SVB and banks

[watu05]

Good recap from Schwab.

Market Snapshot | March 2023

Liz Ann Sonders shares her perspective on the U.S. stock market and economy in this monthly Market Snapshot video.

www.schwab.com

 

[noble cane]

At least your buddies will be getting a bailout...

Yellen Admits CCP-Linked Silicon Valley Depositors Will Be Bailed Out by U.S. Banks | National Review

‘I don’t believe there is any legal basis to discriminate among uninsured depositors,’ Yellen stated.

www.nationalreview.com

 

[aTUfan]

At least your buddies will be getting a bailout...

Yellen Admits CCP-Linked Silicon Valley Depositors Will Be Bailed Out by U.S. Banks | National Review

‘I don’t believe there is any legal basis to discriminate among uninsured depositors,’ Yellen stated.

www.nationalreview.com

thanks to uncle joe.

 

[Gmoney4WW]

At least your buddies will be getting a bailout...

Yellen Admits CCP-Linked Silicon Valley Depositors Will Be Bailed Out by U.S. Banks | National Review

‘I don’t believe there is any legal basis to discriminate among uninsured depositors,’ Yellen stated.

www.nationalreview.com

thanks to uncle joe.

You can't help domestic depositors and not foreign. There would not be any justification for that. Just another thing for the republican party to make a big deal out of, when its normal practices. You can not bail anybody out or you can bail everybody out.(over 250k)

 

[Gmoney4WW]

Foreign Depositors would take all their funds out of American banks and cause more failures if you did that.

 

[lawpoke87]

Foreign Depositors would take all their funds out of American banks and cause more failures if you did that.

We would see a collapse in our financial system. We have very few options.

 

[Gmoney4WW]

We would see a collapse in our financial system. We have very few options.

Europe might follow suit as well. Can't play around here. SBC is already having to consider bailing out Credit Swiss. Tread lightly, delicate situation that could go worldwide.

 

[aTUfan]

so again our Government run safe guards are inadiquit. According to Barney Frank, Fredie Mac was sound. Now the FDIC is not.

 

[Gmoney4WW]

so again our Government run safe guards are inadiquit. According to Barney Frank, Fredie Mac was sound. Now the FDIC is not.

So why is it, that the FDIC isn't sound.

 

[watu05]

There are multiple contributors to SVB's failure.
# Their Risk Officer left the bank 11 months ago but the SVB hid the fact until a January filing. That Risk Officer sold all her stock in the bank when she left. The risk was most of the bank's cash were demand deposits but the bank invested much of their funds in long term bonds. Mismatching short term deposits with long term assets is a basic bank no no. Rising interest rates devalued long term, lower interest bonds. Analysts had identified this issue in late 2022.
# Peter Theil caused the run on the bank by telling his fellow VCs to pull their money. Since their deposits were in the multiple millions, they weren't insured, so they paniced. Most VC's tell their client companies to bank with SVB (it had a 70% share of VC and VC backed businesses), so when they panicked it created a run on the bank. Bank was overly dependent on a single industry sector.
# A retired bank CEO and friend points at the regulators not stepping in earlier as well as the removal of the requirement for annual stress tests under Trump. Republicans led the change but some Dems voted for it: The argument was that the financial crisis was over; and stress tests were too much red tape.

 

[aTUfan]

FDIC should save the depositors, not the investors.

 

[watu05]

FDIC should save the depositors, not the investors.

 

[lawpoke87]

 

[TU 1978]

Well, someone has used Deutsche Bank and Credit Suisse in the past but now he uses a more unusual bank.

Trump used to borrow from big banks. Now look who's lending him money.

An examination of legal filings, internal documents and land records shows Axos Financial has a history of handling atypical loans.

www.nbcnews.com

 

[lawpoke87]

I’m not sure there’s a single topic out there which people wouldn’t try to infer blame on Trump. I’ve never seen anything like it in my 50 plus years It’s quite remarkable.

 

[Gmoney4WW]

I’m not sure there’s a single topic out there which people wouldn’t try to infer blame on Trump. I’ve never seen anything like it in my 50 plus years It’s quite remarkable.

You don't think Trumps actions were quite remarkable in a similar way?

I saw where a Trump spokesperson was accusing the Justice Department of “continuously stepping far outside the standard norms in attempting to destroy the long accepted, long held, Constitutionally based standards of attorney-client privilege and executive privilege.”

I found that amusing seeing as how Trump attempted to destroy standard norms in just about every system and action he was involved with. And several of those were constitutionally based.

 

[lawpoke87]

You don't think Trumps actions were quite remarkable in a similar way?

