I'm waiting to turn on the news and see Wells Fargo in the same boat.
Are we sure it wasn't Hillary Clinton in the CEO's office with a candlestick?I was pretty close, they blame woke liberals and a liberal anti-business economy.
Investor Kevin O'Leary breaks down the Silicon Valley Bank collapse | Fox News Video
Kevin O'Leary called the collapse an 'absolute mess' and warned that this is an important lesson for every company, not just start-ups and the venture community on 'Your World.'www.foxnews.com
Home Depot co-founder torches ‘woke’ Silicon Valley Bank collapse, warns recession may be here already
Home Deport co-founder Bernie Marcus analyzed the historic collapse of 'woke' Silicon Valley Bank and the harmful impact it could have on everyday Americans.www.foxnews.com
And what specifically in the deregulation allowed this to happen? I'm not anti-regulation, in fact I believe we can't trust companies as a whole to do the right thing. But I don't see and haven't read any expert that can point to a provision removed in the last 5 or even 15 years that would have otherwise prevented this. Dodd-Frank requirements and stress testing doesn't appear to have covered this specific scenario at all. I mean I haven't read everything so perhaps its out there but it sure doesn't seem like it. So it's not about restoring any existing regulation (which, again, just encouraged banking consolidation into even larger 'too big to fail' banks as Barney Frank himself identified later) but actually understanding how it happened to be better able to avoid this in the future and not suffer more unintended consequencesYup, I'm pretty sure at least 5 people here pointed out that specific deregulation would cause massive problems eventually. And they were right. And it only took five god damn years for it to happen.
THANKS DONALD! You fucked over a ton of Americans even after you left office, which we all knew you would!
AND I bet you anything Fox News has spent days blaming this all on Biden and those tax'n'spend Libruls! I guarantee it.
So it's not about restoring any existing regulation (which, again, just encouraged banking consolidation into even larger 'too big to fail' banks as Barney Frank himself identified later) but actually understanding how it happened to be better able to avoid this in the future and not suffer more unintended consequences
OK, i will give your question an honest answer, because you are not a lying shitbag conservative who says "prove it!" and "Do your own research!" in the same post on social media.And what specifically in the deregulation allowed this to happen? I'm not anti-regulation, in fact I believe we can't trust companies as a whole to do the right thing. But I don't see and haven't read any expert that can point to a provision removed in the last 5 or even 15 years that would have otherwise prevented this. Dodd-Frank requirements and stress testing doesn't appear to have covered this specific scenario at all. I mean I haven't read everything so perhaps its out there but it sure doesn't seem like it. So it's not about restoring any existing regulation (which, again, just encouraged banking consolidation into even larger 'too big to fail' banks as Barney Frank himself identified later) but actually understanding how it happened to be better able to avoid this in the future and not suffer more unintended consequences
"President Trump and congressional Republicans' decision to roll back Dodd-Frank's 'too big to fail' rules for banks like SVB—reducing both oversight and capital requirements—contributed to a costly collapse," said Sen. Elizabeth Warren.
Prior to the enactment of the Crapo bill, which then-President Donald Trump signed into law on May 24, 2018, banks with more than $50 billion in assets were subject to enhanced liquidity mandates and more frequent stress tests aimed at ensuring they could weather economic turmoil.
The 2018 law raised the threshold for the more stringent regulations to $250 billion or higher, a gift to banks like SVB that had been working for years to gut post-crisis regulations imp"
The collapse of Silicon Valley Bank was totally avoidable," Rep. Katie Porter (D-Calif.) wrote on Twitter. "In 2018, Wall Street pushed a deregulation bill that allowed banks like SVB to take reckless risks. It passed, even as I and many others warned of the risks. I am writing legislation to reverse that law."lemented under the Dodd-Frank Act of 2010.
As The Leverreported Friday, SVB specifically pushed Congress in 2015 to hike the regulatory threshold to $250 billion, with the bank's president touting its "strong risk management practices."
"Three years later—after the bank spent more than half a million dollars on federal lobbying—lawmakers obliged," the outlet noted.
Eight years before the second-largest bank failure in American history occurred this week, the bank’s president personally pressed Congress to reduce scrutiny of his financial institution, citing the “low risk profile of our activities and business model”, according to federal records reviewed by the Lever.
Three years later – after the bank spent more than half a million dollars on federal lobbying – lawmakers obliged.
In 2015, SVB President Greg Becker submitted a statement to a Senate panel pushing legislators to exempt more banks – including his own – from new regulations passed in the wake of the 2008 financial crisis. Despite warnings from some senators, Becker’s lobbying effort was ultimately successful.
Touting “SVB’s deep understanding of the markets it serves, our strong risk management practices”, Becker argued that his bank would soon reach $50bn in assets, which under the law would trigger “enhanced prudential standards”, including more stringent regulations, stress tests and capital requirements for his and other similarly sized banks.
In his testimony, Becker insisted that $250bn was a more appropriate threshold.
