Saturday, March 11, 2023

Bank failure

I've been following the collapse of Silicon Valley Bank with great concern. Not because we have any money in that bank, but because it may trigger a cascade of other bank failures.

Do any of you have an account with SVB? If so, let us know what's going on!

28 comments:

  1. I just read that Wells Fargo, Bank of America, JP Morgan Chase, and Morgan Stanley lost (collectively) 50 BILLION dollars yesterday alone. I am out of debt but wonder when the Feds, who have bankrupted all of us, will confiscate/sell our land and assets to cover their bills. We all know the bureaucrats in power will be exempt.

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  2. It is a planned takedown. We keep minimum funds in the local credit union. SVB was overextended. Also run on the Manhattan branch, I read.

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  3. In 1989 my husband & I owned a hardware store that we had just opened when our bank was one of the first to close. It was a tough time for us (one of many). We made it through, but had to get a loan with a higher interest rate which made it tough.
    Debbie in MA

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  4. ALL US banks received significant deposits during the Covid PPP loan process in 2020/21. Loan demand also fell during this time, lack of economic activity. They all had to invest in vehicles, usually US treasuries, bonds and agencies, rather than loans, to keep their revenues up. Unfortunately, a decade of quantitative easing and zero interest rates meant that their investment yield on their portfolios was low, 1-1.5%. Many of these investments were of longer duration to achieve yield.

    The fed has now had an unprecedented rate hike over the past 9 months, resulting in significant paper losses in bank investment portfolios. Which is not a problem if the investments are held to maturity. There is no loss.

    But. If depositors for some reason, say they are in an industry that is suffering (tech), need to tap their funds in order to operate, simultaneously, the banking institution may not be able to cover significant withdrawal activity without borrowing from the fed or other correspondent banks (which is normal). If those sources tap out, and withdrawals continue, they are forced to sell their portfolio, which then forces a REALIZED loss. Which SIVB had to do. They then tried to sell more shares in the bank to gain funds, and that effort failed.

    Several venture capital management managers, who may manage tens of dozens of tech start up firms, seeing this, called for a divestment of their clients funds, redirecting them to other banks. In this case, they appeared to go to Chase. SIVB had the assets to cover the depositors in the long run. But not at the time the depositors demanded their funds. Voila, fdic take over.

    Many, if not all banks, have this POTENTIAL problem, as many depositors are rate shopping for higher yield. Short term US treasuries are currently the safest high yielding investment, but investing in them takes that money out of the banking system and gives it to the government. If everyone does this simultaneously, or thereabouts, some banks may not be able to meet the withdrawal demand depending on their particulars. That said, they ALL have to stress test their position so as to not get blind sided. But this was a classic run on this bank. Perhaps orchestrated? We shall see.

    IMHO, SIVB is a unique situation because of the condition of the tech industry. Too high of concentration in that field However. If everyone does the same thing at the same time, it's a problem everywhere. It's always a potential problem. Remember Jimmy Stewart in "it's a wonderful life"? Yeah, that.

    Do not keep more than fdic insurance limits in any one bank ...250k for individual and 500k for joint....which is the same for credit unions.

    You want your local bank to survive, otherwise the big banks win and the next step is CBDC. Which is a NO GO.

    Your local bank needs your deposits. Ask them IN PERSON for a quote on interest rates before you move your money. Don't assume their advertising is the bottom line. They may very well accommodate you before they risk the loss of your deposit. Especially in light of what has happened.

    My 2 cents.



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    1. Excellent summary!! Thank you. And I believe the end game is CBDC absolutely. And in that case, they may very well want something catastrophic to happen...

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    2. Very well explained, thank you.

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    3. Banking and finances are, mostly, a foreign language to me. Your explanation and advice are much appreciated. Thank you.

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  5. I wonder who JOE BIDEN is going to blame for this failure?

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  6. Probably going to see a connection between SVB and FTX, which will ether be (((covered up))) or called a conspiracy theory. Either way, Monday morning is going to be VERY interesting; we are either going to be gaslighted beyond the coronabaloney, or, this will be a "bank run" psyop to panic the whey out of the TrulyStupid. Considering the TrulyStupid comprise over 53% of the US population.............

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  7. I think everybody needs to keep a cool head about this mess. And cool heads abound on this site.
    Scripture tells us that there will begreat deception in the last days and we are certainly seeing it. So the one thing we need to be on guard against is deception.
    The internet abounds with people saying take all your money out of the banks. Some are well meaning folks and some are plants, trying to create chaos. Either way, a rush on the banks will be disastrous in the short term.