I saw where a Trump spokesperson was accusing the Justice Department of “continuously stepping far outside the standard norms in attempting to destroy the long accepted, long held, Constitutionally based standards of attorney-client privilege and executive privilege.”

I found that amusing seeing as how Trump attempted to destroy standard norms in just about every system and action he was involved with. And several of those were constitutionally based.

I don’t believe Trump’s craziness (or loans) have a single thing to do with the trouble Deutsche or CS finds itself in today. Which is what was being discussed. Reminds a bit of WATU blaming Dubya for every misstep from Obama back in the day.

 

[astonmartin708]

I’m not sure there’s a single topic out there which people wouldn’t try to infer blame on Trump. I’ve never seen anything like it in my 50 plus years It’s quite remarkable.

I recall it happening frequently after Obama left office on this very board.

 

[Gmoney4WW]

I don’t believe Trump’s craziness (or loans) have a single thing to do with the trouble Deutsche or CS finds itself in today. Which is what was being discussed. Reminds a bit of WATU blaming Dubya for every misstep from Obama back in the day.

I don't agree with that either, except maybe in some peripheral way. The tariff wars with China maybe had some effect on their investments. Him treating Europe with disdain(in trade as well as many other things) and treating Russia like an ally, ...all peripheral as well.

They started to pull away from involvement with us, and invested in Russian and Chinese assets because of this. They started to read the tea leaves, and figured China was a wiser place for their investments, not feeling like the U.S. could be trusted any longer. But as I said this stuff is all peripheral.

 

[lawpoke87]

I don't agree with that either, except maybe in some peripheral way. The tariff wars with China maybe had some effect on their investments. Him treating Europe with disdain(in trade as well as many other things) and treating Russia like an ally, ...all peripheral as well.

They started to pull away from involvement with us, and invested in Russian and Chinese assets because of this. They started to read the tea leaves, and figured China was a wiser place for their investments, not feeling like the U.S. could be trusted any longer. But as I said this stuff is all peripheral.

I’m still unsure what Trump has to do with the current banking crisis. Deutsche problems currently arise from 5 year credit swaps fueled by rapidly rising interest rates. Banks across the globe are feeling these pressure.

Did you mean to address Russia - China relations ?

 

[Clong83a]

FDIC should save the depositors, not the investors.

Investors never get money back from the FDIC and didn't here either. Depositors are legally first in line in a collapse/bankruptcy. Then bondholders. Then investors. FDIC pays back depositors if the bank is not solvent.

As far as I can tell, everything went exactly according to the way it is supposed to work, and the Fed decided to use FDIC funds to insure larger deposits than the minimum, too.

We can hem and haw over the details, but there's nothing here that is really outlandish or unusual.


Not saying the banking system is all roses and everything is A-OK. But considering that it isn't, I completely understand a going above and beyond to insure depositors in response to the first domino falling. It's a show of force to help build confidence that our institutional protections are ready, willing, and able to help. It's really the only good option unless you want to accelerate a banking collapse.

 

[watu05]

Janet Yellen says the Trump administration 'decimated' the Treasury's financial stability department and she's focused on repairing the 'cracks'

Yellen claimed many teams responsible for banking regulation were either drastically cut or completely eliminated before her tenure, and she’s had to “rebuild the financial stability infrastructure.”

fortune.com

 

[lawpoke87]

Janet Yellen says the Trump administration 'decimated' the Treasury's financial stability department and she's focused on repairing the 'cracks'

Yellen claimed many teams responsible for banking regulation were either drastically cut or completely eliminated before her tenure, and she’s had to “rebuild the financial stability infrastructure.”

fortune.com

Yellen has been a disaster. (Inflation is transitory)

 

[Gmoney4WW]

Yellen has been a disaster. (Inflation is transitory)

It can be both. Yellen has been a disaster, Trump has been a disaster. Trump shouldn't have cut the oversight to the bone, just cut the fat. Trump doesn't want oversight of anything. It is definitely necessary especially if we are insuring them with the FDIC.

 

[lawpoke87]

It can be both. Yellen has been a disaster, Trump has been a disaster. Trump shouldn't have cut the oversight to the bone, just cut the fat. Trump doesn't want oversight of anything. It is definitely necessary especially if we are insuring them with the FDIC.

I would buy into the Trump angle more if the European based banks weren’t having similar issues. Not arguing he shouldn’t have eased the restrictions just that it’s not necessarily the reason some of these banks are in trouble. Other factors much more relevant.

 

[watu05]

The first case in a banking finance course covers exactly what SVB did wrong: using short term demand deposits to invest in long term bonds. The bonds may be ultimately secure, but the price can vary substantially. Risk management 101. Matching short bonds with short term demand deposits is less profitable, but it doesn't risk the whole enterprise. A stress test that SVB would have been subject to Pre-Trump would have disclosed that. Add in cut backs in regulators and the clear message that Dodd Frank level supervision of regional banks was no longer necessary, and SVB is no surprise.

