Banks always push the deposit and exclusivity as part of the lending proposal. I have never not been able to negotiate it out (my experience is residential construction lending on this particular comment).

Not buying the story either that they were the only bank. If truly the case, that speaks to an unnatural concentration of risk and if so then the bank should fail - block any acquisition - and make folks learn a ******* lesson for once.

Stat Monitor Repairman said:

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All this could result in businesses and individuals scrambling to buy up tangible assets.

Which would result in higher prices on durable goods.

Wages continue lag behind inflation.

Lower middle class and middle class start to feel the squeeze.

People start to panic.

Panic begets more panic.

People stop spending money.

The economy stagnates out of fear.

Economic gridlock.

Once that happens it'll be real slow to get things moving again.

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Then interest rates to 0%. Start the high velocity cycle again.

The two primary recurring revenue lenders are/were SVB and Wells Fargo. Texas Capital Bank is a relatively new entrant, and I'm not sure how much presence they actually have. With WF, I've gotten them to agree to soften the exclusivity to primary with primary being undefined.

ETA: this wasn't a failure due to concentrated risk in the loan portfolio. Their assets consisted of long duration Treasuries which are the safest asset a bank can have. This was a run caused incited by the herd mentality of VC.

jh0400 said:

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The two primary recurring revenue lenders are/were SVB and Wells Fargo. Texas Capital Bank is a relatively new entrant, and I'm not sure how much presence they actually have. With WF, I've gotten them to agree to soften the exclusivity to primary with primary being undefined.

ETA: this wasn't a failure due to concentrated risk in the loan portfolio. Their assets consisted of long duration Treasuries which are the safest asset a bank can have. This was a run caused incited by the herd mentality of VC.

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And this is causing the same issue at First Republic.

They aren't quite as sensitive as SVB was though. SVB got hammered because of the fact that ZIRP propagated ****Cos because everyone was chasing and money was free. Once the VC funding dried up, ****Cos had to start burning cash to maintain operations, shrinking deposits on hand at SVB. No deposits coming in, money coming out, and a mismanaged/unhedged purchase of long-term treasuries in a rising interest rate environment. How they didn't realize that interest rates were going to butt**** kind of blows my mind.

I would think if everything was in order with SVB then a run on the bank should not result in a failure as the bank balance sheet should still be strong... assuming the loan portfolio is good.

So either highly incompetent bank leadership or the way more likely scenario of greed and shenanigans, both of the legal and maybe not quite as legal variety.

Just my thoughts.

Interesting on Texas Capital. They seem to like to dry their hands at new things, but they were one of the worst about trying to get us to move significant money to them in order to do business. No thanks.

No one believes Yellen.

If there is systemic panic that affects liquidity Yellen will be doing whatever bailout it takes to keep the system afloat.

Ms Yellen has a boss and his name is George, not Joe.

She will do whatever she is told. Full stop.

fka ftc said:

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Ms Yellen has a boss and his name is George, not Joe.

She will do whatever she is told. Full stop.

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Hahaha true

Exactly, she's in that job for one reason

japantiger said:

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Hey guys ... no need to worry. SVBs Carbon Footprint is gonna be zero after Monday. Another victory for ESG.

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BREAKING:
Yellen says the Govt won't bail out Silicon Valley Bank.

Expect major market crash on Monday.

— Kim Dotcom (@KimDotcom) March 12, 2023

Stat Monitor Repairman said:

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Monday morning we'll all be back on here watching clips of the Sunday morning talk shows blaming Trump for this.

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If only there were (Dodd-Frank) regulatory requirements for regional banks with less than $250 billion in assets to control the risk portfolio causing the Silicon Valley Bank collapse.
> Oh wait, somebody rolled those regulations back.https://t.co/LrDscqrlpV

— Save Democracy! Be the Change! (@_Princess_Kelly) March 12, 2023

Talking points went out last night. Look for more of this.

If banks can't own Treasuries or government-backed MBS then the whole thing will quickly fall apart.

Biden Treasury Secretary Janet Yellen: "Whenever a bank — especially one like Silicon Valley Bank with billions of dollars in deposits — fails, it's clearly a concern." pic.twitter.com/K0mJMGhB1F

— RNC Research (@RNCResearch) March 12, 2023

Boomer memaw inspires much confidence.

Outstanding.

[puts tinfoil hat on]

This is interesting:

Quote:

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SVB partnered with Shanghai Pudong Development Bank (SPDB) in 2012 to create a separate Shanghai-based bank to lend to local technology startups.[url=https://en.wikipedia.org/wiki/Silicon_Valley_Bank#cite_note-25][25][/url] The new bank, owned 5050 by the two companies, received approval from Chinese bank regulators to operate in renminbi (RMB), making it one of a handful of American-owned banks permitted to do so.[url=https://en.wikipedia.org/wiki/Silicon_Valley_Bank#cite_note-26][26][/url] SVB also managed two local yuan-denominated funds for Shanghai's Yangpu District government, and invested in a Hangzhou-based loan guarantee company.[url=https://en.wikipedia.org/wiki/Silicon_Valley_Bank#cite_note-:0-27][27][/url]

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Stress testing of banks was of primary concern after the 2008 crisis. BIS and everyone down the chain were jerking each other off with the idea that stress testing and advanced computer modeling would curtail another financial crisis. What happened?

