4 ms·
I wonder why they were not bailed in.
by cm2187 4y ago
I wonder why they were not bailed in.
- stuckkeys 4y agoThey fucked with the wrong people, that is why. I just hope this is not a chain reaction. 2008 all over again, but this time it is going to be extra juicy. Alot of shady stuff is going to be unveiled in the next few months.
- nradov 4y agoWhy would they be bailed in? SVB is not systemically important. The FDIC will wind it up just like any other small failed bank.
- cm2187 4y ago200bn assets is a big bank. Lehman was 600bn and look what it caused.
- timy2shoes 4y agoLehman was a symptom of a larger problem associated with mortgage backed securities, not a cause of the problem.
- TheAlchemist 4y agoFunnily enough, the root cause of the problem for SVP are ... mortgage backed securities !
- giantrobot 4y agoSo you're saying I should invest heavily into mortgage backed securities? Got it!
- hedora 4y agoBuy low! Now’s your chance!
- mcarmichael 4y agoThe really troublesome securities of the Global Financial Crisis were complex derivatives of private-label, almost universally sub-prime, asset-backed-securities: https://en.wikipedia.org/wiki/Collateralized_debt_obligation https://en.wikipedia.org/wiki/Collateralized_debt_obligation The standardized, so-called "agency" MBS on the SVB books really isn't anything like that CDO plague. In 2008, people were losing faith in the ability to even assign valuations to CDOs; SVB's problem with their MBS portfolio is that the current market valuation is obviously not what they needed it to be just now.
- dragontamer 4y agoBear Sterns fell first, at $350 Billion in assets. The issue in 2008 was that the banks were doing a domino effect on each other. We don't see any such signs of that with Silicon Valley bank, and SIVB is smaller than Bear Sterns (and other banks) from 2007 crisis.
- cm2187 4y agoWell Bear Sterns never went bust, it was bailed out. The issue in 2008 is rather that institutional investors (mostly money market funds) ceased to lend to banks, or only overnight. I am not saying that the banking system is as fragile as in 2008, it is clearly not. But it only takes a panic to cause another post-Lehman contagion across the financial system.
- cameldrv 4y agoThere was a domino effect, but a number of banks had the same root problem -- MBS held on their books at higher than their true value. Bear Stearns just happened to have a whole lot of the worst MBS, so it went down first. In this case, a number of banks are holding a lot of long-term debt as "hold til maturity", so they're not recognizing on their books that it has lost value due to rising interest rates.
- FormerBandmate 4y ago> We don't see any such signs of that with Silicon Valley bank Yet. They were pretty important to the startup ecosystem, and the rise in fear could imperil some of the banks that were sick already
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- chollida1 4y agoCompletely different situation SVB is a relatively meaningless bank that can go under with very few knock on effects to the banking system. Lehman was atop 4 or 5 player in the financial space when it went under and. A major pillar that propped up the system. The two are so completely different in their importance. Asset size does very little to show this though so I understand why at a first order look one might get the idea that they are comparable.
- kordlessagain 4y agoThe Times says stock prices of other banks fell as concern spread that they could also be facing similar problems. First Republic Bank in California fell 16.5 percent, Signature Bank in New York more than 12 percent and Zions Bancorporation 11.4 percent.
- ttul 4y agoIt’s the second largest bank failure ever in the United States.
- albert_e 4y agoas opposed to being bailed OUT?
- cm2187 4y agoWell they are not being bailed out, they are being liquidated. A bail-in is the power given to regulators to write down debt holders to auto-recapitalise the bank so it can re-open healthy the following Monday. A sort of instanteneous, extra-judicial chapter 11.
- JumpCrisscross 4y ago> bail-in the power given to regulators to write down debt holders to auto-recapitalise the bank so it can re-open healthy the following Monday SVB’s debts is likely to be impaired. That isn’t enough, however.