Late 2022 articles in sevral news letters highlighted SVB's risk which was a key factor in large depositors suddenly freaking out and pulling their deposits over $250K.

Credit Swiss had been staggering since 2008, and the publicity of SVB/US troubles forced the Swiss government to finally act.

Multiple factors yes, but Trump's deregulation and reduction of oversight opened this possibility which otherwise wouldn't have existed.

 

[lawpoke87]

Anyone heard what the current Admin is doing to combat the US weakening economic position abroad ?

 

[noble cane]

Anyone heard what the current Admin is doing to combat the US weakening economic position abroad ?

View embedded media

Collapse of the Petro Dollar... once oil is fully priced in Yuan or another currency the dollar is done and we will revisit the 30's..

 

[watu05]

Yep, most people don't realize the huge economic benefits of the dollar being the reserve currency. Threatening not to raise the debt ceiling undermines confidence in the dollar and speeds up losing reserve currency status. Unfortunately the House is focused on covering up for Trump, targeting trans people and playing stupid pet tricks instead of producing its budget.

 

[lawpoke87]

Yep, most people don't realize the huge economic benefits of the dollar being the reserve currency. Threatening not to raise the debt ceiling undermines confidence in the dollar and speeds up losing reserve currency status. Unfortunately the House is focused on covering up for Trump, targeting trans people and playing stupid pet tricks instead of producing its budget.

Trump and the House have zero to do with the global move away from the dollar. The current House has been in session for 3 months. Please stop.

Alarms should be going off within the Biden Admin over the phasing out of the dollar as the global currency. Unfortunately, their priorities aren’t reflective of the real concerns existing in the world. Will we wake up?

 

[Gmoney4WW]

Yep, most people don't realize the huge economic benefits of the dollar being the reserve currency. Threatening not to raise the debt ceiling undermines confidence in the dollar and speeds up losing reserve currency status. Unfortunately the House is focused on covering up for Trump, targeting trans people and playing stupid pet tricks instead of producing its budget.

That's a temporary thing that always gets resolved. I doubt it affects confidence in the dollar long term.

 

[watu05]

That's a temporary thing that always gets resolved. I doubt it affects confidence in the dollar long term.

We should all hope so. The last time around the US govt bond rating dropped. This BS plays right into the hands of China and Russia.

 

[watu05]

Yellen has been a disaster. (Inflation is transitory)

A jaundiced personal opinion doesn’t change the fact that Trump dismantled bank regulation designed to prevent regional bank failures.

 

[lawpoke87]

A jaundiced personal opinion doesn’t change the fact that Trump dismantled bank regulation designed to prevent regional bank failures.

Feel free to defend her. She didn’t believe injecting trillions into the financial system at a time of labor and material shortages would increase inflationary pressures. She believe inflation was transitory and thus waited to take the necessary steps to combat the same. Resulting in the fastest increase in fed funds rate in the history of our nation. Which resulted in bank failures here and abroad….and it’s not over. More pain will follow.

You also believe two weeks of budget “talks” have resulted in China’s successful push to erode the dollars as the standard international currency. A change which has been occurring for more than two years. A push which the current Admin appears to be completely helpless to combat. Xi playing chess while Biden lost his checker board. We MUST address China now. Two years from now it may very well be too late. This is the single most important issue facing the US. The continued crickets is unacceptable.

 

[watu05]

A sobering view of the debt ceiling situation.

Opinion | Republicans Can’t Agree on a Path Out of Their Own Debt Crisis

House Republicans have become so factionalized that their leaders cannot speak in one voice.

www.nytimes.com

 

[aTUfan]

A jaundiced personal opinion doesn’t change the fact that Trump dismantled bank regulation designed to prevent regional bank failures.

uncle joe had 2 years to fix it.

 

[lawpoke87]

A sobering view of the debt ceiling situation.

Opinion | Republicans Can’t Agree on a Path Out of Their Own Debt Crisis

House Republicans have become so factionalized that their leaders cannot speak in one voice.

www.nytimes.com

You do realize this exact scenario has occurred under each of the last three Presidents….correct? In fact, it is the norm when we have a Pres and House of different political parties.

 

[noble cane]

When you declare the worlds largest energy exporter a pariah, prepare to deal with the consequences...

 

[watu05]

When you declare the worlds largest energy exporter a pariah, prepare to deal with the consequences...

The leader, not the country. Sucking up to foreign leaders should have no limits?

 

[lawpoke87]

The leader, not the country. Sucking up to foreign leaders should have no limits?

Oh the irony…..#China.