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> But the only way they were able to participate in that world, and serve as a role model for others, was by quietly borrowing from a bank that understood what
by RcouF1uZ4gsC 4y ago
> But the only way they were able to participate in that world, and serve as a role model for others, was by quietly borrowing from a bank that understood what it meant to be a young venture capitalist with carry, but not enough savings.
Using borrowed money for venture capital seems very risky and not something that a bank should be celebrated for enabling.
- margorczynski 4y agoWasn't mixing "normal" banking with investment banking banned in the US after 2007? Or this is something else that doesn't fall into that category?
- NERD_ALERT 4y agoMixing commercial and investment banking was banned in 1933 by the Glass Steagall Act. The act was partially repealed in 1999 which allowed banks to engage in both commercial and investment banking again. As far as I know banks have been able to engage in both since then.
- WalterSear 4y agoIt wasn't. It made bad bets on bonds and lost $2 billion dollars of the $200+ billion dollars it held in deposits. I must be missing something, because I fail to see how this is such a big deal, or why anyone will be taking much of a haircut on their deposits.
- grey-area 4y agoThe prices SVB and other banks use for their assets are not marked to market. Selling it all, today, would mean that they get back far less than the total deposits. Selling it over time or parking it with a temp bad bank would be fine though and that is what fdic will probably do.
- WalterSear 4y agoThat's to my point though: there's not going to be a fire sale.
- grey-area 4y agoWell let’s hope not, and let’s hope they arrange an orderly process by 9AM Monday. Friday was not great and appeared to take them by surprise.
- WalterSear 4y agoWell, not everyone, given that the CEO's been selling shares :)
- grey-area 4y agoBy them I meant the authorities who intervened midday which is unusual I think? I do feel the svb ceo/cfo etc should face consequences for their actions, bonuses should be clawed back, but really those are not the important actions here - providing stability to the entire banking system and making sure hundreds of businesses do not close at once because of a bank run are far more important. Otherwise there is significant systemic risk.
- Danieru 4y ago2 Billion is only what they lost on the ATM portfolio. What triggered the attempted capital raise. The unrealized loses were a further 16Billion+. 18Billion lost of a capital base of 200Billion is clearly a big deal.
- WalterSear 4y agoYes, that is different.