    There's been a move for a while, especially like on this site, for people to get into hard assets, like land and livestock. That move has continued to pick up speed. But without currency, no one can do anything realisticly, except work our land until property taxes fall due, then we can't avoid the need for currency or our land gets sold out from under us for taxes. Then we are in the same boat as people without hard assets.
    The financial system we have IS a ponzi scheme. It has worked pretty well as such for a long time by sharing the benefits of said scheme. We've all been brainwashed by it. And we've all in some way have been dependent on it because it is our financial system.

    Many years ago I took a political science course and on the first couple of pages in the text book there was a statement that the federal reserve was privately owned. The instructor spent much of the first day of class explaining that statement. That by naming it "federal" it had gained the appearance of being of our government. But it isn't. It's private. Great camouflage in a name. The teacher taught that course many times. And the textbook, being a textbook at that time, was used to teach many other classes of college students. There has since been a book written called " The Creature From Jekyll Island", the small island being off the coast of Georgia. The birthplace of the federal reserve.
    So who owns our federal reserve?

    I don't know who owns the federal reserve. But a number of years ago, one of the Rothchilds said that he owned all the banks in the world so he owned all the money. Anyone can Google it. Those folks are over in Europe somewhere I think.

    Here's the proverbial 54 million dollar question. If the federal reserve is privately owned and been used as a vehicle to purchase unfathomable trillions of debt, who owes the debt? The owner(s) of the federal reserve, or America? With her wealth of oil and other natural resources? The owners of the federal reserve, or the American people who have had every penny they've earned and put in the system, laundered to put money into other pockets?
    President Kennedy had this all figured out and was not going to play ball. One of the theories about his assassination goes back to this. As soon as Kennedy was gone Johnson took his place and changes were made to our currency.

    I think most in our government and in other countries are well aware of the ponzi scheme. Our country needs a reboot. I personally think that will happen. God founded Israel, but our country was founded On God, and I believe He will direct events to save America.
    Roman's 8:28 reminds us that all things work together for good to those who love God and are called according to His purpose.
    So trust in the Lord, and keep enough cash on hand to pay property taxes.

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    1. No one owns the Federal Resrve. It is run by a board of governors who report to Congress. God, the level of tinfoil hattery and ignorance in the comments is astounding.

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    2. Don't understand the finance side of this but one comment. You talk about property taxes. I live in a state which gives seniors a cut on their property taxes. As long as the assessment in under a certain amount (lower than market value), no property taxes are assessed.
      kathy in MS

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    3. "Owns: Slang for paying a politician or bureaucrat money or other things to get them to do your bidding.

      It all depends on what the meaning of "owns" is...

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  8. Something neferious happened and it isn't clear just what that was. First sign was depositors took out $48 billion. Who and why, was it planned? Second, the board and operators of the bank sold off huge amounts of their holding just before the crash. This is probably a felony. Third just hours before the government took over the bank the management gave out bonuses to employees. Let that sink in! Last the person in charge of risk assessment was an LGQBT? person and advocate who stated her most important job (not risk assessment obviously) was equity. I think some jail time is coming for some people and I think this management team will rival FTX.

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  9. No personal experience with SVB or any other bank failure, but watching what's going on with a jaundiced eye. Lines of people in California and Massachusetts (Boston Private Bank acquired by SVB). Certain people are claiming there will be (essentially threatening to cause) a bank run if SVB's depositors are not made financially whole. These depositors are not mom and pop average Americans. They are international tech entrepreneurs, wealthy winery owners, and crypto investors.
    Another important fact to bear in mind is that, since March 2020, the Fed ruled banks need not even keep 10% of funds on hand in regard to deposits - dropped it to 0%. So regardless of if someone has less than $250k in the bank, neither the bank nor the FDIC has even 1% of the money to pay back depositors nationwide.
    Monday morning ought to prove very interesting.

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  10. I find it very interesting that now when we have a Congress holding the line in the sand regarding debt increase, Bank failures and scares of bank failures are happening.
    Our morning news tomorrow is liable to brush past the essentials as usual and give us puppy dog tales, kitty cat rescues, wildlife videos of various escapades, and requests for donations to various animal organizations. Oh, and don't let me forget the special adopt a pet segment, frequently starring a precious potential adoptee. And the pet of the week. Followed by commercials for donations to save baby elephants, big cats, and abused animals, then on to the weather, cheerleaders cheering, sports teams winning, and the route to take for your morning commute. I'm not kidding. This is our local Fox news morning Pablum. Safe watching for children of all ages. Evening focus isn't much better but has more extensive weather coverage and local news about schools, fires, crime, and maybe touches something national with not much detail.
    Any real news will be online.
    We're just going to have to deal with whatever happens as it occurs. I probably won't do anything different except go ahead and prepay for propane to be delivered instead of waiting for the bill, and prepay for a month or two of power.
    If banks crash Congress will do something. Don't know what, but it will be on them to act.
    I'm a little more concerned about what the president will do. That Emergency Powers Act got brandied about during covid. There was talk of it getting reined in a bit, but I'm not sure what happened. Think I'll have to check on that for peace of mind.

