers whole. By guaranteeing all deposits ? even the uninsured money that customers kept with the failed banks ? the government aimed to prevent more bank runs and to help companies that deposited large sums with the banks to continue to make payroll and fund their operations.

The Fed will also make additional funding available for eligible financial institutions to prevent runs on similar banks Monday.

?Monday will surely be a stressful day for many in the regional banking sector, but today?s action dramatically reduces the risk of further contagion,? Jefferies analysts Thomas Simons and Aneta Markowska said in a note to clients Sunday evening.

continue at above link

[Jackalope]

I was wondering how the government could afford to keep bailing out these banks, but then I realized it doesn't matter when you also own the printing presses.

Myself, I prefer to invest in tangibles.

[pkveazey]

Hmmm..... The first thing I thought of when I saw the news was, "Hey, let's put on a condom after she gets knocked up". Printing more money is not going to help the problem. We're screwed and nobody wants to come out and say it. I think I'll just sit over here in the corner and count my Silver. We have some royal dumbasses running our country.

[Nemo]

Don't worry, its going to be alright.   Banks won't collapse but your screwed with inflation.

Nemo

https://www.washingtonpost.com/business/2023/03/13/federal-reserve-interest-bank/

Economy
The Fed's fight against inflation just got downgraded
In a sharp turnaround from last week, the central bank is largely expected to pause aggressive interest rate hikes as financial markets wobble
By Abha Bhattarai
March 13, 2023 at 1:19 p.m. EDT


The Federal Reserve?s aggressive year-long fight against inflation has hit its first major roadblock with the collapse of two large banks that have cast a pall over the U.S. financial system.

The crisis, which has already prompted a large response from the Fed and other regulators in the form of a new special lending facility and measures to make depositors of the failed banks whole, is raising questions about whether the central bank can continue to hiking interest rates in the face of an increasingly fragile financial system.

?The Fed has now lost the luxury of being almost single-mindedly focused on the fight against inflation,? said Frances Donald, global chief economist and strategist for Manulife Investment Management. ?There was always going to be an inflection point when the costs of the rate hikes outweighed the benefits. The Fed has to consider that we?re much closer to that moment than before.?

Wall Street, which until a few days ago expected the Fed to raise interest rates by another half-percentage point this month, has sharply revised down its forecasts. Goldman Sachs economists on Sunday said they no longer expect the Fed to raise interest rates in March ?in light of recent stress in the banking system.?

Overall, markets are divided on between a possible quarter-percentage hike or none at all at the central bank?s next meeting on March 22. The central bank?s decision will probably also hinge on two upcoming reports this week ? the consumer price index on Tuesday and retail sales on Wednesday ? that will offer an updated snapshot of inflation in the economy.

?If they raise rates next week, I would be absolutely speechless,? said Joseph LaVorgna, chief economist at SMBC Nikko Securities America. ?Just last week the Fed was alluding to have to raise rates even higher, but this is a whole new situation. SVB is exacerbating what had already been a looming problem: The Fed was singularly focused on inflation, not recognizing that it would be prudent to sit and wait and see how things evolve.?

The likely U-turn comes less than a week after Fed Chair Jerome H. Powell told Congress he ?would be prepared to increase the pace of rate hikes? if the job market and other parts of the economy remained resilient.

But the sudden failure and shutdown of Silicon Valley Bank on Friday, followed by sweeping measures by regulators to stem the fallout, is prompting larger questions about whether the Fed would keep raising interest rates even as it creates facilities to lessen the side effects of higher rates.

?We are in an environment where there is stress in the banking system, where the Fed, Treasury and FDIC have intervened and may need to intervene further,? said Gregory Daco, chief economist at EY. ?But at the same time, the Fed and Fed Chair Powell do not want their legacy to be one where they lost the battle against inflation.?

Inflation has proved more stubborn than Fed officials expected, and job growth has continued to outpace even Wall Street?s most bullish forecasts, confounding the Fed?s efforts to dampen consumer and business demand and relieve price pressures throughout the economy.

That means there?s still a case for further monetary tightening even in the face of shaky financial market confidence.

?Unless we go into a full-on financial meltdown, I think the Fed will still hike by 25 basis points next week,? said Megan Greene, global chief economist at Kroll Institute. ?The Fed has tools for macro policy and it has tools for financial stability ? and they?re different. Cutting interest rates or pausing them wouldn?t have much effect on the banking sector and would ultimately stoke inflation.?

Others, however, believe the distinction between the two will not be so clear-cut, forcing the Fed to rethink its strategy of tackling inflation with additional increases to borrowing costs.

Barclay?s, which last week expected an interest rate hike of a half-percentage point, has updated its stance to say it?s now leaning ?toward zero.? But, bank economists noted, it?s likely the Fed will resume rate hikes this spring, after financial turmoil calms down.

?Based on the financial market turbulence over the weekend ...we believe that the most likely outcome will be a pause,? they wrote in a research note on Monday.

David J. Lynch contributed to this report.

This one was easy to copy/paste.