“Without such changes, SVB likely will need to divert significant resources from providing financing to job-creating companies in the innovation economy to complying with enhanced prudential standards and other requirements,” said Becker, who reportedly sold $3.6m of his own stock two weeks ago, in the lead-up to the bank’s collapse. “Given the low risk profile of our activities and business model, such a result would stifle our ability to provide credit to our clients without any meaningful corresponding reduction in risk.”
Around that time, federal disclosure records show the bank was lobbying lawmakers on “financial regulatory reform” and the Systemic Risk Designation Improvement Act of 2015 – a bill that was the precursor to legislation ultimately signed by President Donald Trump that increased the regulatory threshold for stronger stress tests to $250bn.
Trump signed the bill despite a report from Democrats on Congress’s joint economic committee warning that under the new law, SVB and other banks of its size “would no longer be subject to nearly any enhanced regulations”.
The bill was supported in the Senate by 50 Republicans and 17 Democrats, including the Democratic Virginia Senator Mark Warner, for whom Becker held a fundraiser at his Menlo Park, California, home in 2016, according to an invitation obtained by the Sunlight Foundation and OpenSecrets. The bank’s political action committee also donated a total of $10,000 to Warner’s campaigns in the 2016 and 2018 election cycles.
In 2019, when the Federal Reserve proposed regulations implementing the deregulatory law, financial watchdogs warned that its regulations on Category IV institutions – as SVB was later classified due to its size and other risk factors – were far too weak.
The final rule guaranteed that Category IV institutions are “not required to conduct and publicly report the results of a company-run stress test” and “reduces the required minimum frequency of liquidity stress tests and granularity of certain liquidity risk-management requirements”, according to Federal Reserve officials at the time.
I'm not sure there is a regulatory solution for don't make dumb investments, badly mismanage your PR, and be highly vulnerable to a run started by a relatively small group of quite rich twitchy people. Large regionals argued that regulating them like the big banks was too expensive and would have triggered undesired consolidation (probably true) but also a localized failure would not present a systemic risk and that the FDIC could easily handle the fallout (also probably true). Vocal people in SV of course don't like that part 2 is now happening but they just have a bigger megaphone than say a bank who has say a ton of farmers as depositors.
The irony of SIVB is that most banks have historically failed due to credit risk issues. This is the first major one I recall where the primary issue was a duration mismatch between high quality assets and deposit liabilities. As shown below, being flooded with deposits from fast-money VC firms and other corporate accounts at a time of historically low interest rates might have been more of a curse than a blessing
From my understanding - those requirements amount to holding 7% of deposits in highly liquid assets. SVB needed 24% Even if SVB had been required to hold 7% because the cap hadn't been raised from $50Bn to $250Bn that's still not enoughSo, as one example, and I remember this cuz I was a working adult in 2008 and I remember what happened then and I also remember all the regulations put in place AFTER 2008: Trump vastly increased the value of a bank before it has to comply with all the 2008 regulations of oversight and checks & balances and transparency. And that lobbying was done exclusively by SVB, the 16th largest bank in America.
Will post more in a couple minutes.
The interviews of Silicone Valley people who were impacted last night on TV news suggests that it's not just rich people. Many are small businesses, start-ups, etc. They didn't seem panicked but it was anything but plain that they wouldn't be mostly wiped out. They didn't seem to know what to make of what's happening other than that they weren't able to pull out their money yesterday morning upon hearing of the problems.
I don’t think that’s true - the bank has lots of assets that will be sold to make depositors whole, or at least much more whole.96% of their deposits don’t fall under FDIC insurance. Almost everyone involved who didn’t get out in timeis going to eat their shirts.
And while a relatively unique bank the underlying issue(banks holding long term bond worth way less than going bond rates) is widespread.
See edit.I don’t think that’s true - the bank has lots of assets that will be sold to make depositors whole, or at least much more whole.
well, what happened was they fucked up their finances and were completely unable to take care of their customers.Reading some of the posts of people who had money at SVB be like:
I heard a rumor there were issues at the bank.
I immediately wired out millions of dollars and chatted with my friends who also wired out millions of dollars who chatted with their friends etc and on.
Huh...there appears to be a run on the bank now so I'll wire out whatever else I have in accounts there.
OMG the bank failed. What happened?
well, what happened was they fucked up their finances and were completely unable to take care of their customers.
the customers did NOT cause this. deliberate shenanigans by the executives caused this and the customers just tried to save themselves.
Banks are a service. they have customers. most banks treat their customers worse than McDonalds or Walmart. But the people sitting in nice offices with expenses suits somehow ALWAYS avoid any real responsibilities when they run it into the ground. To the best of my knowledge nobody from Enron ever served any real time in federal prison. Or Fanny Mae/Freddie Mac.
In fact I saw a couple articles showcasing a few assholes who took a shitload of money to a non-extradition country and basically live like kings now.
Also they were keeping huge, necessary, unsecured deposits there. Maybe…don’t do that.SV herd mentality helped cause a massive run on the bank which could have just raised capital and fired the execs responsible for mismanagement instead of smoking the entire bank. So yes some of the customers did cause this, some more knowingly than others though I suspect.
lol, very good odds this sucker has/had a 7 figure balance at the bank