SVB - 2023 Too Big to Fail

[ViperHorn]

From a contributor at the WSJ (it implies incompetence at the bank, state regulator, and the Fed):

Some believe that SVB couldn’t borrow sufficient cash from the Fed to stem the run because it lacked collat-eral. But the fair-market value of its entire portfo-lio of government-backed securities was $102.2 billion as of Dec. 31. Even allowing for a significant decline in value by March 9, SVB would still have substan-tial collateral to borrow from the Fed to cover the run on its deposits. Moreover, the Fed had no credit risk taking government-backed securities, even at par rather than fair-market value, as it could itself hold them to maturity.

This is the only correct part of the statement: "incompetence at the bank, state regulator, and the Fed." But then Competence isn't a job description for those operations.

You take risk under two scenarios: (1) The probable reward is greater than the known risk, and (2) You have no other choice if you want to stay in that business.

SVB's management and board had no idea of the risk they were taking by borrowing to pay the debt in an era of rising interest rates. You need people like Sabre running your bank and not some PE want-a-be with a board full of politicos.

 

[bystander]

After watching the market this morning, my feeling is that we need to jail some people and perp walk them like Bud Fox was in Wall Street. It is just sick that those of us on the precipice of retirement must endure this kind of stress and potential permanent loss as it could take years to recover even to what the market was like one year ago.

 

[Driver 8]

 

[nashhorn]

Idiots are in control.

 

[Monahorns]

Idiots are in control.

Yes. In every institution. Plan accordingly. Educate yourself.

 

[Driver 8]

JPowell didn't want regulatory failures mentioned - good thread in this one

 

[Mr. Deez]

It's not idiocy. It's cronyism, corporatism, and corruption. And of course, if this falls apart, they'll "blame capitalism."

And don't you love when she says they can't discriminate against foreign investors? If they were Russian, you know they damn sure would find a way to discriminate.

 

[Facing Addiction]

In addition to bad decisions, maybe these banks are focusing on the wrong thing....

So this is the head of global markets at Credit Suisse, which just got bailed out by the Swiss central bank | Not the Bee

 

[nashhorn]

Darn, Kyosaki says all this is intentional and we are in serious trouble. Claims Yellen’s comments show they are all controlling and intentionally moving us to a “Fed” coin, ie, a central banking system.
I may not be a “Rich Dad, Poor Dad” disciple but he’s making sense and has been correct before.

 

[Dionysus]

Darn, Kyosaki says all this is intentional and we are in serious trouble. [...] he’s making sense and has been correct before.

I think he is always extremely negative though, like he is trying to stir up drama to get attention. That’s been my limited impression of him anyway, admittedly I haven’t followed his work closely.

 

[nashhorn]

Probably right Dion but I remember hearing Yellen and had the same “did I hear that right” thoughts when she was remarking that only she and the Feds would be deciding to whom the relief would go.

 

[ViperHorn]

Kellen is useless and never should have been confirmed.

UBS is going to end up with Credit Suisse so this is big time godfather stepping up.

 

[nashhorn]

godfather

Now that’s the truth in every way.

 

[guy4321]

Idiots are in control.

Yes. In every institution. Plan accordingly. Educate yourself.

Jeez, guys. How'd you both know I am in control of an institution!?

 

[SabreHorn]

It will never become public knowledge because of politicians, but there are great, long trusted institutions turning up on these problem lists. Places we went because we could not trust US banks with or without insurance. Meet with these banks in private and you realize that they put heavy starch in their underwear - all business, no laughter.

I expected this from US banks but never from the Swiss, HSBC, Butterfield. Paribas was always the First City of Europe. They would go behind your back and steal your biggest customers.

 

[ViperHorn]

Not surprised by Swiss and HSBC. Both were very aggressive in areas (product and geographically) that no sane business man would go.

 

[mchammer]

This article may explain the actions of the feds to protect insurers and let banks fail:

Rich Bank Dumb Bank

In short, a lot of bad folks making greedy and stupid decisions. People are hiding the real reason, hoping you don’t look under the covers.

 

[Monahorns]

The people making stupid decisions, the depositors, got paid from the wallets of poor and working class people.