    Heard a preacher talking the other day about how the Lord may let us go through something hard, the same as a parent who catches a child smoking. That child gets to smoke cigarettes until they literally get sick enough to get on the no smoking page with the parents. I found this to be a good analogy. This country has got a lot of people on a lot of different pages, and that includes Christians. Something needs to pull us together as a country working together again. It may need to be something uncomfortable that none of us wants. We need to stay in prayer not just for our country and it's leadership, but especially for each other.

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    1. Prepaying bills worked just fine. If I had a mortgage or vehicle loan would be working on getting ahead a few payments there if possible if hadn't done so already. It gives a buffer in case something goes wrong which could include accident or illness. Plus saves on interest in the long run. I used to like doing this with loans.

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  11. SVB is reopening Monday and investors will be able to access funds. There's an article on Newsmax with the new details.

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  12. SVB is reopening on your dime. Shareholders will not be able to access "their" funds but rather they will access your funds and all taxpayer funds thanks to Biden. No big deal? Well, actually it is. With a stroke of his digital pen he changed a system that "insured" deposits up to $250K to a system that insures all deposits even into the billions. No more risk for all depositors and no incentive for bank managers to be capable of managing your money.

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    1. Nope. You are wrong. No losses will be borne by the taxpayers. Honestly I don't even know why I bother in these comments because of the ignorant yahoo coefficient.

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    2. So the libby states supporting iffy/risky investments get help when their banking is tanking. All the wording of what's presented to the public has to be ultra sweet coolaid so we can go on in a sugar coma singing " don't worry, be happy" in 3 part harmony, because all the money to pay that was there when needed and wasn't our money. The news said it wasn't so it isn't.
      Drug addled brains are running the show.
      But down here?
      " Hey Honey ! We're runnin' low on corn likker and you know I like that in my sweet tea! Have you cranked up the still yet? Are you gonna make me get up outta my chair to take care of that? You know the news is on and I gotta stay informed! "

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    3. Krab dear, instead of just the insured part of the money being covered by insurance, by covering even the uninsured money, the insurance fund is drained. That insurance fund is for all or most of our banks, and by draining it for uninsured deposits, other banks lose the security of funds for their own secured deposits unless they replenish the funds. Ultimately the bill will go to all the banks and through them, us. So what President Biden did was change the semantics of the word bailout, and at the same time, destroy our confidence in our banks, through no fault of their own. It was politics for him. A backroom deal. Republicans were shut out. When that didn't go over well, a separate meeting was held for them to bring them up to snuff. But the deal making was done behind closed doors without transparency and that is a backroom deal.
      You can always read one of our news sources, Newsmax, to get a more intelligent breakdown of facts.

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    4. I too heard that the "FDIC insurance" (for the little guys) is being used for bail money for SVB. And this was from multiple news sources. If we 'little guys' need it, there is none - unless they print more, which is what they will do, devaluating all that we have left in our accounts.

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    5. Krab, please don't "bother" yourself on my account. I can read the same stuff on Yahoo anytime. However, any yahoo knows every cent the government spends comes from the taxpayers eventually. No pretty propaganda words change that.

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  13. interesting thing to think about. Credit Unions are not backed by the FDIC. They have their own organization. I don't remember the name. BUT, at least my credit union goes through a bank for direct deposits and drafts. Something to remember.
    kathy in MS

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  14. The National Credit Union Share Insurance fund is just as fake as the FDIC - i.e. it has sufficient money to cover approximately 1% of deposits. The FDIC is a fiction to make people think their money is 'safe' - because if even 2% of current deposits were withdrawn simultaneously, the FDIC would be broke. Not to mention, they have years to get you your money (not the rumored 99, but depending on total bank losses a smaller depositor is unlikely to get reimbursed within the 'days' the FDIC likes to claim).

    The only benefit of a credit union (besides the slim possibility of it being more local and run by people who care about their communities) is that they are not subject to bail-ins. But they can still go under and you are still going to lose your money. Ironically, many depositors pulled money out of smaller banks (bearing in mind 'smaller' is relative) and deposited in the larger national banks. Those larger banks (JP Morgan, Bank of America, Wells Fargo) are themselves losers in today's stock market shell game.

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  15. CBDC's are here in July! The Fed has joined hands with 4 other major banks around the world and stabilized the world financial system!
    I'm not really sure what this means or how it works, but supposedly it's a done deal from numerous sources.
    So.
    I guess we're on to The Best Laid Plans of Mice and Men.
    One day at a time, Sweet Jesus.

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