Banks of similar size like SVB weren't subject to the same kind of stress-testing the bigger banks were.

Stat Monitor Repairman said:

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Stress testing of banks was of primary concern after the 2008 crisis. BIS and everyone down the chain were jerking each other off with the idea that stress testing and advanced computer modeling would curtail another financial crisis. What happened?

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Not only that, this was a simple run on the bank from the VCs. It's a different deal than the financial crisis.

This is the result Powell has been wanting. (Taking the froth out of tech.. which enjoyed a breathtaking run up over the last decade). It's going to be bloody over the next few weeks when the market finally realize that Powell was serious. And, more over, he is still going to keep hiking interest rates and keep them there.

Has anybody heard a good counter to the argument that the real winners in this will be big tech and "too big to fail" banks?

Big tech because they're not going to get taken down by it, but early-stage potential competitors will.

Too big to fail banks because it would be irresponsible to keep large amounts of money with any bank they fed won't bail out.

We are at imminent risk of cascading failures.

DallasAg 94 said:

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Scud Runner said:

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Joseph Gentile is the Chief Administrative Officer? Doomed from the beginning. Try going with an Ira Rosenberg next time. Any -berg or -itz, Levy/Goldmann combo.

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I haven't seen this posted, yet.

https://www.foxbusiness.com/economy/silicon-valley-bank-exec-was-lehman-brothers-cfo-prior-to-2008-collapse

Quote:

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Silicon Valley Bank (SVB) executive, Jospeph Gentile, was a former executive of the Lehman Brothers' Global Investment Bank prior to the bank's public collapse in 2008.

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https://www.svbsecurities.com/team/joseph-gentile/

Quote:

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Prior to joining the firm in 2007, Mr. Gentile served as the CFO for Lehman Brothers' Global Investment Bank where he directed the accounting and financial needs within the Fixed Income division.

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Quote:

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He started his career at Arthur Andersen.

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His time at Arthur Anderson was likely prior to Enron, but, being connected to companies like Enron, Lehman's, and now SVB can't be good.

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Don't forget Arthur Anderson was swept away because of their own malfeasance. This guy leaving a lot of dead bodies in his wake.

Quote:

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Billionaire hedge fund manager Bill Ackman is forecasting 'economic meltdown' within hours of the banks opening up on Monday morning following the failure of Silicon Valley Bank.

Ackman is urging for the U.S. government to finally step in and protect all of the bank's depositors, warning inaction could lead to a ripple effect across other smaller banks within the industry.

The worry is that customers will rush to withdraw cash from their accounts fearing instability across the banking system with the very real possibility of a domino effect.

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Stat Monitor Repairman said:

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Quote:

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Billionaire hedge fund manager Bill Ackman is forecasting 'economic meltdown' within hours of the banks opening up on Monday morning following the failure of Silicon Valley Bank.

Ackman is urging for the U.S. government to finally step in and protect all of the bank's depositors, warning inaction could lead to a ripple effect across other smaller banks within the industry.

The worry is that customers will rush to withdraw cash from their accounts fearing instability across the banking system with the very real possibility of a domino effect.

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That's extremely irresponsible.

Communications pro-tip:

Don't wear a half-zip with the logo of one of the world's most exclusive international golf resorts when speaking to staff about one of the largest bank collapses in history.
😳 https://t.co/ZsMDpnTzr0

— Marc A. Ross (@marcaross) March 11, 2023

YouBet said:

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Stat Monitor Repairman said:

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Quote:

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Billionaire hedge fund manager Bill Ackman is forecasting 'economic meltdown' within hours of the banks opening up on Monday morning following the failure of Silicon Valley Bank.

Ackman is urging for the U.S. government to finally step in and protect all of the bank's depositors, warning inaction could lead to a ripple effect across other smaller banks within the industry.

The worry is that customers will rush to withdraw cash from their accounts fearing instability across the banking system with the very real possibility of a domino effect.

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That's extremely irresponsible.

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They are trying to force the govt to backstop the SVB losses.

Scream bank rush to try and force a bank rush.

96ags said:

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YouBet said:

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Stat Monitor Repairman said:

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Quote:

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Billionaire hedge fund manager Bill Ackman is forecasting 'economic meltdown' within hours of the banks opening up on Monday morning following the failure of Silicon Valley Bank.

Ackman is urging for the U.S. government to finally step in and protect all of the bank's depositors, warning inaction could lead to a ripple effect across other smaller banks within the industry.

The worry is that customers will rush to withdraw cash from their accounts fearing instability across the banking system with the very real possibility of a domino effect.

---

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That's extremely irresponsible.

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They are trying to force the govt to backstop the SVB losses.

Scream bank rush to try and force a bank rush.

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I know and it's just damn irresponsible.

YouBet said:

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Stat Monitor Repairman said:

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Quote:

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Billionaire hedge fund manager Bill Ackman is forecasting 'economic meltdown' within hours of the banks opening up on Monday morning following the failure of Silicon Valley Bank.

Ackman is urging for the U.S. government to finally step in and protect all of the bank's depositors, warning inaction could lead to a ripple effect across other smaller banks within the industry.

The worry is that customers will rush to withdraw cash from their accounts fearing instability across the banking system with the very real possibility of a domino effect.

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That's extremely irresponsible.

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You can tell who has exposure and who doesn't