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DFPI specifically called them insolvent and illiquid, took them over and handed them to the FDIC. I don't think they were all that healthy after all. https://d

• borski 4y ago
  No bank is healthy once all its depositors pull their cash out. What their balance sheet looked like before the panic is what I'm talking about. Every bank dies from a bank run, period.
  • slowmovintarget 4y ago
    Unless they get bailed out by taxpayers because "they're too big."
  • kgwgk 4y ago
    And how many banks are acquired after that happens because of how healthy their balance sheet used to look?
    • charrondev 4y ago
      You can see a list of failed banks and who acquired them here. https://www.fdic.gov/bank/historical/bank/ https://www.fdic.gov/bank/historical/bank/ Every one in the past few years looks like it was acquired.
      • nostrebored 4y ago
        The cost of money is very different now though.
      • kgwgk 4y ago
        This one is largest than the 100 previous ones combined. And the point is that there may be many reasons why a bank may want to acquire a smaller failed one to integrate it in its operations but "the previous owners used to have a well-capitalized business until they somehow lost it all" is not a strong reason on its own.
  • dahdum 4y ago
    Wasn't their balance sheet before the panic what caused the panic? It wasn't some WSB meme that drove the bank run, they couldn't cover their normal day to day operations and started a bond fire sale and desperate equity raise.
    • shadowgovt 4y ago
      IIUC: they could definitely cover their normal day-to-day. The thing that broke down is they had to announce true things that made investors conclude that their money wouldn't grow as fast as investors expected, and investors (understandably / justifiably) wanted to pull it out to somewhere it would grow faster. (The investors don't actually know the money won't grow as fast... the Fed could decide to drop interest rates tomorrow, or something else could intervene making it sensible to drop interest rates. But "not growing as fast" was the very likely scenario). Once everyone decided to pull, they were tanked because no bank keeps 100% liquidity.
      • SilasX 4y ago
        No bank keeps 100% liquidity, but my understanding is that most banks are capable of getting liquidity -- at least from the lender of last resort (LoLR) -- for massive withdrawals based on the value of their loan portfolio, and SVB's portfolio had tanked too low to do this based on interest rates the LoLR would lend to them at.
      • twoodfin 4y ago
        Won't lots of investors (aka depositors) start making this same analysis? Whether you have $10K or $10M, right now you don't want your cash anywhere it's not earning 3%+. So it's back to whether they're unique in finding themselves uncompetitive as a place to park cash at a market rate.
      • dahdum 4y ago
        > The thing that broke down is they had to announce true things that made investors conclude that their money wouldn't grow as fast as investors expected, and investors (understandably / justifiably) wanted to pull it out to somewhere it would grow faster. SVB disclosed they took massive losses from high risk, high duration assets and were desperate for cash. Investors took large (up to 60% over 24h!) losses, paper or otherwise, to get out of the stock. That can't be just concern over not growing as fast, that's concern about solvency. VC's and depositors saw the same writing on the wall, but it was SVB who wrote it there. If they were able to cover their normal operations, they wouldn't have needed the emergency equity raise.