Been unfolding for a few days now but might as well have a post here.
Silicon Valley Bank is (or perhaps was) a relatively unknown bank to the public at large but it was not some fly by night regional bank and had some 216 billion US dollars of assets under management, and was in the top 20 banks in the US having been around for some 40 years.
The FDIC does insure bank deposits... but only up to 250 thousand USD. Fine for the average man on the street ( https://theconversation.com/america...t-means-as-a-potential-recession-looms-196333 ) but when deposits are measured in tens of millions for some of their customers... yeah. Examples of losses are Roku (the streaming service) had 487 million in there which is likely gone, Roblox (ask the kids) 150 million, Circle (runners of a stablecoin USDC, these days one of the bigger avenues for cryptocurrency liquidity) apparently being out some 3.3 billion. The US government is being careful not to use the word bailout (instead "Bank Term Funding Program" appears to be the euphemism) but we shall see. Those losses are big, possibly company killers, but many would have split their assets among other banks so it may be a slow bleed out instead.
Contagion is a term you will hear as a result of this, and it appears there is some with various banks being drained of funds by customers not wanting to lose their deposits, and it remaining to be seen how much reassurance the bail outs/lending programs will have on this.
Just prior to the bigger headline grabber of SVB is Silvergate which collapsed just before. On top of this the housing market is dropping rather fast (house prices, time on sale, home builders, mortgage rates/requirements...) and this time around it seems auto loans (as in cars and such) are also likely to be a bubble possibly already popping to add to the fun.
We will probably not know the complete picture for a while but the main story thus far is a small run necessitated the sale of bonds (sometimes required to be purchased by them by law) which the price right now is in the toilet (your old 10 year bonds at a few percent being worth far less than the 7 or more percent offered for a short one today, even more so with inflation being what it is), not so bad when they could have been held until maturity and all would have been fine but selling them ahead of that timeline meant a loss that everybody knows about, rinse and repeat.
Videos and links from a variety of perspectives.
Edit. Follow up dropped
https://www.independent.co.uk/news/...icon-valley-americans-joe-biden-b2299973.html
https://www.forbes.com/sites/conorm...collapse-the-biggest-bank-failure-since-2008/
Thoughts? Anybody personally troubled by things happening here?
Silicon Valley Bank is (or perhaps was) a relatively unknown bank to the public at large but it was not some fly by night regional bank and had some 216 billion US dollars of assets under management, and was in the top 20 banks in the US having been around for some 40 years.
The FDIC does insure bank deposits... but only up to 250 thousand USD. Fine for the average man on the street ( https://theconversation.com/america...t-means-as-a-potential-recession-looms-196333 ) but when deposits are measured in tens of millions for some of their customers... yeah. Examples of losses are Roku (the streaming service) had 487 million in there which is likely gone, Roblox (ask the kids) 150 million, Circle (runners of a stablecoin USDC, these days one of the bigger avenues for cryptocurrency liquidity) apparently being out some 3.3 billion. The US government is being careful not to use the word bailout (instead "Bank Term Funding Program" appears to be the euphemism) but we shall see. Those losses are big, possibly company killers, but many would have split their assets among other banks so it may be a slow bleed out instead.
Contagion is a term you will hear as a result of this, and it appears there is some with various banks being drained of funds by customers not wanting to lose their deposits, and it remaining to be seen how much reassurance the bail outs/lending programs will have on this.
Just prior to the bigger headline grabber of SVB is Silvergate which collapsed just before. On top of this the housing market is dropping rather fast (house prices, time on sale, home builders, mortgage rates/requirements...) and this time around it seems auto loans (as in cars and such) are also likely to be a bubble possibly already popping to add to the fun.
We will probably not know the complete picture for a while but the main story thus far is a small run necessitated the sale of bonds (sometimes required to be purchased by them by law) which the price right now is in the toilet (your old 10 year bonds at a few percent being worth far less than the 7 or more percent offered for a short one today, even more so with inflation being what it is), not so bad when they could have been held until maturity and all would have been fine but selling them ahead of that timeline meant a loss that everybody knows about, rinse and repeat.
Videos and links from a variety of perspectives.
Edit. Follow up dropped
https://www.independent.co.uk/news/...icon-valley-americans-joe-biden-b2299973.html
https://www.forbes.com/sites/conorm...collapse-the-biggest-bank-failure-since-2008/
Thoughts? Anybody personally troubled by things happening here?
Last edited by FAST6191,